DESCRIPTION OF NOTES
Continental Resources, Inc. issued the old notes and will issue the new notes under the Indenture. The terms of the new 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 (the
Trust Indenture Act
).
The following description is only a summary of certain material provisions of the notes and the Indenture. This summary is not a complete
description of all the provisions of the notes and is subject to, and is qualified in its entirety by reference to, the notes and the Indenture. For more information, we refer you to the notes and the Indenture, all of which you may request copies
of at our address set forth under the heading Where You Can Find More Information; Incorporation by Reference. Defined terms used but not otherwise defined in this section shall have the meanings assigned to such terms in the Indenture.
In this description, the words Continental Resources, Company, our, us and
we refer only to Continental Resources, Inc. and not to any of its subsidiaries. Any reference to the notes contained in this description refers collectively to the 4.375% Senior Notes due 2028 issued on December 8, 2017
(the
old notes
) and the new 4.375% Senior Notes due 2028 to be issued pursuant to this exchange (the
new notes
), unless the context indicates otherwise.
General
The new notes will be
general unsecured senior obligations of Continental Resources and will be guaranteed by the Guarantors as described below under Guarantees. The new notes will rank
pari passu
in right of payment with all existing and future
Senior Indebtedness of Continental Resources and rank senior in right of payment to all future subordinated Indebtedness of Continental Resources.
Interest on the notes accrues from December 8, 2017 at an annual rate of 4.375% and is payable semi-annually in arrears on
January 15 and July 15 of each year, commencing July 15, 2018, to the Holders of record of the notes at the close of business on January 1 and July 1, respectively, preceding such interest payment date. Interest is computed
on the basis of a 360-day year consisting of twelve 30-day months. Initially, the Trustee has acted as paying agent and registrar for the notes.
If the exchange offer contemplated by this prospectus is consummated, holders of old notes who do not exchange those old notes for new notes
in the exchange offer will vote together with holders of new notes for all relevant purposes under the Indenture. In that regard, the Indenture requires that certain actions by the holders thereunder must be taken, and certain rights must be
exercised, by specified minimum percentages of the aggregate principal amount of the outstanding securities issued under the Indenture. In determining whether holders of the requisite percentage in principal amount have given any notice, consent or
waiver or taken any other action permitted under the Indenture, any old notes that remain outstanding after the exchange offer will be aggregated with the new notes, and the holders of such old notes and the new notes will vote together as a single
class for all such purposes. Accordingly, all references herein to specified percentages in aggregate principal amount of the notes outstanding shall be deemed to mean, at any time after the exchange offer is consummated, such percentages in
aggregate principal amount of the old notes and the new notes then outstanding.
Further Issuances
We may from time to time, without notice or the consent of the Holders of the notes, create and issue further notes ranking equally and
ratably with the original notes in all respects (or in all respects except for the payment of interest accruing prior to the issue date of such further notes, the public offering price and the issue date), so that such further notes form a single
series with the original notes and have the same terms as to status, redemption or otherwise as the original notes;
provided, however
, if the further notes are not fungible with the notes for U.S. federal income tax purposes, such further
notes will have a different CUSIP number.
Optional Redemption
At any time prior to October 15, 2027 (the Par Call Date), we may redeem the notes, in whole or in part, at a redemption price
equal to the Make-Whole Price, plus accrued and unpaid interest, if any, to, but excluding, the redemption date (subject to the right of Holders on the relevant record date to receive interest due on the corresponding interest payment date falling
prior to or on the redemption date).
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At any time on or after the Par Call Date, we may redeem the notes, in whole or in part, at a
redemption price equal to 100% of the principal amount of the notes being redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
Notice and Selection
Notice of redemption of the notes must be given to each Holder of the notes not less than 30 nor more than 60 days prior to the
redemption date in accordance with the Indenture;
provided
that in connection with a defeasance or satisfaction and discharge notice may be given more than 60 days prior to the redemption date.
Once a notice of redemption is given in accordance with the Indenture, notes called for redemption become due and payable on the
applicable redemption date at the applicable redemption price. Any notice of redemption for the notes will state, among other things, the aggregate principal amount and the notes to be redeemed, the redemption date, the redemption price and the name
and address of the Paying Agent. If less than all of the notes are redeemed at any time, the Trustee will select the notes to be redeemed on a pro rata basis, by lot or in accordance with any other method the Trustee deems fair and appropriate,
subject to DTCs procedures, or, if the notes are listed on any securities exchange, by any other method that complies with the requirements of such exchange;
provided, however
, that no notes with a principal amount of $2,000 or less
will be redeemed in part. Unless we default in payment of the applicable redemption price, interest on the notes to be redeemed will cease to accrue on the applicable redemption date, whether or not such notes are presented for payment.
Certain Definitions
Make-Whole Amount
with respect to a note means an amount equal to any excess of (i) the present value of the
remaining principal, any premium, and any interest payments due on such note (excluding any portion of such payments of interest accrued as of the redemption date) as if such note matured on the Par Call Date, computed using a discount rate equal to
the Treasury Rate plus 50 basis points over (ii) the outstanding principal amount of such note.
Make-Whole
Average Life
means the number of years (calculated to the nearest one-twelfth) between the date of redemption and the Par Call Date.
Make-Whole Price
means the sum of the outstanding principal amount of the notes to be redeemed plus the Make-Whole
Amount of such notes.
Treasury Rate
means the yield to maturity (calculated on a semi-annual bond
equivalent basis) at the time of the computation of United States Treasury securities with a constant maturity (as compiled by and published in the most recent Federal Reserve Statistical Release H.15 (519) or any successor publication which is
published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption Treasury Constant Maturities),
which has become publicly available at least two Business Days prior to the date of the redemption notice or, if such Federal Reserve Statistical Release is no longer published, any publicly available source of similar market data) most nearly equal
to the then remaining maturity of the relevant notes being redeemed assuming maturity of the notes on the Par Call Date;
provided, however
, that if the Make-Whole Average Life of such notes is not equal to the constant maturity of the United
States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation or extrapolation (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 Make-Whole Average Life of such notes 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.
Business Day
means any day on which the New York Stock Exchange is open for trading and
which is not a Legal Holiday.
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Legal Holiday
is a Saturday, a Sunday or a day on which banks and trust
companies in The City of New York or place of payment are not required by law or executive order to be open.
Guarantees
Payment of the principal, premium, if any, and interest on the notes, when and as the same become due and payable, are fully and
unconditionally guaranteed, jointly and severally, on a senior unsecured basis (the
guarantees
) by the Guarantors. Banner Pipeline Company, L.L.C., CLR Asset Holdings, LLC and The Mineral Resources Company, Subsidiaries of the
Company, are the initial Guarantors. However, in the circumstances described under Certain CovenantsIssuances of Guarantees by Restricted Subsidiaries, the Company will cause certain future Restricted Subsidiaries to enter
into a supplemental indenture pursuant to which each such Restricted Subsidiary shall agree to guarantee the Companys obligations under the notes jointly and severally with any other Guarantors, fully and unconditionally, on a senior unsecured
basis. Unrestricted Subsidiaries will not become Guarantors. For the purposes of the Indenture, the Companys Subsidiary, 20 Broadway Associates LLC, has been designated as an Unrestricted Subsidiary and, as such, does not guarantee the notes,
and the Companys Subsidiary, Flintlock Energy, Inc., is a Restricted Subsidiary but does not guarantee the notes. The value of these Subsidiaries assets and operations are minor.
The obligations of each Guarantor under its guarantee will be limited to the maximum amount which, after giving effect to all other contingent
and fixed liabilities of such Guarantor, and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its guarantee or pursuant to its
contribution obligations under the Indenture, will result in the obligations of such Guarantor under its guarantee not constituting a fraudulent conveyance or fraudulent transfer under Federal or state law. See Risk FactorsRisks Relating
to Investment in the Notes Any guarantees of the notes by our subsidiaries could be deemed fraudulent conveyances under certain circumstances, and a court may subordinate or void the subsidiary guarantees. Each Guarantor that makes
a payment or distribution under its guarantee will be entitled to a contribution from each other Guarantor in a pro rata amount based on the net assets of each Guarantor determined in accordance with GAAP.
The guarantee of a Guarantor will be released automatically with respect to the notes if:
(A) in connection with any sale or other disposition of (i) all of the Capital Stock of such Guarantor or (ii) all or
substantially all of the properties or assets of such Guarantor (including by way of merger or consolidation), in each case to one or more Persons that are not (either before or after giving effect to such transaction) the Company or a Restricted
Subsidiary;
(B) if such Guarantor is a Restricted Subsidiary, the Company properly designates such Guarantor as an
Unrestricted Subsidiary;
(C) if the guarantee was required pursuant to the terms of the Indenture described under
Certain CovenantsIssuances of Guarantees by Restricted Subsidiaries, the cessation of the circumstances requiring such guarantee;
(D) if the notes are discharged in accordance with the procedures described below under Legal Defeasance and
Covenant Defeasance or Satisfaction and Discharge; or
(E) upon the liquidation or dissolution of
such Guarantor;
provided
that any such release and discharge pursuant to clauses (A), (B), (C) and (D) above shall occur only to the
extent that all obligations of such Guarantor under all of its guarantees of, and under all of its pledges of assets or other security interests which secure any, Indebtedness of the Company shall also terminate at such time.
Ranking
Senior Indebtedness versus
Notes
. The Indebtedness evidenced by the notes and the guarantees are unsecured and rank pari passu in right of payment to all Senior Indebtedness of Continental Resources and the Guarantors, as the case may be. As of December 31, 2017,
Continental Resources and the Guarantors had an aggregate of $6.39 billion of Senior Indebtedness outstanding.
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Secured Indebtedness versus Notes
. Future secured debt and other secured obligations of
Continental Resources and the Guarantors are effectively senior to the notes and the Guarantors guarantee thereof to the extent of the value of the assets securing such debt or other obligations. Although the Indenture limits the incurrence of
certain Funded Debt that is secured Indebtedness, such limitations are subject to a number of significant qualifications, and the Indenture does not limit the incurrence of secured obligations other than certain Funded Debt or the incurrence of
unsecured Indebtedness. See Risk FactorsRisks Relating to Investment in the NotesThe notes will be effectively junior in right of payment to our secured debt and that of our guarantors.
Liabilities of non-Guarantor Subsidiaries versus Notes
. The Companys Subsidiary, 20 Broadway Associates LLC, has been designated
as an Unrestricted Subsidiary for purposes of the Indenture and, as such, does not guarantee the notes, and the Companys Subsidiary, Flintlock Energy, Inc., is a Restricted Subsidiary but does not guarantee the notes. The value of these
Subsidiaries assets and operations are minor. In addition, one or more future Subsidiaries of the Company may not guarantee the notes. The assets of any Subsidiary of the Company that does not guarantee the notes will be subject to the prior
claims of all creditors of that Subsidiary, including trade creditors. In the event of a bankruptcy, administrative receivership, composition, insolvency, liquidation or reorganization of any of the non-guarantor Subsidiaries, such Subsidiaries will
pay the holders of their liabilities, including trade payables, and preferred securities before they will be able to distribute any of their assets to the Company or a Guarantor. As of December 31, 2017, our subsidiaries that do not guarantee
the notes had approximately $10.0 million of indebtedness. See Risk FactorsRisks Relating to Investment in the NotesClaims of holders of the notes will be structurally subordinate to claims of creditors of our non-guarantor
subsidiaries.
Change of Control
If a Change of Control Triggering Event occurs with respect to the notes, each Holder of notes will have the right to require that the
Company purchase all or any part (in amounts of $1,000 or whole multiples of $1,000 in excess thereof) of such Holders notes pursuant to the offer described below (the
Change of Control Offer
). In the Change of Control
Offer, the Company will offer to purchase all of the notes, at a purchase price (the
Change of Control Purchase Price
) in cash in an amount equal to 101% of the principal amount of such notes, plus accrued and unpaid interest, if
any, to the date of purchase (the
Change of Control Purchase Date
), subject to the rights of Holders of record on relevant record dates to receive interest due on an interest payment date.
Within 30 days after the date upon which any Change of Control Triggering Event occurred, or, at the Companys option, prior to such
Change of Control but after it is publicly announced, the Company must notify the Trustee and give written notice of the Change of Control Triggering Event to each Holder of notes, by first-class mail, postage prepaid, at such Holders address
appearing in the security register. The notice must state, among other things:
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that a Change of Control Triggering Event has occurred or will occur and the date of such event;
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the circumstances and relevant facts regarding such Change of Control Triggering Event;
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the Change of Control Purchase Price and the Change of Control Purchase Date, which shall be fixed by the Company on a business day no earlier than 30 days nor later than 60 days from the date the notice is mailed, or
such later date as is necessary to comply with requirements under the Exchange Act;
provided
that the Change of Control Purchase Date may not occur prior to the Change of Control Triggering Event;
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that any note not tendered will continue to accrue interest;
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that, unless the Company defaults in the payment of the Change of Control Purchase Price, any notes accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control
Purchase Date; and
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other procedures that a Holder of notes must follow to accept a Change of Control Offer or to withdraw acceptance of the Change of Control Offer.
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If a Change of Control Offer is made, the Company may not have available funds sufficient to pay the Change of Control Purchase Price for all
of the notes that might be delivered by Holders of the notes seeking to accept the Change of Control Offer. The failure of the Company to make or consummate the Change of Control Offer or pay the Change of Control Purchase Price when due will give
the Trustee and the Holders of the notes the rights described under Events of Default.
The Credit Agreement provides
that the occurrence of certain change of control events with respect to the Company would constitute a default thereunder, which would permit the lenders under the Credit Agreement to accelerate the maturity of such Indebtedness. If such
acceleration occurred, then the Company would be obligated to repay amounts outstanding under such Indebtedness and a default would result under the Indenture. Any future credit agreements or agreements relating to other Indebtedness to which the
Company becomes a party may contain similar restrictions and provisions. In the event a Change of Control Triggering Event occurs at a time when the Company is prohibited from purchasing notes, the Company could seek the consent of the lenders under
those agreements to the purchase of the notes or could attempt to refinance the borrowings that contain such prohibition. If the Company does not obtain such a consent or repay such borrowings, the Company will remain so prohibited from purchasing
notes. In such case, the Companys failure to purchase tendered notes would constitute an Event of Default under the Indenture which would, in turn, likely constitute a default under such other Indebtedness. See Risk FactorsRisks
Relating to Investment in the NotesWe may not be able to repurchase the notes in certain circumstances.
The definition of
Change of Control includes a phrase relating to the sale, lease, transfer, conveyance or other disposition of all or substantially all of the assets of the Company. The term all or substantially all as used in the definition
of Change of Control has not been interpreted under New York law (which is the governing law of the Indenture) to represent a specific quantitative test. Therefore, if Holders of the notes elected to exercise their rights under the
Indenture and the Company elected to contest such election, it is not clear how a court interpreting New York law would interpret the phrase.
The existence of a Holders right to require the Company to repurchase such Holders notes upon a Change of Control Triggering Event
may deter a third party from acquiring the Company in a transaction which constitutes a Change of Control.
The provisions of the
Indenture do not afford Holders of the notes the right to require the Company to repurchase the notes in the event of a highly leveraged transaction or certain transactions with the Companys management or its affiliates, including a
reorganization, restructuring, merger or similar transaction (including, in certain circumstances, an acquisition of the Company by management or its affiliates) involving the Company that may adversely affect Holders of the notes, if such
transaction is not a transaction defined as a Change of Control. A transaction involving the Companys management or its affiliates, or a transaction involving a recapitalization of the Company, will result in a Change of Control if it is the
type of transaction specified by such definition.
The Company will comply with the applicable tender offer rules, including Rule 14e-1
under the Exchange Act, and any other applicable securities laws or regulations in connection with a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions relating to a Change
of Control Offer, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations described above by virtue thereof.
The Company will not be required to make a Change of Control Offer (1) upon a Change of Control Triggering Event if a third party makes
the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements described in the Indenture applicable to a Change of Control Offer made by the Company and purchases all notes validly tendered and not
withdrawn under such Change of Control Offer or (2) if notice of redemption for 100% of the aggregate principal amount of the outstanding notes has been given pursuant to the Indenture as described under the caption Optional
Redemption, unless and until there is a default in payment of the applicable redemption price.
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In the event that Holders of not less than 90% of the aggregate principal amount of the
outstanding notes accept a Change of Control Offer and the Company purchases all of the notes held by such Holders, the Company will have the right, upon not less than 30 nor more than 60 days prior notice, given not more than 30 days
following the purchase pursuant to the Change of Control Offer described above, to redeem all of the notes that remain outstanding following such purchase at a redemption price equal to 101% of the aggregate principal amount of notes redeemed plus
accrued and unpaid interest, if any, thereon to the date of redemption, subject to the right of the Holders of record on relevant record dates to receive interest due on an interest payment date.
Certain Covenants
Limitation on Liens
Securing Funded Debt
. The Company, for the benefit of the notes (1) will not, and will not permit any Restricted Subsidiary to, create, incur or assume any Funded Debt secured by any Liens (other than Permitted Liens) upon any of the
properties of the Company or any Restricted Subsidiary and (2) will not, and will not permit any Subsidiary to, create, incur or assume any Funded Debt secured by any Liens (other than Permitted Liens) upon the Capital Stock of any Restricted
Subsidiary or the Capital Stock of any Subsidiary that owns, directly or indirectly through ownership in another Subsidiary, the Capital Stock of any Restricted Subsidiary, unless (as to each of clauses (1) and (2)) the notes or the
guarantee (if any) of such Restricted Subsidiary, as applicable, (together with, if the Company shall so determine, any other Indebtedness or other obligation of the Company or such Restricted Subsidiary which is not subordinate in right of payment
to the prior payment in full of the notes) are equally and ratably secured for so long as such Funded Debt shall be so secured;
provided
that if such Funded Debt is expressly subordinated to the notes or a related guarantee, if any, the Lien
securing such Funded Debt will be subordinated and junior to the Lien securing such notes or such guarantee. Notwithstanding the foregoing provisions, the Company or any Subsidiary may create, incur or assume Funded Debt secured by Liens which would
otherwise be subject to the restrictions of such section, if the aggregate principal amount of such Funded Debt and all other Funded Debt of the Company and any Subsidiary theretofore created, incurred or assumed pursuant to the exception in this
sentence and outstanding at such time does not exceed 15% of the Adjusted Consolidated Net Tangible Assets of the Company (the
Secured Debt Basket
).
Limitation on Sale/Leaseback Transactions
. The Company will not, and will not permit any Restricted Subsidiary to, enter into any
Sale/Leaseback Transaction with any Person (other than the Company or any other Subsidiary) unless:
(A) the
Company or such Restricted Subsidiary would be entitled to incur Funded Debt secured by Liens in a principal amount equal to the Attributable Indebtedness (treated as if such Attributable Indebtedness were Funded Debt) with respect to such
Sale/Leaseback Transaction in accordance with the covenant captioned Limitation on Liens Securing Funded Debt;
provided, however
, that Attributable Indebtedness in respect of any Sale/Leaseback Transaction entered into
pursuant to this clause (A) shall not count against the amount of Funded Debt permitted under the Secured Debt Basket for any other purpose, including when determining the amount available thereunder for future Sale/ Leaseback Transactions or
any Funded Debt transactions; or
(B) the Company or such Restricted Subsidiary receives proceeds from such Sale/Leaseback
Transaction at least equal to the fair market value thereof (as determined in good faith by the Company) and such proceeds are applied in accordance with the following two paragraphs:
The Company may apply Net Available Proceeds from such Sale/Leaseback Transaction, within 365 days following the receipt of Net Available
Proceeds from the Sale/Leaseback Transaction, to:
(1) the repayment of Indebtedness of the Company or a Restricted
Subsidiary under Credit Facilities or other Senior Indebtedness, including any mandatory redemption or repurchase or make-whole redemption of the Existing Notes or the notes;
(2) make an Investment in assets used in the Oil and Gas Business; or
(3) develop by drilling the Companys oil and gas reserves;
provided
, that the Company will be deemed to have complied with clause (2) or clause (3) of this paragraph, as applicable, if, within 365
days of such Sale/Leaseback Transaction, the Company shall have commenced and not
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completed or abandoned an Investment or development within the scope of such clause (2) or clause (3), respectively, or shall have executed a binding agreement with respect to an Investment
or development within the scope of such clause (2) or clause (3), respectively, and such Investment or development is substantially completed within a date one year and six months after the date of such Sale/Leaseback Transaction.
If, upon completion of the 365-day period, any portion of the Net Available Proceeds shall not have been applied by the Company as
described in clauses (1), (2) or (3) in the immediately preceding paragraph and such remaining Net Available Proceeds, together with any remaining net cash proceeds from any prior Sale/ Leaseback Transaction (such aggregate constituting
Excess Proceeds
), exceed $20.0 million, then the Company will be obligated to make an offer (the
Net Proceeds Offer
) to purchase the notes and any other Senior Indebtedness in respect of which such an offer to
purchase is also required to be made concurrently with the Net Proceeds Offer having an aggregate principal amount equal to the Excess Proceeds (such purchase to be made on a pro rata basis if the amount available for such repurchase is less than
the principal amount of the notes and other such Senior Indebtedness tendered in such Net Proceeds Offer) at a purchase price of 100% of the principal amount thereof plus accrued interest thereon to the date of repurchase. Upon the completion of the
Net Proceeds Offer, the amount of Excess Proceeds will be reset to zero.
Within 15 days after the Company becomes obligated
to make a Net Proceeds Offer (a
Net Proceeds Offer Triggering Event
), the Company will send or cause to be sent to all Holders on the date of the Net Proceeds Offer Triggering Event a notice of the occurrence of such Net Proceeds
Offer Triggering Event and of the Holders rights arising as a result thereof.
The Net Proceeds Offer will be deemed to have
commenced upon sending of the Offer Notice and will terminate 20 business days after its commencement, unless a longer offering period is required by law. Promptly after the termination of the offer, the Company will purchase and mail or deliver
payment for all notes tendered and accepted in response to the offer.
On the payment date, the Company will, to the extent lawful,
(a) accept for payment notes or portions thereof tendered pursuant to the Net Proceeds Offer, (b) deposit with the paying agent an amount equal to the payment in respect of all notes or portions thereof so tendered and (c) deliver to
the Trustee the notes so accepted together with an officers certificate stating the notes or portions thereof tendered to the Company. The Depositary, the Company or the paying agent will promptly mail or deliver to each Holder of notes so
accepted payment in an amount equal to the purchase price for such notes, and the Trustee will promptly authenticate and mail or deliver to each Holder new notes equal in principal amount to any unpurchased portion of the notes surrendered, if any,
provided
that each such new notes will be in a principal amount of $2,000 or integral multiples of $1,000 in excess thereof.
The Company will comply with the applicable tender offer rules, including Rule 14e-1 under the Exchange Act, and any other applicable
securities laws or regulations in connection with a Net Proceeds Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions relating to a Net Proceeds Offer, the Company will comply with the
applicable securities laws and regulations and will not be deemed to have breached its obligations described above by virtue thereof.
Issuances of Guarantees by Restricted Subsidiaries
. The Company will provide to the Trustee, on or prior to the 90th day after the date
that (a) any Person becomes a Wholly Owned Restricted Subsidiary after the Issue Date (excluding any Foreign Subsidiary and any Immaterial Subsidiary), (b) any Unrestricted Subsidiary is redesignated as a Restricted Subsidiary (excluding
any Foreign Subsidiary and any Immaterial Subsidiary), or (c) any Restricted Subsidiary of the Company (which is not a Guarantor) becomes a guarantor or obligor in respect of any Indebtedness of the Company or any of the Guarantors, in each
case, a supplemental indenture to the Indenture, executed by such Restricted Subsidiary, providing for a full and unconditional guarantee on a senior unsecured basis by such Restricted Subsidiary of the Companys obligations under the notes and
the Indenture to the same extent as that set forth in the Indenture.
Unrestricted Subsidiaries
. The Board of Directors of
the Company may after the Issue Date designate any Subsidiary as an Unrestricted Subsidiary under the Indenture (a Designation) only if:
(A) no Default or Event of Default shall have occurred and be continuing at the time of or after giving effect to such
Designation;
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(B) such Unrestricted Subsidiary does not own any Capital Stock in any Restricted
Subsidiary of the Company which is not simultaneously being designated an Unrestricted Subsidiary;
(C) such Unrestricted
Subsidiary is not liable, directly or indirectly, with respect to any Indebtedness other than Unrestricted Subsidiary Indebtedness;
provided
that an Unrestricted Subsidiary may provide a guarantee for the notes; and
(D) such Unrestricted Subsidiary is not a party to any agreement, contract, arrangement or understanding at such time with the
Company or any Restricted Subsidiary unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are
not Affiliates of the Company.
The Company shall not and shall not cause or permit any Restricted Subsidiary to at any time:
(1) provide credit support for, guarantee or subject any of its property or assets (other than the Capital Stock of any
Unrestricted Subsidiary) to the satisfaction of, any Indebtedness of any Unrestricted Subsidiary (including any undertaking, agreement or instrument evidencing such Indebtedness); or
(2) be directly or indirectly liable for any Indebtedness of any Unrestricted Subsidiary (other than, with respect to clauses
(1) and (2), any such Indebtedness (x) outstanding on the date hereof or (y) incurred to finance property and improvements constituting the Companys corporate headquarters or other principal place of business).
For purposes of the foregoing, the Designation of a Subsidiary of the Company as an Unrestricted Subsidiary shall be deemed to be the
Designation of all present and future Subsidiaries of such Subsidiary as Unrestricted Subsidiaries. Unless so designated as an Unrestricted Subsidiary, any Person that becomes a Subsidiary of the Company will be classified as a Restricted
Subsidiary.
The Company may revoke any Designation of a Subsidiary as an Unrestricted Subsidiary (a
Revocation
) if:
(A) no Default or Event of Default shall have occurred and be continuing at the time of and after giving effect to such
Revocation; and
(B) all Liens and Indebtedness of such Unrestricted Subsidiary outstanding immediately following such
Revocation would, if incurred at such time, have been permitted to be incurred for all purposes of the Indenture.
All Designations and
Revocations must be evidenced by a resolution of the Board of Directors of the Company delivered to the Trustee in an Officers Certificate certifying compliance with the foregoing provisions of this covenant.
Limitations on Mergers and Consolidations
. The Company will not consolidate or merge with or into any Person, or sell, convey, lease or
otherwise dispose of all or substantially all of its assets to any Person, unless:
(1) the Person formed by or
surviving such consolidation or merger (if other than the Company), or to which such sale, lease, conveyance or other disposition shall be made (collectively, the
Successor
), is a corporation, limited liability company, general
partnership or limited partnership organized and existing under the laws of the United States or any state thereof or the District of Columbia and the Successor assumes by supplemental indenture all of the obligations of the Company under the
Indenture;
provided
that unless the Successor is a corporation, a corporate co-issuer of the notes will be added to the Indenture by such supplemental indenture; and
(2) immediately after giving effect to such transaction, no Event of Default shall have occurred and be continuing.
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Except as provided under the third paragraph of Guarantees, no Guarantor may
consolidate or merge with or into (whether or not such Guarantor is the surviving Person) another Person unless:
(1) the
Person formed by or surviving any such consolidation or merger (if other than such Subsidiary Guarantor) assumes all the obligations of such Subsidiary Guarantor under the Indenture and the notes pursuant to a supplemental indenture; and
(2) immediately after such transaction, no Default or Event of Default exists.
The preceding does not prohibit a merger between Guarantors or a merger between the Company and a Guarantor.
Notwithstanding the foregoing, the Company or any Guarantor may merge with an Affiliate of it incorporated or organized solely for the purpose
of reincorporating or reorganizing the Company or Guarantor in another jurisdiction to realize tax or other benefits.
SEC Reports
.
Whether or not required by the rules and regulations of the SEC, so long as any notes are outstanding, the Company will file with the SEC and furnish to the Holders of notes and the Trustee all quarterly and annual financial information required to
be contained in a filing with the SEC on Forms 10-Q and 10-K, including a Managements Discussion and Analysis of Financial Condition and Results of Operations and, with respect to the annual consolidated financial statements only,
a report thereon by the Companys independent auditors.
The Company will be deemed to have furnished such reports to the
Trustee and the Holders of notes if it has filed such reports with the SEC using the EDGAR filing system and such reports are publicly available, it being understood that the Trustee shall have no responsibility to determine if such filings have
been made.
For so long as any notes remain outstanding and constitute restricted securities under Rule 144, the Company will
furnish to the Holders of the notes and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
Certain Definitions
The following is a
summary of certain defined terms used in the Indenture. Reference is made to the Indenture for the full definition of all such terms and for the definitions of capitalized terms used in this prospectus and not defined below.
Acquired Debt
means Indebtedness of a Person (1) existing at the time such Person becomes a Restricted
Subsidiary or (2) assumed in connection with the acquisition of assets from such Person, in each case other than Indebtedness incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary or such acquisition,
as the case may be. Acquired Debt shall be deemed to be incurred on the date of the related acquisition of assets from any Person or the date the acquired Person becomes a Restricted Subsidiary, as the case may be.
Adjusted Consolidated Net Tangible Assets
means, without duplication, as of the date of determination:
(a) discounted future net revenues from proved oil and gas
reserves of the Company and its Restricted Subsidiaries calculated in accordance with SEC guidelines before any state, federal or foreign income taxes, as estimated by the Company in a reserve report prepared as of the end of the Companys most
recently completed fiscal year for which audited financial statements are then available, as increased by, as of the date of determination, the estimated discounted future net revenues from (1) estimated proved oil and gas reserves acquired
since such year-end, which reserves were not reflected in such year-end reserve report, and (2) estimated increases in proved oil and gas reserves since such year-end due to exploration, development or exploitation activities or due to changes
in geological conditions or other factors which would, in accordance with standard industry practice, cause such revisions, in each case calculated in accordance with SEC guidelines (utilizing the prices utilized in such year-end reserve report),
and decreased by, as of the date of determination, the estimated discounted future net revenues from (3) estimated proved oil and gas reserves reflected in such year-end report produced or disposed of since such
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year-end and (4) estimated oil and gas reserves attributable 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 in accordance with SEC guidelines (utilizing the prices utilized in such year-end reserve report);
provided
that, in the
case of each of the determinations made pursuant to clauses (1) through (4), such increases and decreases shall be as estimated by the Companys petroleum engineers, plus
(b) the Net Working Capital on a date no earlier than the date of the Companys latest annual or quarterly financial
statements, plus
(c) the greater of (1) the net book value on a date no earlier than the date of the Companys
latest annual or quarterly financial statements and (2) the appraised value, as estimated by independent appraisers, of other tangible assets (including, without duplication, Investments in unconsolidated Restricted Subsidiaries) of the Company
and its Restricted Subsidiaries, as of the date no earlier than the date of the Companys latest audited financial statements (
provided
that the Company shall not be required to obtain such appraisal of such assets if no such appraisal
has been performed),
minus (ii) the sum of:
(a) minority interests, plus
(b) any net gas balancing liabilities of the Company and its Restricted Subsidiaries reflected in the Companys latest
annual or quarterly financial statements (to the extent not deducted in calculating Net Working Capital in accordance with clause (i)(b) of this definition), plus
(c) to the extent included in (i)(a) above, the discounted future net revenues, calculated in accordance with SEC guidelines
(utilizing the prices utilized in the Companys 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), plus
(d) the discounted future net revenues, calculated in accordance with SEC guidelines, attributable to reserves subject to
Dollar-Denominated Production Payments which, based on the estimates of production and price assumptions included in determining the discounted future net revenues specified in (i)(a) 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).
Affiliate
of any specified Person means any other Person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified Person. For the purposes of this definition, control when used with respect to any specified Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms controlling and controlled have meanings correlative to the foregoing.
Attributable Indebtedness
means, with respect to any particular lease under which any Person is at the time liable
and at any date as of which the amount thereof is to be determined, the present value of the total net amount of rent required to be paid by such Person under the lease during the primary term thereof, without giving effect to any renewals at the
option of the lessee, discounted from the respective due dates thereof to such date at the rate of interest per annum implicit in the terms of the lease. As used in the preceding sentence, the net amount of rent under any lease for any
such period shall mean the sum of rental and other payments required to be paid with respect to such period by the lessee thereunder excluding any amounts required to be paid by such lessee on account of maintenance and repairs, insurance, taxes,
assessments, water rates or similar charges. In the case of any lease which is terminable by the lessee upon payment of a penalty, such net amount of rent shall also include the amount of such penalty, but no rent shall be considered as required to
be paid under such lease subsequent to the first date upon which it may be so terminated.
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Below Investment Grade Rating Event
means the notes are unrated or rated below
Investment Grade by both Rating Agencies on any date of the public notice of an arrangement that could result in a Change in Control until the end of the 60-day period following public notice of the occurrence of a Change of Control (which period
shall be extended so long as the rating of the notes is under publicly announced consideration for possible downgrade by either of the Rating Agencies);
provided, however
, a Below Investment Grade Rating Event will be cured and deemed not to
have occurred (and thus shall not be deemed a Below Investment Grade Rating Event for purposes of the definition of a Change of Control Triggering Event) if the Company causes at least one of the Rating Agencies to confirm to the Trustee in writing
that the change in rating status to below Investment Grade was not in any part related to the applicable Change of Control (whether or not the applicable Change of Control shall have occurred at the time of the rating downgrade).
Board of Director
s means, with respect to any Person, the Board of Directors or other governing body of such Person
or any committee thereof duly authorized to act on behalf of such Board of Directors or such other governing body.
Capital Lease Obligation
of any Person means any obligation of such Person and its Restricted Subsidiaries on a
Consolidated basis under any capital lease of (or other agreement conveying the right to use) real or personal property which, in accordance with GAAP, is required to be recorded as a capitalized lease obligation.
Capital Stock
of any Person means any and all shares, units, interests, participations, rights in or other
equivalents (however designated) of such Persons capital stock, other equity interests whether now outstanding or issued after the Issue Date, partnership interests (whether general or limited), joint venture interests, limited liability
company interests, any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, including any Preferred Stock, and any rights (other than
debt securities convertible into Capital Stock), warrants or options exchangeable for or convertible into such Capital Stock.
Change of Control
means the occurrence of any of the following events:
(1) any person or group (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other
than the Hamm Group is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to have beneficial ownership of all shares that such Person has the right to
acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total outstanding Voting Stock of the Company or any Successor Parent (measured by voting power rather than
the number of shares);
provided
that no Change of Control shall be deemed to occur by reason of the Company becoming a Subsidiary of a Successor Parent;
(2) the Company or any Successor Parent consolidates with or merges with or into any Person, or sells, assigns, conveys,
transfers, leases or otherwise disposes of all or substantially all of its assets to any such Person, or any such Person consolidates with or merges into or with the Company or any Successor Parent, in any such event pursuant to a transaction in
which the outstanding Voting Stock of the Company or such Successor Parent, as the case may be, is converted into or exchanged for cash, securities or other property, other than any such transaction where (A) in the case of any such merger or
consolidation, the outstanding Voting Stock of the Company or such Successor Parent, as the case may be, is changed into or exchanged for (1) Voting Stock of the surviving Person which is not Disqualified Stock or (2) cash, securities and
other property (other than Capital Stock of the surviving Person) and (B) immediately after such transaction, no person or group (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than the
Hamm Group, is the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have beneficial ownership of all securities that such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total outstanding Voting Stock (measured by voting power rather than the number of shares) of the surviving Person; or
(3) the Company is liquidated or dissolved or adopts a plan of liquidation or dissolution other than in a transaction which
complies with the provisions described under Certain CovenantsLimitation on Mergers and Consolidations.
30
For purposes of this definition, any transfer of an equity interest of an entity that was formed
for the purpose of acquiring Voting Stock of the Company will be deemed to be a transfer of such portion of such Voting Stock as corresponds to the portion of the equity of such entity that has been so transferred. Notwithstanding the foregoing, a
Change of Control shall not be deemed to occur upon the consummation of any actions undertaken by the Company or any Restricted Subsidiary solely for the purpose of changing the legal structure of the Company or such Restricted Subsidiary.
Change of Control Triggering Event
means the occurrence of both a Change of Control and a Below Investment Grade
Rating Event.
Consolidation
means, with respect to any Person, the consolidation of the accounts of such
Person and each of its Subsidiaries if and to the extent the accounts of such Person and each of its Subsidiaries would normally be consolidated with those of such Person, all in accordance with GAAP. The term Consolidated shall have a
similar meaning.
Credit Agreement
means that certain Revolving Credit Agreement, dated as of
May 16, 2014, among the Company, as borrower, Banner Pipeline Company L.L.C., CLR Asset Holdings, LLC and The Mineral Resources Company, as guarantors, Union Bank, N.A., as administrative agent, and the other lenders party thereto, as such
agreement, in whole or in part, in one or more instances, has been or hereafter may be amended, renewed, extended, increased, substituted, refinanced, restructured, replaced, supplemented or otherwise modified from time to time (including, without
limitation, any successive renewals, extensions, increases, substitutions, refinancings, restructurings, replacements, supplementations or other modifications of the foregoing).
Credit Facility
means, one or more debt facilities (including, without limitation, the Credit Agreement) or
commercial paper facilities, in each case with banks, investment banks, insurance companies, mutual funds and/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 (or sell receivables to) such lenders against such receivables) or letters of credit, in each case, as amended, extended, restated, renewed, refunded, replaced (whether
contemporaneously or otherwise) or refinanced (in each case with Credit Facilities with such lenders), supplemented or otherwise modified (in whole or in part and without limitation as to amount, terms, conditions, covenants and other provisions)
from time to time.
Debt Securities
means the Companys debentures, notes, bonds or other evidence of
indebtedness in one or more series.
Depositary
means, unless otherwise specified by the Company with respect
any notes issuable or issued in whole or in part in the form of one or more Global Securities, The Depository Trust Company, New York, New York, or any successor thereto registered as a clearing agency under the Exchange Act or other applicable
statute or regulations.
Disqualified Stock
means any Capital Stock that, either by its terms or by the
terms of any security into which it is convertible or exchangeable or otherwise, is or upon the happening of an event or passage of time would be, required to be redeemed prior to the Maturity Date of the notes or is redeemable at the option of the
holder thereof at any time prior to such Maturity Date (other than upon a change of control of the Company in circumstances where the holders of the notes would have similar rights), or is convertible into or exchangeable for debt securities at any
time prior to such Maturity Date at the option of the holder thereof.
Dollar-Denominated Production
Payment
means a production payment required to be recorded as a borrowing in accordance with GAAP, together with all undertakings and obligations in connection therewith.
Exchange Act
means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC
thereunder.
Existing Notes
means the Companys outstanding (a) 5% Senior Notes due 2022,
(b) 4.5% Senior Notes due 2023, (c) 3.8% Senior Notes due 2024 and (d) 4.9% Senior Notes due 2044.
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Foreign Subsidiary
means any Restricted Subsidiary of the Company that
(i) is not organized under the laws of the United States of America or any State thereof or the District of Columbia or (ii) was organized under any such laws but has no material assets other than Capital Stock of foreign entities of the
type described in the preceding clause (i).
Funded Debt
means, with regard to any Person, all
Indebtedness incurred, created, assumed or guaranteed by such Person, which matures, or is renewable by such Person to a date, more than one year after the date as of which Funded Debt is being determined.
GAAP
means generally accepted accounting principles as in effect in the United States of America from time to time.
Global Security
means a note in global form that evidences all or part of the notes and registered in the name of
the Depositary for the notes or a nominee thereof.
Guaranteed Debt
of any Person means, without duplication,
all Indebtedness of any other Person referred to in the definition of Indebtedness below guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement, made
primarily for the purpose of enabling the debtor to make payment of such Indebtedness or to assure the holder of such Indebtedness against loss,
(1) to pay or purchase such Indebtedness or to advance or supply funds for the payment or purchase of such Indebtedness;
(2) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services;
(3) to supply funds to, or in any other manner invest in, the debtor (including any agreement to pay for property or services
without requiring that such property be received or such services be rendered);
(4) to maintain working capital or equity
capital of the debtor, or otherwise to maintain the net worth, solvency or other financial condition of the debtor or to cause such debtor to achieve certain levels of financial performance; or
(5) otherwise to assure a creditor against loss;
provided
that the term guarantee shall not include endorsements for collection or deposit, in either case in the ordinary course of
business.
Guarantor
means any Subsidiary of the Company which is a guarantor of the notes, including any
Person that is required after the Issue Date to guarantee the notes pursuant to the covenant described under Certain CovenantsIssuances of Guarantees by Restricted Subsidiaries until a successor replaces such Person pursuant
to the applicable provisions of the Indenture and, thereafter, means such successor.
Hamm Group
means
(i) Harold G. Hamm (
Hamm
); (ii) Hamms wife; (iii) any of Hamms lineal descendants; (iv) Hamms guardian or other legal representative or Hamms estate; (v) any trust of which at least
one of the trustees is Hamm, or the principal beneficiaries of which are any one or more of the Persons in clauses (i) through (iv) above; (vi) any Person which is controlled by any one or more of the Persons in clauses
(i) through (v) above; and (vii) any group (within the meaning of the Exchange Act and the rules of the SEC thereunder as in effect on the Issue Date) that includes one or more of the Persons described in clauses (i) through
(vi) above,
provided
that such Persons described in clauses (i) through (vi) above control more than 50% of the voting power of such group.
Holder
means the Person in whose name a note is registered in the Register.
Immaterial Subsidiary
means any Subsidiary of the Company with total assets of less than $2.0 million, as determined
in accordance with the latest internal financial statements available to the Company.
Indebtedness
means,
without duplication, with respect to any Person,
32
(a) all obligations of such Person, including those evidenced by bonds, notes,
debentures or similar instruments, for the repayment of money borrowed (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof);
(b) all liabilities of others of the kind described in the preceding clause (a) that such Person has guaranteed; and
(c) Indebtedness (as otherwise defined in this definition) of another Person secured by a Lien on any asset of such Person,
whether or not such Indebtedness is assumed by such Person, the amount of such obligations being deemed to be the lesser of:
(1) the full amount of such obligations so secured; and
(2) the fair market value of such asset, as determined in good faith by the Board of Directors of such Person, which
determination shall be evidenced by a resolution of such Board.
Neither Dollar-Denominated Production Payments nor Volumetric Production
Payments shall be deemed to be Indebtedness.
Interest Rate Agreements
means one or more interest rate
protection agreements (including, without limitation, interest rate swaps, caps, floors, collars and similar agreements) and other types of interest rate hedging agreements from time to time entered into with one or more financial institutions.
Investment
means, with respect to any Person, directly or indirectly, any advance, loan (including
guarantees), or other extension of credit or capital contribution to any other Person (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase,
acquisition or ownership by such Person of any Capital Stock, bonds, notes, debentures or other securities issued or owned by any other Person and all other items that would be classified as investments on a balance sheet prepared in accordance with
GAAP. Investment shall exclude direct or indirect (i) advances or extensions of credit to customers or suppliers in the ordinary course of business that are, in conformity with GAAP, recorded as accounts receivable, prepaid expenses
or deposits on the Companys or any Restricted Subsidiarys balance sheet, (ii) endorsements for collection or deposit arising in the ordinary course of business and (iii) extensions of trade credit on commercially reasonable
terms in accordance with normal trade practices.
Investment Grade
means a rating of Baa3 or better by
Moodys (or its equivalent under any successor rating categories of Moodys) and BBB- or better by S&P (or its equivalent under any successor rating categories of S&P) (or, in each case, if such Rating Agency ceases to rate the
notes for reasons outside of our control, the equivalent investment grade credit rating from any Rating Agency selected by us as a replacement Rating Agency.
Issue Date
means, with respect to the notes, the date of original issuance of the notes.
Lien
means any mortgage or deed of trust, charge, pledge, lien (statutory or otherwise), privilege, security
interest, assignment, deposit, arrangement, hypothecation, claim, preference, priority or other encumbrance for security purposes upon or with respect to any property of any kind (including any conditional sale, capital lease or other title
retention agreement, any leases in the nature thereof, and any agreement to give any security interest), real or personal, movable or immovable, now owned or hereafter acquired. A Person will be deemed to own subject to a Lien any property which it
has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, Capital Lease Obligation or other title retention agreement. References in the Indenture to Liens allowed to exist upon any particular item of
Property shall also be deemed (whether or not stated specifically) to allow Liens to exist upon any accessions, improvements or additions to such property, upon any contractual rights relating primarily to such Property, and upon any proceeds of
such Property or of such accessions, improvements, additions or contractual rights.
Maturity
means, with
respect to the notes, the date on which the principal of the notes or an installment of principal becomes due and payable as provided therein or by the Indenture, whether at the Maturity Date or by declaration of acceleration, call for redemption or
otherwise.
33
Maturity Date
means, with respect to the notes, the fixed date
specified pursuant to the Indenture as to the notes on which the principal of the notes becomes due and payable as provided therein or by the Indenture.
Moodys
means Moodys Investor Services Inc., or any successor thereto, including a replacement rating
agency selected by us as provided in the definition of Rating Agency.
Net Available Proceeds
means, with
respect to any Sale/Leaseback Transaction of any Person, cash proceeds received (including any cash proceeds received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received,
and excluding any other consideration until such time as such consideration is converted into cash) therefrom, in each case net of all legal, title and recording tax expenses, commissions and other fees and expenses incurred, and all federal, state
or local taxes required to be accrued as a liability as a consequence of such Sale/Leaseback Transaction, and in each case net of all Indebtedness which is secured by such assets, in accordance with the terms of any Lien upon or with respect to such
assets, or which must, by its terms or in order to obtain a necessary consent to such Sale/Leaseback Transaction or by applicable law, be repaid out of the proceeds from such Sale/Leaseback Transaction and which is actually so repaid.
Net Working Capital
means the sum of (i) all current assets of the Company and its Restricted Subsidiaries plus
(ii) the amount of borrowings available to be incurred under the Credit Agreement, less all current liabilities of the Company and its Restricted Subsidiaries, except current liabilities included in Indebtedness, in each case (other than in
respect of the amount referred to in the preceding clause (ii)) as set forth in Consolidated financial statements of the Company prepared in accordance with GAAP;
provided, however
, that all of the following shall be excluded in the
calculation of Net Working Capital: (a) current assets or liabilities relating to the mark-to-market value of Interest Rate Agreements and hedging arrangements permitted by the Indenture, (b) any current assets or liabilities relating to
non-cash charges arising from any grant of Capital Stock, options to acquire Capital Stock, or other equity based awards, and (c) any current assets or liabilities relating to non-cash charges or accruals for future abandonment liabilities.
Oil and Gas Business
means the business of exploiting, exploring for, developing, acquiring, operating,
producing, processing, gathering, marketing, storing, selling, hedging, treating, swapping, refining and transporting hydrocarbons and carbon dioxide and other related energy businesses, including contract drilling and other oilfield services.
Oil and Gas Hedging Contracts
means any oil and gas purchase or hedging agreement, and other agreement or
arrangement, in each case, that is designed to provide protection against price fluctuations of oil, gas or other commodities.
Oil and Gas Liens
means (i) Liens on any specific property or any interest therein, construction thereon or
improvement thereto to secure all or any part of the costs incurred for surveying, exploration, drilling, extraction, development, operation, production, construction, alteration, repair or improvement of, in, under or on such property and the
plugging and abandonment of wells located thereon (it being understood that, in the case of oil and gas producing properties, or any interest therein, costs incurred for development shall include costs incurred for all facilities
relating to such properties or to projects, ventures or other arrangements of which such properties form a part or which relate to such properties or interests); (ii) Liens on an oil or gas producing property to secure obligations incurred or
guarantees of obligations incurred in connection with or necessarily incidental to commitments for the purchase or sale of, or the transportation or distribution of, the products derived from such property; (iii) Liens arising under partnership
agreements, oil and gas leases, overriding royalty agreements, net profits agreements, production payment agreements, royalty trust agreements, incentive compensation programs for geologists, geophysicists and other providers of technical services
to the Company or a Restricted Subsidiary, master limited partnership agreements, farm-out agreements, farm-in agreements, division orders, contracts for the sale, purchase, exchange, transportation, gathering or processing of oil, gas or other
hydrocarbons, unitizations and pooling designations, declarations, orders and agreements, development agreements, operating agreements, production sales contracts, area of mutual interest agreements, gas balancing or deferred production agreements,
injection, repressuring and recycling agreements, salt water or other disposal agreements, seismic or geophysical permits or agreements, and other agreements which are customary in the Oil and Gas Business;
provided, however
, in all instances
that such Liens are limited to the assets that are the subject of the relevant agreement, program, order or contract; (iv) Liens arising in connection with Production Payments and Reserve Sales; and (v) Liens on pipelines or pipeline
facilities that arise by operation of law.
34
Original Issue Discount Security
means any note which provides for an
amount less than the stated principal amount thereof to be due and payable upon a declaration of acceleration of the maturity thereof pursuant to the Indenture.
Permitted Lien
means:
(1) with respect to the notes, Liens existing on the Issue Date of the notes;
(2) Liens securing Indebtedness under Credit Facilities;
(3) Liens securing any renewal, extension, substitution, refinancing or replacement of secured Indebtedness;
provided
,
that such Liens extend to or cover only the property or assets then securing the Indebtedness being refinanced and that the Indebtedness being refinanced was not incurred under the Credit Facilities;
(4) Liens on, or related to, properties to secure all or part of the costs incurred in the ordinary course of business of
exploration, drilling, development or operation thereof;
(5) any Lien arising by reason of:
(A) any judgment, decree or order of any court, 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, decree or order shall not have been finally terminated or the period within which such proceedings may be initiated shall not have expired;
(B) taxes, assessments or governmental charges or claims that are not yet delinquent or which are being contested in good faith
by appropriate proceedings promptly instituted and diligently conducted;
provided
that any reserve or other appropriate provision as will be required in conformity with GAAP will have been made therefor;
(C) security made in the ordinary course of business in connection with workers compensation, unemployment insurance or
other types of social security;
(D) good faith deposits in connection with tenders, leases and contracts (other than
contracts for the payment of Indebtedness);
(E) zoning restrictions, easements, licenses, reservations, title defects,
rights of others for rights of way, utilities, sewers, electric lines, telephone or telegraph lines, and other similar purposes, provisions, covenants, conditions, waivers, restrictions on the use of property or minor irregularities of title (and
with respect to leasehold interests, mortgages, obligations, Liens and other encumbrances incurred, created, assumed or permitted to exist and arising by, through or under a landlord or owner of the leased property, with or without consent of the
lessee), none of which materially impairs the use of any parcel of property material to the operation of the business of the Company or any Subsidiary or the value of such property for the purpose of such business;
(F) deposits to secure public or statutory obligations, or in lieu of surety or appeal bonds;
(G) operation of law or contract in favor of mechanics, carriers, warehousemen, landlords, materialmen, laborers, employees,
suppliers and similar persons, incurred in the ordinary course of business for sums which are not yet delinquent for more than 30 days or are being contested in good faith by negotiations or by appropriate proceedings which suspend the collection
thereof;
(6) Liens in favor of collecting or payor banks having a right of setoff, revocation, refund or chargeback with
respect to money or instruments of the Company or any Subsidiary on deposit with or in possession of such bank;
(7) Oil
and Gas Liens which are not incurred in connection with the borrowing of money;
35
(8) Liens securing obligations of the Company or any of its Subsidiaries under
Oil and Gas Hedging Contracts;
(9) Liens in favor of the United States, any state thereof, any foreign country or any
department, agency or instrumentality or political subdivision of any such jurisdiction, to secure partial, progress, advance or other payments pursuant to any contract or statute or to secure any indebtedness incurred for the purpose of financing
all or any part of the purchase price or the cost of constructing or improving the property subject to such Liens, including without limitation, Liens to secure Funded Debt of the pollution control or industrial revenue bond type;
(10) any Lien securing Acquired Debt created prior to (and not created in connection with, or in contemplation of) the
incurrence of such Indebtedness by the Company or any Subsidiary;
provided
that such Lien only secures the assets acquired in connection with the transaction pursuant to which the Acquired Debt became an obligation of the Company or a
Restricted Subsidiary;
(11) any Lien to secure performance bids, leases (including, without limitation, statutory and
common law landlords liens), statutory obligations, letters of credit and other obligations of a like nature and incurred in the ordinary course of business of the Company or any Subsidiary and not securing or supporting Indebtedness, and any
Lien to secure statutory or appeal bonds;
(12) leases and subleases of real property which do not materially interfere
with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries;
(13) any Lien created by a
mortgage related to a property or building that is used as the Companys headquarters or other principal place of business;
(14) Liens on the Capital Stock of any Unrestricted Subsidiary to the extent securing Unrestricted Subsidiary Indebtedness
permitted to be guaranteed by the Company under clause (2) of the covenant described under Certain CovenantsUnrestricted Subsidiaries; and
(15) Liens in favor of the Company or any Guarantor.
Person
means any individual, corporation, partnership, limited liability company, joint venture, trust, estate,
association, unincorporated organization or government or any agency or political subdivision thereof.
Principal
Property
means any property interest in oil and gas reserves located in the United States owned by the Company or any Subsidiary and which is capable of producing crude oil, condensate, natural gas, natural gas liquids or other similar
hydrocarbon substances in paying quantities, the net book value of which property interest or interests exceeds 2.0% of Adjusted Consolidated Net Tangible Assets, except any such property interest or interests that in the opinion of the Board of
Directors of the Company is not of material importance to the total business conducted by the Company and its Subsidiaries taken as a whole.
Without limitation, the term Principal Property shall not include:
(1) property or assets employed in gathering, treating, processing, refining, transportation, distribution or marketing,
(2) accounts receivable and other obligations of any obligor under a contract for the sale, exploration, production, drilling,
development, processing or transportation of crude oil, condensate, natural gas, natural gas liquids or other similar hydrocarbon substances by the Company or any of its Subsidiaries, and all related rights of the Company or any of its Subsidiaries,
and all guarantees, insurance, letters of credit and other agreements or arrangements of whatever character supporting or securing payment of such receivables or obligations, or
(3) the production or any proceeds from production of crude oil, condensate, natural gas, natural gas liquids or other similar
hydrocarbon substances.
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Property
means, with respect to any Person, any interest of such Person
in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including Capital Stock and other securities issued by any other Person (but excluding Capital Stock or other securities issued by such first mentioned
Person).
Rating Agency
means
(1) each of Moodys and S&P; and
(2) if either of Moodys or S&P ceases to rate the notes or fails to make a rating of the notes publicly available for
reasons outside of our control, a nationally recognized statistical rating organization within the meaning of Section 3(a)(62) of the Exchange Act selected by us as a replacement rating agency for Moodys or S&P, or both,
as the case may be.
Representative
means the trustee, agent or representative (if any) for an issue of Senior
Indebtedness.
Restricted Subsidiary
of any Person means any Subsidiary of the Person that is not an Unrestricted
Subsidiary.
Sale/Leaseback Transaction
means with respect to the Company or any Restricted Subsidiary, any
arrangement with any Person providing for the leasing by the Company or any of its Restricted Subsidiaries of any Principal Property which was acquired or placed into service more than 180 days prior to such arrangement, whereby such property has
been or is to be sold or transferred by the Company or such Restricted Subsidiary to such Person;
provided
that the term Sale/Leaseback Transaction shall not include any such arrangement that does not provide for a lease by the
Company or any of its Restricted Subsidiaries with a period, including renewals, of more than three years. For the avoidance of doubt, a transaction primarily involving Dollar- Denominated Production Payments or Volumetric Production Payments shall
not be deemed to be a Sale/ Leaseback Transaction.
S&P
means Standard & Poors Ratings
Services, a division of McGraw-Hill, Inc., or any successor thereto, including a replacement rating agency selected by us as provided in the definition of Rating Agency.
SEC
means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act,
or if at any time after the execution of the Indenture such Commission is not existing and performing the duties now assigned to it under the Securities Act and the Exchange Act then the body performing such duties at such time.
Securities Act
means the Securities Act of 1933, as amended, or any successor statute, and the rules and regulations
promulgated by the SEC thereunder.
Senior Indebtedness
means any Debt Securities or other Indebtedness
of the Company or a Guarantor (whether outstanding on the date of the Indenture or thereafter incurred), unless such Indebtedness is contractually subordinate or junior in right of payment of principal of, and any premium and interest on any such
Debt Securities or other Indebtedness, respectively.
Subsidiary
of a Person means
(1) any corporation more than 50% of the outstanding voting power of the Voting Stock of which is owned or controlled, directly
or indirectly, by such Person or by one or more other Subsidiaries of such Person, or by such Person and one or more other Subsidiaries thereof, or
(2) any limited partnership of which such Person or any Subsidiary of such Person is a general partner, or
(3) any other Person in which such Person, or one or more other Subsidiaries of such Person, or such Person and one or more
other Subsidiaries, directly or indirectly, has more than 50% of the outstanding partnership or similar interests or has the power, by contract or otherwise, to direct or cause the direction of the policies, management and affairs thereof.
Successor Parent
with respect to any Person means any other Person more than 50% of the total outstanding Voting Stock of
which (measured by voting power rather than the number of shares) is, at the time the first Person
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becomes a Subsidiary of such other Person, beneficially owned (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to have beneficial
ownership of all shares that such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time) by one or more Persons that beneficially owned more than 50% of the total outstanding
Voting Stock of the first Person (measured by voting power rather than the number of shares) immediately prior to the first Person becoming a Subsidiary of such other Person.
Unrestricted Subsidiary
means (i) 20 Broadway Associates LLC, (ii) any other Subsidiary of the Company
(other than a Guarantor) designated as such pursuant to and in compliance with the covenant described under Certain CovenantsUnrestricted Subsidiaries, and (iii) any Subsidiary of an Unrestricted Subsidiary.
Unrestricted Subsidiary Indebtedness
of any Unrestricted Subsidiary means Indebtedness of such Unrestricted Subsidiary:
(1) as to which neither the Company nor any Restricted Subsidiary is directly or indirectly liable (by virtue of the
Company or any such Restricted Subsidiary being the primary obligor on, guarantor of, or otherwise liable in any respect to, such Indebtedness), except Guaranteed Debt of the Company or any Restricted Subsidiary to any Affiliate of the Company; and
(2) which, upon the occurrence of a default with respect thereto, does not result in, or permit any holder of any
Indebtedness of the Company or any Restricted Subsidiary to declare, a default on such Indebtedness of the Company or any Restricted Subsidiary or cause the payment thereof to be accelerated or payable prior to the fixed date on which the principal
of such Indebtedness is due and payable;
provided
that notwithstanding the foregoing, any Unrestricted Subsidiary may guarantee the notes or any
Credit Facility.
U.S. Government Securities
means securities that are (1) direct obligations of the
United States of America for the payment of which its full faith and credit is pledged or (2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case under clauses (1) or (2) are not callable or redeemable at the option of the issuer thereof.
U.S. Legal Tender
means such coin or currency of the United States as at the time of payment shall be legal tender
for the payment of public and private debts.
Volumetric Production Payment
means a production payment
that is recorded as a sale in accordance with GAAP, whether or not the sale price must be recorded as deferred revenue, together with all undertakings and obligations in connection therewith.
Voting Stock
of a Person means Capital Stock of such Person of the class or classes pursuant to which the holders
thereof have the general voting power under ordinary circumstances to elect at least a majority of the board of directors, managers or trustees of such Person (irrespective of whether or not at the time Capital Stock of any other class or classes
shall have or might have voting power by reason of the happening of any contingency).
Wholly Owned Restricted
Subsidiary
means a Restricted Subsidiary all the Capital Stock of which is owned by the Company or one or more other Wholly Owned Restricted Subsidiaries (other than directors qualifying shares or shares required by applicable law to
be held by a Person other than the Company or a Subsidiary of the Company).
Events of Default
The following will be Events of Default with respect to the notes:
(1) default by the Company or any Guarantor in the payment of principal of or any premium on the notes when due and payable at
Maturity;
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(2) default by the Company or any Guarantor in the payment of any installment of
interest on the notes when due and payable and continuance of such default for 30 days;
(3) default on any other
Indebtedness of the Company or any Guarantor if either:
(A) such default results in the acceleration of the maturity of
any such Indebtedness having a principal amount of $25.0 million or more individually or, taken together with the principal amount of any other such Indebtedness the maturity of which has been so accelerated, in the aggregate; or
(B) such default results from the failure to pay when due principal of any such Indebtedness, after giving effect to any
applicable grace period (a Payment Default), having a principal amount of $25.0 million or more individually or, taken together with the principal amount of any other Indebtedness under which there has been a Payment Default, in the
aggregate;
provided
that if any such default is cured or waived or any such acceleration is rescinded, or such Indebtedness is
repaid, within a period of 30 days from the continuation of such default beyond any applicable grace period or the occurrence of such acceleration, as the case may be, such Event of Default and any consequent acceleration of the notes shall be
rescinded, so long as any such rescission does not conflict with any judgment or decree or applicable provision of law;
(4) default in the performance or breach of the provisions described under Certain CovenantsLimitations on
Mergers and Consolidation, the failure to make or consummate a Net Proceeds Offer in accordance with the provisions of Certain CovenantsLimitation on Sale/ Leaseback Transactions, or the failure to make or consummate a
Change of Control Offer in accordance with the provisions of Change of Control;
(5) default in the
performance, or breach of, any covenant or agreement of the Company or any Guarantor in the Indenture and, in each such case, failure to remedy such default within a period of 60 days after written notice thereof from the Trustee or Holders of 25%
of the principal amount of the notes;
provided
,
however
, that the Company will have 90 days following such written notice to remedy or receive a waiver for any failure to comply with its obligations under the Indenture so long as the
Company is attempting to remedy any such failure as promptly as reasonably practicable;
(6) the failure of a guarantee by
a Guarantor of the notes to be in full force and effect, or the denial or disaffirmance by such entity thereof; or
(7)
certain events involving bankruptcy, insolvency or reorganization of the Company or any Guarantor of the Company.
The Indenture provides
that the Trustee may withhold notice to the Holders of the notes of any default (except in payment of principal of, or any premium or interest on, any notes) if the Trustee considers it in the interest of the Holders of the notes to do so.
If an Event of Default occurs and is continuing with respect to the notes, the Trustee or the Holders of not less than 25% in principal amount
of the outstanding notes may declare the unpaid principal of and accrued but unpaid interest on, all the notes then outstanding to be due and payable. Upon such a declaration, such principal and accrued and unpaid interest will be due and payable
immediately. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company or any Subsidiary of the Company occurs and is continuing, the principal of, and accrued and unpaid interest on, all the notes
will become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. Under certain circumstances, the Holders of a majority in principal amount of the outstanding notes may rescind any such
acceleration with respect to the notes and its consequences.
No Holder of the notes may pursue any remedy under the Indenture unless:
(1) the Trustee shall have received written notice of a continuing Event of Default;
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(2) the Trustee shall have received a written request from Holders of at least
25% in principal amount of the notes to pursue such remedy;
(3) the Trustee shall have been offered indemnity reasonably
satisfactory to it;
(4) the Trustee shall have failed to act for a period of 60 days after receipt of such written notice,
request and offer of indemnity; and
(5) no direction inconsistent with such written request has been given to the Trustee
during such 60-day period by the Holders of a majority in principal amount of the notes;
provided, however
, such provision does not affect the
right of a Holder of any notes to sue for enforcement of any overdue payment thereon.
The Holders of a majority in principal amount of
the outstanding notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee for the notes, subject to certain limitations specified in the Indenture. The Trustee
shall be under no obligation and may refuse to perform any duty or exercise any right, duty or power hereunder unless it receives indemnity satisfactory to it against any loss, liability, claim, damage or expense.
Modification and Waiver
Supplements and
amendments to the Indenture or the notes may be made by the Company, the Guarantors and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the notes then outstanding;
provided
that no such modification
or amendment may, without the consent of each Holder affected thereby:
(1) reduce the percentage of principal amount of
notes whose Holders must consent to an amendment, supplement or waiver of any provision of the Indenture or the notes;
(2)
reduce the rate or change the time for payment of interest, including default interest, if any, on the notes;
(3) reduce
the principal amount of any note or change the Maturity Date of the notes;
(4) reduce the amount payable upon redemption
of any Note;
(5) waive any Event of Default in the payment of principal of, any premium or interest on the notes;
(6) make any note payable in money other than that stated in such Note;
(7) impair the right of Holders of notes to receive payment of the principal of and interest on notes on the respective due
dates therefor and to institute suit for the enforcement of any such payment; or
(8) make any change in the percentage of
principal amount of notes necessary to waive compliance with certain provisions of the Indenture.
Supplements and amendments of the
Indenture or the notes may be made by the Company, the Guarantors and the Trustee without the consent of any Holders in certain limited circumstances, including:
(1) to cure any ambiguity, omission, defect or inconsistency;
provided
that such modification shall not adversely affect
the Holders of the notes in any material respect;
(2) to provide for the assumption of the obligations of the Company or
any Guarantor under the Indenture upon the merger, consolidation or sale or other disposition of all or substantially all of the assets of the Company or such Guarantor;
(3) to establish the forms or terms of the notes issued under the Indenture;
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(4) to evidence the acceptance or appointment by a separate Trustee or successor
Trustee with respect to the notes or otherwise;
(5) to reflect the addition or release of any Guarantor from its guarantee
of the notes, in the manner provided in the Indenture, or to secure any of the notes or the guarantees;
(6) to comply with
any requirement of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act;
(7) to provide for uncertificated notes in addition to certificated notes;
(8) to mortgage, pledge, hypothecate or grant a security interest in favor of the Trustee for the benefit of the holders of the
notes as additional security for the payment and performance of the Companys and any Guarantors obligations under the Indenture, in any property or assets, including any of which are required to be mortgaged, pledged or hypothecated, or
in which a security interest is required to be granted to or for the benefit of the Trustee pursuant to the Indenture or otherwise;
(9) to comply with the rules of any applicable securities Depositary;
(10) to conform the text of the Indenture, the notes or the guarantees to any provision of the Description of Notes
section in the final offering memorandum dated December 4, 2017, relating to the offering of the notes; or
(11) to
make any change that would provide any additional benefit to the Holders of the notes or that does not adversely affect the rights of any Holder in any material respect.
The Holders of a majority in aggregate principal amount of the outstanding notes may waive compliance with or any past default under the
Indenture, except a default in the payment of principal, or any premium or interest.
Legal Defeasance and Covenant Defeasance
The Company may, at its option and at any time, elect to have its obligations discharged with respect to the notes (
Legal
Defeasance
). Such Legal Defeasance means that the Company and any Guarantors will be deemed to have paid and discharged the entire Indebtedness represented by the outstanding notes and any guarantees thereof, except for:
(1) the rights of Holders of outstanding notes to receive payments solely from the trust fund described in the following
paragraph in respect of the principal of, and any premium and interest on such notes when such payments are due;
(2) the
Companys obligations concerning the issuance of temporary notes, transfers and exchanges of the notes, replacement of mutilated, destroyed, lost or stolen notes, the maintenance of an office or agency where the notes may be surrendered for
transfer or exchange or presented for payment, and duties of paying agents and conversion agents;
(3) the rights, powers,
trusts, duties and immunities of the Trustee, and the Companys obligations in connection therewith; and
(4) the
Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have the obligations of the
Company released with respect to certain covenants described under Certain Covenants (
Covenant Defeasance
), and thereafter any omission to comply with such obligations shall not constitute a Default or Event of
Default. In the event Covenant Defeasance occurs, certain events (not including non-payment) described under Events of Default will no longer constitute an Event of Default. If we exercise our Legal Defeasance or Covenant
Defeasance option, each Guarantor will be released from all its obligations under the Indenture and its guarantee.
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In order to exercise either Legal Defeasance or Covenant Defeasance under the Indenture with
respect to the notes:
(1) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders
of the notes, cash in U.S. Legal Tender, U.S. Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay:
(A) the principal of, and any premium and interest on the outstanding notes on each date on which such principal, and any
premium and interest is due and payable or on any redemption date established pursuant to the Indenture; and
(B) any
mandatory sinking fund payments on the dates on which such payments are due and payable in accordance with the terms of the Indenture and of the notes;
(2) in the case of Legal Defeasance, the Company must deliver to the Trustee an opinion of counsel reasonably acceptable to the
Trustee confirming that:
(A) the Company has received from or there has been published by, the Internal Revenue Service a
ruling; or
(B) since the date of the Indenture, there has been a change in the applicable federal income tax law,
in either case to the effect that, and based thereon such opinion of counsel shall confirm that, the Holders of the outstanding notes will not
recognize income, gain or loss for U.S. Federal income tax purposes as a result of such Legal Defeasance and will be subject to U.S. Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such
Legal Defeasance had not occurred;
(3) in the case of Covenant Defeasance, the Company shall have delivered to the Trustee
an opinion of counsel reasonably acceptable to the Trustee to the effect that the Holders of the outstanding notes will not recognize income, gain or loss for U.S. Federal income tax purposes as a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and be continuing on the date of such deposit or insofar as Events of
Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of deposit;
(5) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under
any other material agreement, other than the Indenture, or instrument to which the Company is a party or by which the Company is bound;
(6) the Company shall have delivered to the Trustee an officers certificate stating that the deposit was not made by the
Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and
(7) the
Company shall have delivered to the Trustee an officers certificate and an opinion of counsel each stating that the Company has complied with all conditions precedent provided for relating to the Legal Defeasance or the Covenant Defeasance.
No Sinking Fund
We are not required
to make any mandatory redemption or sinking fund payments with respect to the notes.
Satisfaction and Discharge
The Company may discharge all its obligations under the Indenture, other than its obligation to register the transfer of and exchange
the notes;
provided
that it either:
(1) delivers all outstanding notes to the Trustee for cancellation; or
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(2) all such notes not so delivered for cancellation have either become due and
payable or will become due and payable at their Maturity within one year or are to be called for redemption within one year, and in the case of this bullet point the Company has deposited with the Trustee in trust an amount of cash sufficient to pay
the entire indebtedness of such notes, including any premium and interest to the Maturity Date or applicable redemption date and all other sums due and payable under the Indenture by the Company.
Governing Law
The Indenture provides
that it and the notes and the guarantees will be governed by, and construed in accordance with, the laws of the State of New York.
The Trustee
Wilmington Trust, National Association is acting as Trustee, paying agent and registrar for the notes. We may also maintain banking
and other commercial relationships with the Trustee and its affiliates in the ordinary course of business, and the Trustee may own notes. Its address is 50 S. 6th Street, Suite 1290, Minneapolis, Minnesota 55402.
The Trustee is permitted to become an owner or pledgee of the notes and may otherwise deal with the Company or its Subsidiaries or Affiliates
with the same rights it would have if it were not Trustee. If, however, the Trustee acquires any conflicting interest (as defined in the Trust Indenture Act) after an Event of Default has occurred and is continuing, it must eliminate such conflict
or resign.
In case an Event of Default shall occur (and be continuing), the Trustee will be required to use the degree of care and skill
of a prudent person in the conduct of such persons own affairs. The Trustee will be under no obligation to exercise any of its powers under the Indenture at the request of any of the Holders of the notes, unless such Holders have offered the
Trustee indemnity satisfactory to it.
Payment and Transfer
Initially, the notes will be issued only in global form registered in the name of Cede & Co., as nominee of The Depository Trust
Company, the Depositary. Beneficial interests in notes in global form will be shown on, and transfers of interests in notes in global form will be made only through, records maintained by the Depositary and its participants. Any notes in definitive
form may be presented for registration of transfer or exchange at the office or agency maintained by us for such purpose (which initially will be the corporate trust office of the Trustee).
Payment of principal, or any premium or interest on notes in global form registered in the name of the Depositorys nominee will be made
in immediately available funds to the Depositorys nominee, as the registered Holder of such global notes. If any notes are no longer represented by a global note, payment of interest on the notes in definitive form may, at our option, be made
at the corporate trust office of the Trustee indicated above or by check mailed directly to Holders at their respective registered addresses or by wire transfer to an account designated by a Holder.
If any interest payment date, maturity date or redemption date falls on a day that is not a business day, the payment will be made on the next
business day with the same force and effect as if made on the relevant interest payment date, maturity date or redemption date. No interest will accrue for the period from and after the applicable interest payment date, maturity date or redemption
date.
The notes may be transferred or exchanged, and they may be presented for payment, at the office of the Trustee indicated in the
Indenture, subject to the limitations provided in the Indenture, without the payment of any service charge, other than any applicable tax or governmental charge.
The registered Holder of a note will be treated as the owner of it for all purposes, and all references in this Description of
Notes to Holders mean holders of record, unless otherwise indicated.
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BOOK-ENTRY; DELIVERY AND FORM
Global Notes
The new notes, like the old
notes, will be issued in the form of one or more fully registered notes in global form, without interest coupons. The new notes will be deposited with the Trustee, as custodian for The Depository Trust Company (DTC), and registered in
the name of Cede & Co., as nominee of DTC.
Ownership of beneficial interests in each global note will be limited to persons who
have accounts with DTC (DTC participants) or persons who hold interests through DTC participants.
We expect that under
procedures established by DTC:
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upon deposit of each global note with DTCs custodian, DTC will credit portions of the principal amount of the global notes to the accounts of the DTC participants that have tendered the old notes to the account
designated by the exchange agent; and
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ownership of beneficial interests in each global note will be shown on, and transfer of ownership of those interests will be effected only through, records maintained by DTC (with respect to interests of DTC
participants) and the records of DTC participants (with respect to other owners of beneficial interests in the global notes).
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Beneficial interests in the global notes may not be exchanged for notes in physical, certificated form except in the limited circumstances
described below.
Book-Entry Procedures for the Global Notes
All interests in the global notes will be subject to the operations and procedures of DTC, including its participants, Euroclear Bank
S.A./N.V., as operator of the Euroclear System (Euroclear), and Clearstream Banking S.A. (Clearstream). We provide the following summaries of those operations and procedures solely for the convenience of investors. The
operations and procedures of each settlement system are controlled by that settlement system and may be changed at any time.
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Neither we nor the Trustee is responsible for those operations or procedures.
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DTC has advised us it is:
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a limited purpose trust company organized under the laws of the State of New York;
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a banking organization within the meaning of the New York State Banking Law;
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a member of the Federal Reserve System;
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a clearing corporation within the meaning of the Uniform Commercial Code; and
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a clearing agency registered under Section 17A of the Exchange Act.
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DTC was
created to hold securities for its participants and to facilitate the clearance and settlement of securities transactions between its participants through electronic book-entry changes to the accounts of its participants. DTCs participants
include securities brokers and dealers, including the initial purchasers, banks and trust companies, clearing corporations, and other organizations. Indirect access to DTCs system is also available to others such as banks, brokers, dealers,
and trust companies; these indirect participants clear through or maintain a custodial relationship with a DTC participant, either directly or indirectly. Investors who are not DTC participants may beneficially own securities held by or on behalf of
DTC only through DTC participants or indirect participants in DTC.
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So long as DTCs nominee is the registered owner of a global note, that nominee will be
considered the sole owner or holder of the notes represented by that global note for all purposes under the Indenture. Except as provided below, owners of beneficial interests in a global note:
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will not be entitled to have notes represented by the global note registered in their names;
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will not receive or be entitled to receive physical, certificated notes; and
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will not be considered the owners or holders of the notes under the Indenture for any purpose, including with respect to the giving of any direction, instruction, or approval to the Trustee under the Indenture.
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As a result, each investor who owns a beneficial interest in a global note must rely on the procedures of DTC to exercise
any rights of a holder of notes under the Indenture (and, if the investor is not a participant or an indirect participant in DTC, on the procedures of the DTC participant through which the investor owns its interest).
Payments of principal, premium (if any), and interest with respect to the new notes represented by a global note will be made by the Trustee
to DTCs nominee, as the registered holder of the global note. Neither we nor the Trustee will have any responsibility or liability for the payment of amounts to owners of beneficial interests in a global note, for any aspect of the records
relating to or payments made on account of those interests by DTC, or for maintaining, supervising, or reviewing any records of DTC relating to those interests.
Payments by participants and indirect participants in DTC to the owners of beneficial interests in a global note will be governed by standing
instructions and customary industry practice and will be the responsibility of those participants or indirect participants and DTC.
Transfers between participants in DTC will be effected under DTCs procedures and will be settled in same-day funds. Transfers between
participants in Euroclear or Clearstream will be effected in the ordinary way under the rules and operating procedures of those systems.
Cross market transfers between DTC participants, on the one hand, and Euroclear or Clearstream participants, on the other hand, will be
effected within DTC through the DTC participants that are acting as depositaries for Euroclear and Clearstream. To deliver or receive an interest in a global note held in a Euroclear or Clearstream account, an investor must send transfer
instructions to Euroclear or Clearstream, as the case may be, under the rules and procedures of that system and within the established deadlines of that system. If the transaction meets its settlement requirements, Euroclear or Clearstream, as the
case may be, will send instructions to its DTC depositary to take action to effect final settlement by delivering or receiving interests in the relevant global notes in DTC, and making or receiving payment under normal procedures for same-day funds
settlement applicable to DTC. Euroclear and Clearstream participants may not deliver instructions directly to the DTC depositaries that are acting for Euroclear or Clearstream.
Because of time zone differences, the securities account of a Euroclear or Clearstream participant that purchases an interest in a global note
from a DTC participant will be credited on the business day for Euroclear or Clearstream immediately following the DTC settlement date. Cash received in Euroclear or Clearstream from the sale of an interest in a global note to a DTC participant will
be received with value on the DTC settlement date but will be available in the relevant Euroclear or Clearstream cash account as of the business day for Euroclear or Clearstream following the DTC settlement date.
DTC, Euroclear, and Clearstream have agreed to the above procedures to facilitate transfers of interests in the global notes among
participants in those settlement systems. However, the settlement systems are not obligated to perform these procedures and may discontinue or change these procedures at any time. Neither we nor the Trustee will have any responsibility for the
performance by DTC, Euroclear, or Clearstream, or their participants or indirect participants, of their obligations under the rules and procedures governing their operations.
Certificated Notes
New notes in
physical, certificated form will be issued and delivered to each person that DTC identifies as a beneficial owner of the related notes only if:
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DTC notifies us at any time that it is unwilling or unable to continue as depositary for the global notes and a successor depositary is not appointed within 90 days;
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DTC ceases to be registered as a clearing agency under the Exchange Act and a successor depositary is not appointed within 90 days;
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we, at our option, notify the Trustee that we elect to cause the issuance of certificated notes; or
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an event of default with respect to the notes has occurred and is continuing and such beneficial owner requests that its notes be issued in physical, certificated form.
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