-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Tma+j+AlXX3XzYrNq9WVv0RFte0UqtIWTTUHmyd48jh9IX5tj3BpnCeWtm8wDeaW SBs2NGb/kV0jiDavUeHDiw== 0000899243-98-001593.txt : 19980817 0000899243-98-001593.hdr.sgml : 19980817 ACCESSION NUMBER: 0000899243-98-001593 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OCEAN ENERGY INC CENTRAL INDEX KEY: 0000930550 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 721277752 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-14252 FILM NUMBER: 98688928 BUSINESS ADDRESS: STREET 1: 8440 JEFFERSON HIGHWAY STREET 2: STE 420 CITY: BATON ROUGE STATE: LA ZIP: 70809 BUSINESS PHONE: 7136549110 MAIL ADDRESS: STREET 1: 8440 JEFFERSON HIGHWAY STREET 2: SUITE 420 CITY: BATON ROUGE STATE: LA ZIP: 70809 FORMER COMPANY: FORMER CONFORMED NAME: FLORES & RUCKS INC /DE/ DATE OF NAME CHANGE: 19940926 10-Q 1 FORM 10-Q FOR THE QUARTER ENDED ON JUNE 30, 1998 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________________ FORM 10-Q [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 0-25058 OCEAN ENERGY, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 72-1277752 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 1201 LOUISIANA, SUITE 1400 HOUSTON, TEXAS 77002 (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code: (713) 654-9110 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] The number of shares outstanding of the registrant's common stock, all of which comprise a single class with a $0.01 par value, as of August 10, 1998, the latest practicable date, was 100,907,108. OCEAN ENERGY, INC. FORM 10-Q JUNE 30, 1998 TABLE OF CONTENTS
PAGE ---- PART I - FINANCIAL INFORMATION Item 1. Consolidated Financial Statements (Unaudited) Consolidated Statement of Income for the Three Months and Six Months Ended June 30, 1998 and 1997................... 1 Consolidated Balance Sheet at June 30, 1998 and December 31, 1997......................................... 2 Consolidated Statement of Changes in Stockholders' Equity for the Year Ended December 31, 1997 and for the Six Months Ended June 30, 1998................................ 4 Consolidated Statement of Cash Flows for the Six Months Ended June 30, 1998 and 1997.............................. 5 Notes to Consolidated Financial Statements................. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations....................... 13 Item 3. Quantitative and Qualitative Disclosures About Market Risk. 18 PART II OTHER INFORMATION Item 1. Legal Proceedings.......................................... 19 Item 2. Changes in Securities...................................... 19 Item 3. Defaults Upon Senior Securities............................ 19 Item 4. Submission of Matters to a Vote of Security Holders................................................... 19 Item 5. Other Information.......................................... 19 Item 6. Exhibits and Reports on Form 8-K........................... 20 SIGNATURES ........................................................... 20 EXHIBITS Index to Exhibits.................................................... 21
OCEAN ENERGY, INC. CONSOLIDATED STATEMENT OF INCOME (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED JUNE 30, JUNE 30, -------------------------- ------------------------- 1998 1997 1998 1997 -------- -------- -------- --------- Operating revenues: Gas sales.................................... $ 58,330 $ 42,974 $ 115,934 $ 95,777 Oil sales.................................... 74,626 75,622 158,031 150,776 Contract settlements and other............... 251 1,120 1,125 1,818 --------- -------- --------- -------- 133,207 119,716 275,090 248,371 --------- -------- --------- -------- Costs and expenses: Production costs............................. 36,923 29,763 74,230 58,297 General and administrative................... 10,559 7,169 20,200 13,553 Depreciation, depletion and amortization..... 74,727 57,762 147,498 105,810 Write-down of oil and gas properties......... 218,392 -- 218,392 -- --------- -------- --------- -------- 340,601 94,694 460,320 177,660 --------- -------- --------- -------- Income (loss) from operations................. (207,394) 25,022 (185,230) 70,711 Other income, expenses and deductions: Interest and debt expense.................... 9,437 11,593 21,941 22,741 Merger costs................................. -- -- 39,000 -- Interest and other expense (income).......... (24) (632) 317 (2,112) --------- -------- --------- -------- Income (loss) before income taxes............. (216,807) 14,061 (246,488) 50,082 Income tax provision (benefit): Current...................................... 648 1,392 2,591 2,674 Deferred..................................... (82,609) 3,070 (86,100) 16,423 --------- -------- --------- -------- Net income (loss)............................. $(134,846) $ 9,599 $(162,979) $ 30,985 ========= ======== ========= ======== Basic earnings (loss) per share............... $ (1.34) $ 0.10 $ (1.62) $ 0.34 ========= ======== ========= ======== Weighted average number of common shares outstanding........................... 100,569 92,279 100,351 92,083 ========= ======== ========= ======== Diluted earnings (loss) per share............. $ (1.34) $ 0.10 $ (1.62) $ 0.32 ========= ======== ========= ======== Weighted average number of common shares and common share equivalents outstanding................................. 100,569 96,703 100,351 96,587 ========= ======== ========= ========
The accompanying notes are an integral part of these consolidated financial statements. 1 OCEAN ENERGY, INC. CONSOLIDATED BALANCE SHEET (In thousands)
JUNE 30, DECEMBER 31, ASSETS 1998 1997 ------------ ------------ (UNAUDITED) Current assets: Cash and cash equivalents.............................. $ 14,348 $ 11,689 Accounts receivable Oil and gas sales................................... 58,433 75,642 Joint interest and other............................ 59,270 49,289 Deferred income taxes.................................. 24 1,547 Inventory.............................................. 17,901 11,097 Prepaid expenses and other............................. 13,352 10,630 ----------- ---------- 163,328 159,894 ----------- ---------- Property and equipment, at cost: Oil and gas (full cost method) Evaluated properties................................ 2,374,886 2,043,700 Unevaluated properties excluded from amortization... 310,093 232,726 Other.................................................. 34,486 28,182 ----------- ---------- 2,719,465 2,304,608 Accumulated depreciation, depletion and amortization... (1,245,462) (880,771) ----------- ---------- 1,474,003 1,423,837 ----------- ---------- Other assets: Gas imbalances receivable.............................. 5,856 6,227 Deferred income taxes.................................. 97,509 130 Deferred financing costs............................... 14,994 19,661 Restricted deposits and other.......................... 20,440 33,246 ----------- ---------- 138,799 59,264 ----------- ---------- TOTAL ASSETS........................................ $ 1,776,130 $1,642,995 =========== ==========
The accompanying notes are an integral part of these consolidated financial statements. 2 OCEAN ENERGY, INC. CONSOLIDATED BALANCE SHEET (In thousands)
JUNE 30, DECEMBER 31, LIABILITIES AND STOCKHOLDERS' EQUITY 1998 1997 ----------- ------------ (UNAUDITED) Current liabilities: Accounts payable......................................... $ 135,068 $ 188,429 Advances from joint owners............................... 13,807 8,491 Interest payable......................................... 20,090 16,476 Accrued liabilities...................................... 10,277 6,572 Current maturities of long-term debt..................... 951 911 ---------- ---------- 180,193 220,879 ---------- ---------- Long-term debt............................................. 987,277 672,298 ---------- ---------- Deferred credits and other liabilities: Deferred income taxes.................................... 17,254 11,159 Gas imbalances payable................................... 4,777 5,861 Other.................................................... 16,257 7,461 ---------- ---------- 38,288 24,481 ---------- ---------- Commitments and contingencies Stockholders' equity: Common stock............................................. 1,007 1,001 Additional paid-in capital............................... 832,548 823,956 Accumulated other comprehensive income (loss) foreign currency translation adjustment....................... (7,423) (6,839) Retained earnings (deficit).............................. (255,760) (92,781) ---------- ---------- 570,372 725,337 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............... $1,776,130 $1,642,995 ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. 3 OCEAN ENERGY, INC. CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (In thousands, except share amounts) For the year ended December 31, 1997 and six months ended June 30, 1998
Common Stock Additional Accumulated Other Retained Total ----------------------- Paid-In Comprehensive Earnings Stockholders' Shares Amount Capital Income (Deficit) Equity ----------- -------- ---------- ----------------- ---------- ------------- Balance, December 31, 1996............ 91,741,503 $ 918 $632,111 $(4,257) $(135,700) $ 493,072 OEI common stock offering........... 7,254,000 73 177,674 -- -- 177,747 Common shares issued in exchange for shares tendered from a prior acquisition....................... 3,461 -- -- -- -- -- Exercise of common stock options.... 1,110,277 10 14,171 -- -- 14,181 Comprehensive income: Net income........................ -- -- -- -- 42,919 42,919 Other comprehensive income (loss): Foreign currency translation adjustment....................... -- -- -- (2,582) -- (2,582) ----------- ------ -------- ------- --------- --------- Balance, December 31, 1997............ 100,109,241 $1,001 $823,956 $(6,839) $ (92,781) $ 725,337 Exercise of common stock options.... 631,071 6 8,592 -- -- 8,598 Comprehensive income: Net loss.......................... -- -- -- -- (162,979) (162,979) Other comprehensive income: Foreign currency translation adjustment....................... -- -- -- (584) -- (584) ----------- ------ -------- ------- --------- --------- Balance, June 30, 1998 (Unaudited).... 100,740,312 $1,007 $832,548 $(7,423) $(255,760) $ 570,372 =========== ====== ======== ======= ========= =========
The accompanying notes are an integral part of these consolidated financial statements. 4 OCEAN ENERGY, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (In thousands) (UNAUDITED)
SIX MONTHS ENDED JUNE 30, ---------------------- 1998 1997 --------- --------- Cash flows from operating activities: Net income (loss)................................................. $(162,979) $ 30,985 Adjustments to reconcile net income (loss) to cash provided by operating activities: Depreciation, depletion and amortization........................ 147,498 105,810 Write-down of oil and gas properties............................ 218,392 -- Amortization of debt issue cost................................. 6,308 1,411 Deferred income tax provision (benefit)......................... (86,100) 15,731 Deferred hedge revenue.......................................... (98) (75) --------- --------- 123,021 153,862 Changes in assets and liabilities: Decrease in receivables......................................... 10,644 18,907 Increase (decrease) in payables and other current liabilities... (24,259) 16,733 Increase (decrease) in net gas imbalances....................... (713) 85 Other........................................................... 3,122 (977) --------- --------- Net cash provided by operating activities...................... 111,815 188,610 --------- --------- Cash flows from investing activities: Additions to oil and gas properties.............................. (421,988) (350,700) Additions to other property and equipment........................ (5,633) (3,559) Net proceeds from sale of assets................................. 739 47,053 Increase in restricted deposits.................................. (1,085) (1,068) --------- --------- Net cash used in investing activities.......................... (427,967) (308,274) --------- --------- Cash flows from financing activities: Repayment of long-term debt...................................... (364,480) (65,984) Additions to total debt.......................................... 679,438 139,236 Deferred financing costs......................................... (1,590) (2,802) Proceeds from common stock options exercised..................... 5,443 4,897 --------- --------- Net cash provided by financing activities...................... 318,811 75,347 --------- --------- Net increase (decrease) in cash and cash equivalents............... 2,659 (44,317) Cash and cash equivalents, beginning of the period................. 11,689 60,701 --------- --------- Cash and cash equivalents, end of the period....................... $ 14,348 $ 16,384 ========= =========
The accompanying notes are an integral part of these consolidated financial statements. 5 OCEAN ENERGY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 BASIS OF FINANCIAL STATEMENTS The accompanying consolidated financial statements of Ocean Energy, Inc. (OEI or the Company), a Delaware corporation, included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Although certain information normally included in financial statements prepared in accordance with generally accepted accounting principles has been condensed or omitted, OEI believes that the disclosures are adequate to make the information presented not misleading. Effective March 27, 1998, pursuant to the Agreement and Plan of Merger dated December 22, 1997, United Meridian Corporation (UMC) was merged into the Company (the Merger). As a result of the Merger, each outstanding share of UMC common stock was converted into 1.3 shares of OEI common stock with approximately 46 million shares issued to the shareholders of UMC representing approximately 46% of all of the issued and outstanding shares of OEI. The Company's shareholders received 2.34 shares of OEI shares for each share outstanding immediately preceding the Merger representing approximately 54% of all of the issued and outstanding shares of OEI. The Merger was accounted for as a pooling of interests. Accordingly, the consolidated financial statements for periods prior to the Merger have been restated to conform accounting policies and combine the historical results of OEI and UMC and have been included in the Form 8-K filed May 6, 1998. The accompanying consolidated financial statements of OEI should be read in conjunction with the supplemental consolidated financial statements and notes thereto for the year ended December 31, 1997 included in the Form 8-K filed May 6, 1998. The financial statements reflect all normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation. NOTE 2 INVESTMENT IN OIL AND GAS PROPERTIES As part of its on-going operations, the Company continually acquires and sells producing and undeveloped reserves and related assets. Certain transactions occurring in the periods presented are discussed below. On January 3, 1997, the Company completed the sale of its interest in the South Marsh Island 269 field, realizing proceeds of $37.2 million from the sale. No gain or loss was recognized on the sale. During the six months ended June 30, 1997, the Company sold various non-strategic North American properties for total proceeds of $13.6 million. On March 7, 1997, the Company completed the acquisition of certain interests in various state leases in the Main Pass Block 69 field for a net purchase price of $55.9 million. Through July 1997, the Company acquired additional interests in various properties from several of its institutional partners. In conjunction with one of these acquisitions, the Company sold a portion of the acquired interests. The net cost of the additional interests was approximately $25.9 million. As required under the full cost method of accounting, capitalized costs are limited to the sum of the present value of future net revenues using current unescalated pricing discounted at 10% related to estimated production of proved reserves and the lower of cost or estimated fair value of unevaluated properties, all net of expected income tax effects. At June 30, 1998, the Company recognized a non-cash impairment of oil and gas properties in the amount of $218.4 million pre-tax ($135.4 million after-tax) pursuant to this ceiling limitation required by the full cost method of accounting for oil and gas properties, using certain improvements in pricing experienced after period end. The write-down is primarily a result of the precipitous decline in world crude oil prices experienced during the second quarter 1998. 6 Note 3 Financial Instruments The Company hedges certain of its production through master swap agreements (Swap Agreements) which provide for separate contracts tied to the NYMEX light sweet crude oil and natural gas futures contracts. In addition, the Company has combined contracts which have agreed upon price floors and ceilings (Costless Collars). As of June 30, 1998, the fair market value of all hedging contracts was approximately $10.1 million. Oil revenues have been increased by $6.3 million and $11.1 million for the three and six months ended June 30, 1998 as a result of the hedge contracts in place for each period. As of June 30, 1998, the Company's open forward position on its outstanding crude oil Swaps was 2,100 MBbls at an average price of $19.87 per Bbl for the year ended December 31, 1998. The Company currently has no outstanding natural gas swaps. As of June 30, 1998, the Company's open forward position on its outstanding natural gas Costless Collars was as follows: Effective Contracted Contracted Contracted -------------- Volumes Floor Ceiling Year From Through (MMBTU/day) Price Price ---- ---- ------- ----------- ---------- ---------- 1998 July August 40,000 $2.00 $2.54 1998 July July 20,000 $2.00 $2.50 1998 July August 10,000 $2.00 $2.50 The Company currently has certain agreements in place to reduce interest rate fluctuation risk on a portion of its debt, resulting in an increase in interest and debt expense of $0.2 million during the six months ended June 30, 1998. NOTE 4 SUBSEQUENT EVENT On July 8, 1998, the Company closed an offering of $500.0 million Senior and Senior Subordinated Notes receiving net proceeds of approximately $487.8 million, after deducting underwriting discounts and expenses. The offering, made pursuant to Rule 144A, comprised three separate indentures including $125.0 million of 7 5/8% Senior Notes due July 1, 2005, $125.0 million of 8 1/4% Senior Notes due July 1, 2018, and $250.0 million of 8 3/8% Senior Subordinated Notes due July 1, 2008. The proceeds from the offering were used to pay off amounts then outstanding under the OEI Credit Facility. The excess net proceeds of the offering over the amounts outstanding under the OEI Credit Facility have since been used for capital expenditures and general corporate purposes. In addition, the Company announced the simultaneous amendment and restatement of the OEI Credit Facility. Concurrent with the closing of the Merger on March 27, 1998, the Company had entered into a $750.0 million five-year unsecured revolving credit facility (OEI Credit Facility) with an initial borrowing base of $600.0 million. As of June 30, 1998, total borrowings outstanding against the facility were approximately $472.1 million, leaving approximately $127.9 million of available credit. In connection with the $500.0 million notes offering made by the Company in July 1998, the OEI Credit Facility was restated and amended to a $400.0 million, five-year revolving credit facility, with an initial borrowing base of $300.0 million. No amounts were outstanding under the OEI Credit Facility immediately following the $500.0 million notes offering. NOTE 5 IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARD In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities, which establishes a new model for accounting for derivatives and hedging activities. SFAS 133, which will be effective for the Company's fiscal year 2000, requires that all derivatives be recognized in the balance sheet as either assets or liabilities and measured at fair value. The statement also requires that changes in fair value be reported in earnings unless specific hedge accounting criteria are met. The Company is currently evaluating the effect of the adoption of the Statement on its consolidated financial position and results of operations. 7 NOTE 6 SUPPLEMENTAL GUARANTOR INFORMATION Ocean Energy, Inc., a Louisiana corporation (Ocean Louisiana), the Company's only direct subsidiary, has unconditionally guaranteed the full and prompt performance of the Company's obligations under certain of the notes and related indentures, including the payment of principal, premium (if any) and interest. None of the referenced indentures place significant restrictions on a wholly- owned subsidiary's ability to make distributions to the parent. Other than intercompany arrangements and transactions, the consolidated financial statements of Ocean Louisiana are equivalent in all material respects to those of the Company and therefore the separate consolidated financial statements of Ocean Louisiana are not material to investors and have not been included herein. However, in an effort to provide meaningful financial data relating to the guarantor (i.e., Ocean Louisiana on an unconsolidated basis), the following condensed consolidating financial information has been provided following the policies set forth below: (1) Investments in subsidiaries are accounted for by the Company on the cost basis. Earnings of subsidiaries are therefore not reflected in the related investment accounts. (2) Certain reclassifications were made to conform all of the financial information to the financial presentation on a consolidated basis. The principal eliminating entries eliminate investments in subsidiaries and intercompany balances. Certain intercompany notes and the related accrued interest were transferred from the Company to a newly formed non-guarantor subsidiary effective as of January 1, 1997. 8 SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME For the three months ended June 30, 1998 and 1997 (In thousands)
Unconsolidated ----------------------------------------------------------- Guarantor Non-Guarantor Consolidated OEI Subsidiary Subsidiaries OEI -------- --------------- -------------- ------------- 1998 - ---- Revenues..................................... $ -- $ 106,325 $26,882 $ 133,207 ------- --------- ------- --------- Costs and expenses: Production costs........................... -- 30,470 6,453 36,923 General and administrative................. 60 9,997 502 10,559 Depreciation, depletion and amortization... -- 62,436 12,291 74,727 Write-down of oil and gas properties....... -- 218,392 218,392 ------- --------- ------- --------- Income (loss) from operations................ (60) (214,970) 7,636 (207,394) Interest expense (income), net............. 4,028 9,789 (4,380) 9,437 Other expense (credits), net............... -- 106 (130) (24) ------- --------- ------- --------- Income (loss) before income taxes............ (4,088) (224,865) 12,146 (216,807) Income tax benefit........................... (78) (80,176) (1,707) (81,961) ------- --------- ------- --------- Net income (loss)............................ $(4,010) $(144,689) $13,853 $(134,846) ======= ========= ======= ========= 1997 - ---- Revenues..................................... $ -- $ 90,932 $28,784 $ 119,716 ------- --------- ------- --------- Costs and expenses: Production costs........................... -- 25,186 4,577 29,763 General and administrative................. 60 6,707 402 7,169 Depreciation, depletion and amortization... -- 41,409 16,353 57,762 ------- --------- ------- --------- Income (loss) from operations................ (60) 17,630 7,452 25,022 Interest expense (income), net............. (4,879) 13,691 2,781 11,593 Other credits, net......................... -- (502) (130) (632) ------- --------- ------- --------- Income before income taxes................... 4,819 4,441 4,801 14,061 Income tax provision......................... 2,181 1,184 1,097 4,462 ------- --------- ------- --------- Net income................................... $ 2,638 $ 3,257 $ 3,704 $ 9,599 ======= ========= ======= =========
9 SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME For the six months ended June 30, 1998 and 1997 (In thousands)
Unconsolidated -------------------------------------------- Guarantor Non-Guarantor Consolidated OEI Subsidiary Subsidiaries OEI --------- --------------- -------------- ------------- 1998 - ---- Revenues..................................... $ -- $ 216,733 $58,357 $ 275,090 -------- --------- ------- --------- Costs and expenses: Production costs........................... -- 62,888 11,342 74,230 General and administrative................. 60 19,139 1,001 20,200 Depreciation, depletion and amortization... -- 116,197 31,301 147,498 Write-down of oil and gas properties....... -- 218,392 -- 218,392 -------- --------- ------- --------- Income (loss) from operations............... (60) (199,883) 14,713 (185,230) Interest expense (income), net............. 8,057 20,338 (6,454) 21,941 Merger costs............................... -- 39,000 -- 39,000 Other expense, net......................... -- 222 95 317 -------- --------- ------- --------- Income (loss) before income taxes............ (8,117) (259,443) 21,072 (246,488) Income tax benefit........................... (21,900) (60,444) (1,165) (83,509) -------- --------- ------- --------- Net income (loss)............................ $ 13,783 $(198,999) $22,237 $(162,979) ======== ========= ======= ========= 1997 - ---- Revenues..................................... $ -- $ 193,378 $54,993 $ 248,371 -------- --------- ------- --------- Costs and expenses: Production costs........................... -- 50,068 8,229 58,297 General and administrative................. 90 12,591 872 13,553 Depreciation, depletion and amortization... -- 76,619 29,191 105,810 -------- --------- ------- --------- Income (loss) from operations................ (90) 54,100 16,701 70,711 Interest expense (income), net............. (9,640) 25,306 7,075 22,741 Other credits, net......................... -- (2,006) (106) (2,112) -------- --------- ------- --------- Income before income taxes................... 9,550 30,800 9,732 50,082 Income tax provision......................... 3,904 11,334 3,859 19,097 -------- --------- ------- --------- Net income................................... $ 5,646 $ 19,466 $ 5,873 $ 30,985 ======== ========= ======= =========
10 SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET At June 30, 1998 and December 31, 1997 (In thousands)
Unconsolidated --------------------------------------------- Guarantor Non-Guarantor Eliminating Consolidated OEI Subsidiary Subsidiaries Entries OEI ---------- --------------- -------------- ------------ ------------ JUNE 30, 1998 - ------------- ASSETS Current assets............................. $ 2 $ 95,205 $ 68,121 $ -- $ 163,328 Intercompany investments................... 1,338,677 (206,451) 287,437 (1,419,663) -- Property and equipment, net................ -- 1,052,463 421,540 -- 1,474,003 Other assets............................... 17,964 106,047 14,788 -- 138,799 ---------- ---------- -------- ----------- ---------- Total assets............................. $1,356,643 $1,047,264 $791,886 $(1,419,663) $1,776,130 ========== ========== ======== =========== ========== LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities........................ $ 16,107 $ 137,050 $ 27,036 $ -- $ 180,193 Long-term debt............................. 509,213 460,300 17,764 -- 987,277 Deferred credits and other liabilities..... -- 22,246 16,042 -- 38,288 Stockholders' equity....................... 831,323 427,668 731,044 (1,419,663) 570,372 ---------- ---------- -------- ----------- ---------- Total liabilities & stockholders' equity... $1,356,643 $1,047,264 $791,886 $(1,419,663) $1,776,130 ========== ========== ======== =========== ========== DECEMBER 31, 1997 - ----------------- ASSETS Current assets............................. $ 11,480 $ 103,243 $ 56,649 $ (11,478) $ 159,894 Intercompany investments................... 1,094,737 (19,479) 335,024 (1,410,282) -- Property and equipment, net................ -- 1,033,193 390,644 -- 1,423,837 Other assets............................... 5,395 89,189 (35,320) -- 59,264 ---------- ---------- -------- ----------- ---------- Total assets............................. $1,111,612 $1,206,146 $746,997 $(1,421,760) $1,642,995 ========== ========== ======== =========== ========== LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities........................ $ 14,804 $ 180,345 $ 37,208 $ (11,478) $ 220,879 Long-term debt............................. 509,152 147,800 15,346 -- 672,298 Deferred credits and other liabilities..... -- 27,936 (3,455) -- 24,481 Stockholders' equity....................... 587,656 850,065 697,898 (1,410,282) 725,337 ---------- ---------- -------- ----------- ---------- Total liabilities & stockholders' equity... $1,111,612 $1,206,146 $746,997 $(1,421,760) $1,642,995 ========== ========== ======== =========== ==========
11 SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS For the six months ended June 30, 1998 and 1997 (In thousands)
Unconsolidated -------------------------------------------- Guarantor Non-Guarantor Consolidated OEI Subsidiary Subsidiaries OEI --------- --------------- -------------- ------------- 1998 - ---- Cash flows from operating activities: Net income (loss)..................................... $ 13,783 $(198,999) $ 22,237 $(162,979) Adjustments to reconcile net income (loss) to cash from operating activities..................... (21,091) 279,409 27,682 286,000 Changes in assets and liabilities..................... 1,865 (92,600) 79,529 (11,206) -------- --------- --------- --------- Net cash provided by (used in) operating activities.............................. (5,443) (12,190) 129,448 111,815 Cash flows used in investing activities................. -- (299,138) (128,829) (427,967) Cash flows provided by financing activities............. 5,443 310,910 2,458 318,811 -------- --------- --------- --------- Net increase (decrease) in cash and cash equivalents.... -- (418) 3,077 2,659 Cash and cash equivalents at beginning of period........ 2 2,653 9,034 11,689 -------- --------- --------- --------- Cash and cash equivalents at end of period.............. $ 2 $ 2,235 $ 12,111 $ 14,348 ======== ========= ========= ========= 1997 - ---- Cash flows from operating activities: Net income............................................ $ 5,646 $ 19,466 $ 5,873 $ 30,985 Adjustments to reconcile net income to cash from operating activities..................... 4,180 88,050 30,647 122,877 Changes in assets and liabilities..................... 2 36,781 (2,035) 34,748 -------- --------- --------- --------- Net cash provided by operating activities.......... 9,828 144,297 34,485 188,610 Cash flows used in investing activities................. -- (208,832) (99,442) (308,274) Cash flows provided by (used in) financing activities... (9,829) 20,737 64,439 75,347 -------- --------- --------- --------- Net decrease in cash and cash equivalents............... (1) (43,798) (518) (44,317) Cash and cash equivalents at beginning of period........ 3 47,518 13,180 60,701 -------- --------- --------- --------- Cash and cash equivalents at end of period.............. $ 2 $ 3,720 $ 12,662 $ 16,384 ======== ========= ========= =========
12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS On December 23, 1997, the Company announced that it entered into a Merger Agreement with UMC that provided in part for a stock-for-stock merger of UMC with and into the Company. Pursuant to the Merger Agreement, at the effective time of the Merger, the Company's stockholders received 2.34 shares of the combined company's common stock for each share of the Company's common stock then owned and UMC stockholders received 1.30 shares of the combined company's common stock for each share of UMC stock then owned. The Merger, effective March 27, 1998, was treated as a pooling of interests for accounting purposes. This financial review summarizes the combined financial condition and results of operations giving retroactive effect to the Merger and should be read in conjunction with the Company's supplemental consolidated financial statements and the notes thereto included in the Form 8-K filed May 6, 1998. The consolidated financial statements previously filed in the Company's Form 10-K for the year ended December 31, 1997, have been restated therein to reflect the combination of the historical results of OEI and UMC and conforming of accounting policies in accordance with the pooling of interests method of accounting. RESULTS OF OPERATIONS The following table sets forth certain operating information of the Company for the periods shown:
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED JUNE 30, JUNE 30, -------------------------- ------------------------ 1998 1997 1998 1997 ------------ ----------- ----------- ---------- Production: Oil (MBO) U.S............................................. 3,819 2,776 7,635 5,320 Canada.......................................... 111 110 218 212 Cote d'Ivoire................................... 184 274 393 568 Equatorial Guinea............................... 1,494 929 2,888 1,679 ------- ------- ------- ------- Total......................................... 5,608 4,089 11,134 7,779 ======= ======= ======= ======= Natural gas (MMCF) U.S............................................. 25,356 19,829 49,886 37,172 Canada.......................................... 2,471 1,834 4,729 3,470 Cote d'Ivoire................................... 1,771 1,209 3,615 2,160 ------- ------- ------- ------- Total......................................... 29,598 22,872 58,230 42,802 ======= ======= ======= ======= AVERAGE WELLHEAD SALES PRICE, INCLUDING HEDGING: Oil ($ per bbl) U.S............................................. $ 14.19 $ 18.55 $ 14.76 $ 19.89 Canada.......................................... $ 11.23 $ 16.59 $ 12.04 $ 18.88 Cote d'Ivoire................................... $ 13.83 $ 17.22 $ 14.81 $ 18.61 Equatorial Guinea............................... $ 11.14 $ 18.91 $ 12.77 $ 18.10 Average....................................... $ 13.31 $ 18.49 $ 14.19 $ 19.38 Natural Gas ($ per MCF) U.S............................................. $ 2.06 $ 1.95 $ 2.08 $ 2.33 Canada.......................................... $ 1.28 $ 1.13 $ 1.30 $ 1.49 Cote d'Ivoire................................... $ 1.65 $ 1.79 $ 1.68 $ 1.82 Average....................................... $ 1.97 $ 1.88 $ 1.99 $ 2.24 ADDITIONAL DATA ($ PER BOE): Production and operating costs (1)............... $ 3.01 $ 3.16 $ 3.04 $ 3.20 General and administrative expense............... $ 1.00 $ 0.91 $ 0.97 $ 0.91 Oil and natural gas depletion and depreciation... $ 6.99 $ 7.19 $ 6.98 $ 6.97
- ---------- (1) Costs incurred to operate and maintain wells and related equipment, excluding ad valorem and production taxes of $0.49 and $0.61 per BOE for the three months ended June 30, 1998 and 1997, and $0.52 and $0.71 per BOE for the six months ended June 30, 1998 and 1997, respectively. 13 SIX MONTHS ENDED JUNE 30, 1998 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1997 Operating revenues. The Company's total operating revenues increased approximately $26.7 million, or 11%, to $275.1 million for the six months ended June 30, 1998, from $248.4 million for the comparable period in 1997. Production levels for the six months ended June 30, 1998, increased 40% to 20,839 MBOE from 14,913 MBOE for the comparable period in 1997. The increase in oil and gas revenues is due to increased oil volumes in the Gulf of Mexico and Equatorial Guinea and overall higher U.S. gas volumes. Oil revenues increased $7.2 million, or 5%, to $158.0 million for the six months ended June 30, 1998, from $150.8 million for the six months ended June 30, 1997, the result of significantly increased worldwide production volumes offset by a decline in the average realized price received. Oil production increased 43% to 11,134 MBO for the first six months of 1998 as compared to the same period in 1997 due primarily to increased oil production in the Gulf of Mexico and Equatorial Guinea. The average sales price before hedging for oil decreased 32% to $13.20 in the first six months of 1998 compared to $19.43 in the same period in 1997. Natural gas revenues increased $20.1 million, or 21%, to $115.9 million for the six months ended June 30, 1998, from $95.8 million for the six months ended June 30, 1997, the result of increased worldwide production which more than offset the decline in prices received for gas. Natural gas production for the six months of 1998 was 58,230 MMCF, an increase of 36% over 1997 volumes due primarily to increased production in the Gulf of Mexico, Cote d'Ivoire and Canada and the impact of acquisitions, offset by property sales and natural production declines in North America. The average sales price before hedging for natural gas decreased 11% to $1.99 per MCF in the first six months of 1998 as compared to $2.24 in the first six months of 1997. For the six months ended June 30, 1998, the Company's total revenues were further affected by a $6.3 million increase in hedging revenues. In order to manage its exposure to price risks in the sale of its crude oil and natural gas, the Company from time to time enters into price hedging arrangements. The Company's average sales prices including hedging for oil and natural gas for the six months ended June 30, 1998 were $14.19 per Bbl and $1.99 per Mcf compared to $19.38 per Bbl and $2.24 per Mcf in the comparable 1997 period. Production costs. Total production costs increased $15.9 million, or 27%, to $74.2 million for the six months ended June 30, 1998 from $58.3 million for the comparable 1997 period. This increase primarily results from fluctuations in normal operating expenses, including operating expenses associated with increased production from new facilities. Production and operating costs (costs incurred to operate and maintain wells and related equipment, excluding ad valorem and production taxes) decreased $0.16 per BOE, or 5%, to $3.04 per BOE for the six months ended June 30, 1998, from $3.20 per BOE in the comparable 1997 period. This decrease is primarily the result of increased production in the Company's offshore Gulf of Mexico and Equatorial Guinea fields and resulting higher utilization of existing facilities. General and administrative expenses. General and administrative expenses increased $6.6 million, or 49%, to $20.2 million for the six months ended June 30, 1998, from $13.6 million in the comparable 1997 period. This increase is primarily due to costs of increased corporate staffing associated with both an increase in drilling activities and the Company's property acquisitions in 1997. In addition, costs related to a new systems implementation partially offset by an increase in the capitalization of a portion of the salaries paid to employees directly engaged in the acquisition, exploration and development of oil and gas properties in accordance with the full cost method of accounting contributed to the increase. As a result of these factors, general and administrative expenses per BOE increased slightly by $0.06 per BOE, or 7%, to $0.97 per BOE for the six months ended June 30, 1998, from $0.91 per BOE for the comparable 1997 period. Depreciation, depletion and amortization expense. Depreciation, depletion and amortization (DD&A) expense increased $41.7 million, or 39%, to $147.5 million for the six months ended June 30, 1998, from $105.8 million for the comparable 1997 period. This variance is primarily attributable to the Company's increased production and related current and future capital costs from the 1997 and 1998 Gulf of Mexico and international drilling programs and acquisitions, partially offset by the effect of an increase in proved reserves resulting from such programs and acquisitions. Oil and gas DD&A increased $0.01 per BOE, or less than 1%, to $6.98 per BOE for the six months ended June 30, 1998, from $6.97 per BOE for the comparable 1997 period. The non-cash write-down of oil and gas properties recognized in the second quarter of 1998 should lower oil and gas DD&A per BOE in future periods. Write-down of oil and gas properties. As required under the full cost method of accounting, capitalized costs are limited to the sum of the present value of future net revenues using current unescalated pricing discounted at 10% related to estimated production of proved reserves and the lower of cost or estimated fair value of unevaluated properties, all net of expected income 14 tax effects. At June 30, 1998, the Company recognized a non-cash impairment of oil and gas properties in the amount of $218.4 million pre-tax ($135.4 million after-tax) pursuant to this ceiling limitation required by the full cost method of accounting for oil and gas properties, using certain improvements in pricing experienced after period end. The write-down is primarily a result of the precipitous decline in world crude oil prices experienced during the second quarter 1998. Interest and debt expense. Reported interest and debt expense decreased $0.8 million, or 4%, to $21.9 million for the six months ended June 30, 1998, from $22.7 million in the comparable 1997 period. This decrease is primarily the result of an increase in capitalized interest for the period. Average total debt outstanding for the six months ended June 30, 1998, was $830.7 million as compared to $478.6 million for the same period in 1997. Merger Costs. Merger costs of $39.0 million were recorded in the first quarter of 1998. These costs consist primarily of investment banking and other transaction fees, employee severance and relocation costs as well as the write- off of deferred financing costs related to the former credit facilities replaced by the OEI Credit Facility in March 1998. Income tax provision (benefit). An income tax benefit of $83.5 million (of which $2.6 million is a current provision and $86.1 million is a deferred benefit) was recognized for 1998, compared to a provision of $19.1 million (of which $2.7 million was a current provision and $16.4 million was a deferred provision) for 1997. A significant portion of current taxes is a non-cash provision representing current taxes incurred in Cote d'Ivoire which, under the terms of the production sharing contract, will be paid by the Ivorian government from their production proceeds. The deferred tax benefit for the six months ended June 30, 1998 is further impacted by the non-cash write-down of oil and gas properties and the tax treatment of certain Merger costs, a portion of which is not deductible for tax purposes. Consistent with Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes, the deferred income tax provision or benefit was derived primarily from changes in deferred income tax assets and liabilities recorded on the balance sheet. Net income (loss). Due to the factors described above, the net loss for the six months ended June 30, 1998, was $(163.0) million, a decrease of $194.0 million from net income of $31.0 million for the comparable 1997 period. THREE MONTHS ENDED JUNE 30, 1998 COMPARED WITH THE THREE MONTHS ENDED JUNE 30, 1997. Material changes in the results of operations between the three months ended June 30, 1998 and 1997, primarily reflect the significant increases in oil and natural gas production volumes offset by decreases in prices received and other activities as previously discussed. LIQUIDITY AND CAPITAL RESOURCES The following summary table reflects comparative cash flows for the Company for the six months ended June 30, 1998 and 1997 (in thousands):
Six Months Ended June 30, --------------------------- 1998 1997 ------------ ------------ Net cash provided by operating activities $ 111,815 $ 188,610 Net cash used in investing activities (427,967) (308,274) Net cash provided by financing activities 318,811 75,347
15 Capital requirements. The Company's capital investments to date have focused primarily on exploration, acquisitions and development of proved properties. The Company's expenditures for property acquisition, exploration and development for the six months ended June 30, 1998 and 1997 are as follows:
Six months ended June 30, ------------------------- 1998 1997 ----------- ----------- (in thousands) Property acquisition costs: Proved......................................... $ 6,879 $ 92,980 Unproved....................................... 16,916 30,280 Exploration costs................................ 140,914 99,827 Development costs................................ 216,160 151,562 Capitalized interest on unevaluated properties... 15,049 5,001 Capitalized general and administrative costs..... 11,469 6,589 -------- -------- Total costs incurred............................. $407,387 $386,239 ======== ========
The Company makes, and will continue to make, substantial capital expenditures for the acquisition, exploration, development, production and abandonment of its oil and natural gas reserves. The Company has historically funded its operations, acquisitions, exploration and development expenditures from cash flows from operating activities, bank borrowings, sales of equity and debt securities, sales of non-strategic oil and natural gas properties, sales of partial interests in exploration concessions and project finance borrowings. The Company intends to finance remaining 1998 capital expenditures related to this strategy primarily with funds provided by operations, borrowings or other capital market activities. The Company's capital expenditure budget for 1998 is expected to be approximately $650 million focused on the Company's three operating regions. In addition, the Company will evaluate its level of capital spending throughout the year based upon drilling results, commodity prices, cash flows from operations and property acquisitions. Actual capital spending may vary from the capital expenditure budget. The Company's debt to total capitalization ratio has increased to 63.4% at June 30, 1998, from 48.1% at December 31, 1997. The Company's interest coverage ratio (calculated as the ratio of income from operations plus DD&A and impairment of proved oil and gas properties to reported interest expense plus capitalized interest less non-cash amortization of debt issue costs) was 5.1 to 1 for the first six months of 1998 compared with 6.7 to 1 for the first six months of 1997. The Company currently has certain agreements in place to reduce interest rate fluctuation risk on a portion of its debt, resulting in an increase in interest and debt expense of $0.2 million during the six months ended June 30, 1998. Concurrent with the closing of the Merger on March 27, 1998, the Company entered into a $750.0 million five-year unsecured revolving credit facility (OEI Credit Facility) which combined and replaced the Revolving Credit Facility and the Global Credit Facility. The OEI Credit Facility, which is with a group of commercial banks, provides for various borrowing options under either a base rate or Eurodollar margin rates. As of June 30, 1998, the OEI Credit Facility provided a $600.0 million initial borrowing base. As of June 30, 1998, total borrowings outstanding against the facility were approximately $472.1 million, leaving approximately $127.9 million of available credit. These borrowings were repaid in July 1998 with the proceeds from a $500.0 million Notes Offering made by the Company pursuant to Rule 144A. At that time, the credit facility was amended and restated to a $400.0 million, five-year revolving credit facility with an initial borrowing base of $300.0 million. Liquidity. The ability of the Company to satisfy its obligations and fund planned capital expenditures will be dependent upon its future performance, which will be subject to prevailing economic conditions, including oil and gas prices, and subject to financial and business conditions and other factors, many of which are beyond its control, supplemented if necessary with existing cash balances and borrowings under the OEI Credit Facility. The Company currently expects that its cash flow from operations and availability under the OEI Credit Facility will be adequate to execute its 1998 business plan. However, no assurance can be given that the Company will not experience liquidity problems from time to time in the future or on a long-term basis. If the Company's cash flow from operations and availability under the OEI Credit Facility are not sufficient to satisfy its cash requirements, there can be no assurance that additional debt or equity financing will be available to meet its requirements. 16 Effects of Leverage. The Company has outstanding long-term indebtedness of approximately $987.3 million as of June 30, 1998. The Company's level of indebtedness has several important effects on its future operations, including (i) a substantial portion of the Company's cash flow from operations must be dedicated to the payment of interest on its indebtedness and will not be available for other purposes, (ii) the covenants contained in the various indentures require the Company to meet certain financial tests, and contain other restrictions which limit the Company's ability to borrow additional funds or to dispose of assets and may affect the Company's flexibility in planning for, and reacting to, changes in its business, including possible acquisition activities and (iii) the Company's ability to obtain additional financing in the future for working capital, expenditures, acquisitions, general corporate purposes or other purposes may be impaired. None of the indentures place significant restrictions on a wholly-owned subsidiary's ability to make distributions to the parent company. The Company believes it is currently in compliance with all covenants contained in the respective indentures. The Company's ability to meet its debt service obligations and to reduce its total indebtedness will be dependent upon the Company's future performance, which will be subject to oil and gas prices, general economic conditions and to financial, business and other factors affecting the operations of the Company, many of which are beyond its control. There can be no assurance that the Company's future performance will not be adversely affected by such economic conditions and financial, business and other factors. OTHER MATTERS Energy swap agreements. The Company hedges certain of its production through master swap agreements (Swap Agreements) which provide for separate contracts tied to the NYMEX light sweet crude oil and natural gas futures contracts. In addition, the Company has combined contracts which have agreed upon price floors and ceilings (Costless Collars). As of June 30, 1998, the fair market value of all hedging contracts was approximately $10.1 million. Oil revenues have been increased by $6.3 million and $11.1 million for the three and six months ended June 30, 1998 as a result of the hedge contracts in place for each period. As of June 30, 1998, the Company's open forward position on its outstanding crude oil Swaps was 2,100 MBbls at an average price of $19.87 per Bbl for the year ended December 31, 1998. The Company currently has no outstanding natural gas swaps. It is the Company's current intention to commit no more than 50% of its production on a BOE basis to such arrangements at any point in time. As the current Swap Agreements expire, the portion of the Company's oil and natural gas production which is subject to price fluctuations will increase substantially unless the Company enters into additional hedging transactions. Price fluctuations and volatile nature of markets. Despite the measures taken by the Company to attempt to control price risk, the Company remains subject to price fluctuations for natural gas and oil sold on the spot market. Prices received for natural gas sold on the spot market are volatile due primarily to seasonality of demand and other factors beyond the Company's control. Domestic oil prices generally follow worldwide oil prices which are subject to price fluctuations resulting from changes in world supply and demand. Any significant decline in prices for oil and gas could have a material adverse effect on the Company's financial position, results of operations and quantities of reserves recoverable on an economic basis. Environmental. The Company's business is subject to certain federal, state, and local laws and regulations relating to the exploration for, and the development, production and transportation of, oil and natural gas, as well as environmental and safety matters. Many of these laws and regulations have become more stringent in recent years, often imposing greater liability on a larger number of potentially responsible parties. Although the Company believes it is in substantial compliance with all applicable laws and regulations, the requirements imposed by such laws and regulations are frequently changed and subject to interpretation, and the Company is unable to predict the ultimate cost of compliance with these requirements or their effect on its operations. Under certain circumstances, the MMS may require any Company operations on federal leases to be suspended or terminated. Any such suspensions, terminations or inability to meet applicable bonding requirements could materially and adversely affect the Company's financial condition and operations. Although significant expenditures may be required to comply with governmental laws and regulations applicable to the Company, to date such compliance has not had a material adverse effect on the earnings or competitive position of the Company. It is possible that such regulations in the future may add to the cost of operating offshore drilling equipment or may significantly limit drilling activity. The Company has included approximately $10.0 million in its 1998 exploration and development capital budget 17 to reformat operations for alternative disposal of water produced from its offshore wells in accordance with an approved zero discharge plan. The Oil Pollution Act of 1990 (OPA) imposes ongoing requirements on a responsible party including proof of financial responsibility to cover at least some costs in a potential spill. For tank vessels, including mobile offshore drilling rigs, the OPA imposes on owners, operators and charterers of the vessels, an obligation to maintain evidence of financial responsibility of up to $10.0 million depending on gross tonnage. With respect to offshore facilities, proof of greater levels of financial responsibility may be applicable. This amount is subject to upward regulatory adjustment up to $150.0 million. Year 2000 compliance. The Company is currently in the process of evaluating its information technology infrastructure for the year 2000 (Year 2000) compliance. The Company's primary information systems are in the process of being replaced with fully compliant new systems as part of a regularly scheduled upgrade to meet the Company's growing capacity and performance requirements. These replacements are expected to be completed by early 1999. The Company does not expect that the cost to modify and replace its information technology infrastructure to be Year 2000 compliant will be material to its financial condition or results of operations. The Company does not anticipate any material disruption in its operations as a result of any failure by the Company to be in compliance. The costs of these projects and the date on which the Company plans to complete modifications and replacements are based on management's best estimates, which were derived utilizing numerous assumptions of future events including the continued availability of certain resources, third party modification plans and other factors. However, there can be no guarantee that these estimates will be achieved and actual results could differ materially from those plans. The Company does not currently have any information concerning the Year 2000 compliance status of its suppliers and customers. In the event that any of the Company's significant suppliers or customers do not successfully and timely achieve Year 2000 compliance, the Company's business or operations could be adversely affected. The Company has not incurred significant costs related to Year 2000 compliance prior to December 31, 1997, other than internal costs to evaluate the extent of compliance. Forward-looking statements. Certain statements in this report, including statements of the Company's and management's expectation, intentions, plans and beliefs, including those contained in or implied by "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Notes to Consolidated Financial Statements, are "forward-looking statements", within the meaning of Section 21E of the Securities Exchange Act of 1934, that are subject to certain events, risk and uncertainties that may be outside the Company's control. These forward-looking statements include statements of management's plans and objectives for the Company's future operations and statements of future economic performance; information regarding drilling schedules, expected or planned production or transportation capacity, future production levels of international and domestic fields, the Company's capital budget and future capital requirements, the Company's meeting its future capital needs, the Company's realization of its deferred tax assets, the level of future expenditures for environmental costs and the outcome of regulatory and litigation matters; and the assumptions described in this report underlying such forward-looking statements. Actual results and developments could differ materially from those expressed in or implied by such statements due to a number of factors, including, without limitation, those described in the context of such forward-looking statements, fluctuations in the price of crude oil and natural gas, the success rate of exploration efforts, timeliness of development activities, risk incident to the drilling and completion for oil and gas wells, future production and development costs, the political and economic climate in which the Company conducts operations and the risk factors described from time to time in the Company's other documents and reports filed with the Securities and Exchange Commission. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not applicable. 18 OCEAN ENERGY, INC. PART II - OTHER INFORMATION Item 1. Legal Proceedings On December 29, 1997, a class action complaint (Newman v. Carson, et al., Civil Action No. 16109-NC) was filed in the Court of Chancery of the State of Delaware, by a person claiming to represent the stockholders of UMC against UMC and each of its directors. On January 9, 1998, a similar class action complaint (Ross v. Brock. et al., Civil Action No. 98-00845) was filed in the District Court of Harris County, Texas, 164th Judicial District by another person claiming to represent the stockholders of UMC against UMC and each of its directors. Preliminary settlements have been reached in each of these complaints, the effects of which are not material to the consolidated financial statements. The U.S. Environmental Protection Agency has indicated that the Company may be potentially responsible for costs and liabilities associated with alleged releases of hazardous substances at two sites in Louisiana under the Comprehensive Environmental Response, Compensation and Liability Act. Given the extremely large number of companies that have been identified as potentially responsible for releases of hazardous substances at the sites and the small volume of hazardous substances allegedly disposed of by the companies whose properties the Company acquired, management believes that the Company's potential liability arising from these sites, if any, will not have a material adverse impact on the Company. In February 1998, the Tulane Environmental Law Clinic (Clinic), claiming to represent several southeastern Louisiana environmental groups, gave notice that it intends to file a Clean Water Act citizens' suit against the Company after a sixty-day waiting period expires in connection with the discharge of produced water in East Bay. The Clinic claims that the Company is violating the Clean Water Act by discharging produced water from its East Bay Central Facilities into Southwest Pass, and has stated that it will seek an injunction to require the Company to cease its discharge of produced water, and will seek civil penalties and attorney's fees. If the Clinic were to successfully obtain an injunction, certain production operations at the Company's East Bay Facilities could be interrupted until favorable resolution of the issue in court or accelerated completion of the Company's plan to reformat operations to provide for alternative produced water disposal. The Company believes that its zero discharge compliance plan, which permits the temporary continued discharge of produced water into Southwest Pass through July 1, 1999, is completely lawful as authorized by a Compliance Order issued by the Louisiana Department of Environmental Quality, and intends to vigorously defend any such citizens' suit, if filed. The Clinic has delivered similar notices to other Louisiana coastal producers. The Company is a named defendant in lawsuits and is a party in governmental proceedings from time to time arising in the ordinary course of business. While the outcome of such lawsuits or other proceedings against the Company cannot be predicted with certainty, management does not expect these matters to have a material adverse effect on the financial position or results of operations of the Company. ITEM 2. CHANGES IN SECURITIES None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION None. 19 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K [A] Exhibits: See Index to Exhibits on page 21. [B] Reports on Form 8-K A Form 8-K dated May 6, 1998 was filed containing the Company's Supplemental Consolidated Financial Statements and Related Management's Discussion and Analysis of Financial Condition and Results of Operations giving retroactive effect of the merger between United Meridian Corporation and Ocean Energy, Inc. A Form 8-K dated May 29, 1998 was filed announcing 30 days of combined operating results of the Company to satisfy the requirements of Accounting Series Release 135 issued by the SEC. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Signature Title Date --------- ----- ---- /s/ JONATHAN M. CLARKSON Executive Vice President and August 12, 1998 - ------------------------- Chief Financial Officer Jonathan M. Clarkson /s/ CHRISTOPHER E. CRAGG Vice President and Controller August 12, 1998 - ------------------------ (Chief Accounting Officer) Christopher E. Cragg 20 INDEX TO EXHIBITS
EXHIBIT NUMBER EXHIBIT - ----------- ------------------------------------------------------------------------------------------------------ 3.1 Certificate of Incorporation of the Company, as amended, incorporated by reference to Exhibit 99.1 to the Company's Form 8-K filed with the Securities and Exchange Commission on March 31, 1998. 3.2 Amended and Restated Bylaws of the Company, incorporated by reference to Exhibit 99.2 to the Company's Form 8-K filed with the Securities and Exchange Commission on March 31, 1998. 10.1 Employment Agreement, dated as of March 27, 1998, among the Company and John B. Brock, incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed with the Securities and Exchange Commission on March 31, 1998. 10.2 Employment Agreement, dated as of March 27, 1998, among the Company and James C. Flores, incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed with the Securities and Exchange Commission on March 31, 1998. 10.3* Amended and Restated Global Credit Agreement, dated as of July 8, 1998, by and among the Company, Chase Bank of Texas, National Association ("Chase Texas") as Administrative Agent, Morgan Guaranty Trust Company of New York ("Morgan Guaranty") as Syndication Agent, Barclays Bank PLC as Documentation Agent, and the other Lenders named therein. 10.4* Amended and Restated Guaranty Agreement, dated as of July 8, 1998, by and among the Company, Chase Manhattan Bank of Canada as Administrative Agent, Morgan Guaranty as Syndication Agent, Barclays Bank PLC as Documentation Agent, and the other Lenders named therein. 10.5* Amended and Restated Intercreditor Agreement, dated as of July 8, 1998, by and among the Company, OEI Louisiana, Ocean Energy Resources Canada, Ltd., (Resources Canada), Chase Texas as Administrative Agent and Paying Agent, Morgan Guaranty as Syndication Agent, Barclays Bank PLC as Documentation Agent, and the other Lenders named therein. 10.6* Amended and Restated Credit Agreement, dated as of July 8, 1998, by and among Resources Canada, the Chase Manhattan Bank of Canada ("Chase Canada") as Administrative Agent, and the other Lenders named therein. 10.7* Amended and Restated Guaranty Agreement, dated as of July 8, 1998, by and among the Company, Chase Canada as Administrative Agent, and the other Lenders named therein. 10.8* Guaranty Agreement, dated as of July 8, 1998, by and among OEI Louisiana, Chase Texas as Administrative Agent, Morgan Guaranty as Syndication Agent, Barclays Bank PLC as Documentation Agent, and the other Lenders named therein. 10.9 Third Supplemental Indenture, dated as of March 27, 1998, among Ocean Energy, Inc., a Delaware corporation, Ocean Energy, Inc., a Louisiana corporation, and State Street Bank and Trust Company, relating to the 13 1/2% Senior Notes due 2004, incorporated by reference to Exhibit 10.9 to the Company's Form 8-K filed with the Securities and Exchange Commission on March 31, 1998. 10.10 First Supplemental Indenture, dated as of March 27, 1998, among Ocean Energy, Inc. a Delaware corporation, Ocean Energy, Inc., a Louisiana corporation, and State Street Bank and Trust Company, relating to the 9 3/4% Senior Subordinated Notes due 2006, incorporated by reference to Exhibit 10.10 to the Company's Form 8-K filed with the Securities and Exchange Commission on March 31, 1998. 10.11 First Supplemental Indenture, dated as of March 27, 1998, among Ocean Energy, Inc., a Delaware corporation, Ocean Energy, Inc., a Louisiana corporation, and State Street Bank and Trust Company, relating to the 8 7/8% Senior Subordinated Notes due 2007, incorporated by reference to Exhibit 10.11 to the Company's Form 8-K filed with the Securities and Exchange Commission on March 31, 1998.
21 10.12 Second Supplemental Indenture, dated as of March 27, 1998, among Ocean Energy, Inc. a Delaware corporation (successor by merger to United Meridian Corporation), Ocean Energy, Inc., a Louisiana corporation, (successor by merger to UMC Petroleum Corporation), and U.S. Bank Trust National Association, relating to the 10 3/8% Senior Subordinated Notes due 2005, incorporated by reference to Exhibit 10.12 to the Company's Form 8-K filed with the Securities and Exchange Commission on March 31, 1998. 10.13 Ocean Energy, Inc. 1998 Long Term Incentive Plan, incorporated by reference to Exhibit 10.13 to the Company's Form 8-K filed with the Securities and Exchange Commission on March 31, 1998. 10.14 Petroleum Production Sharing Contract on Block CI-11 dated June 27, 1992 among the Republic of Cote d'Ivoire, UMIC Cote d'Ivoire Corporation and Societe Nationale d'Operations Petrolieres de la Cote d'Ivoire (including English translation), incorporated herein by reference to Exhibit 10.5 to Amendment No. 3 to United Meridian Corporation's Form S-1 (No. 33-63532) filed with the Securities and Exchange Commission on July 20, 1993. 10.15 Production Sharing Contract dated August 18, 1992 between the Republic of Equatorial Guinea and United Meridian International Corporation (Area A - Offshore NE Bioco), incorporated herein by reference to Exhibit 10.6 to Amendment No. 1 to United Meridian Corporation's Form S-1 (No. 33-63532) filed with the Securities and Exchange Commission on June 18, 1993. 10.16 Production Sharing Contract dated June 29, 1992 between the Republic of Equatorial Guinea and United Meridian International Corporation (Area B - Offshore NW Bioco), incorporated herein by reference to Exhibit 10.7 to Amendment No. 1 to United Meridian Corporation's Form S-1 (No. 33-63532) filed with the Securities and Exchange Commission on June 18, 1993. 10.17 Production Sharing Contract dated June 29, 1994 between the Republic of Equatorial Guinea and United Meridian International Corporation (Area C - Offshore Bioco), incorporated herein by reference to Exhibit 10.15 to United Meridian Corporation's 1994 Form 10-K filed with the Securities and Exchange Commission on March 10, 1995. 10.18 Production Sharing Contract on Block CI-01 dated December 5, 1994 among The Republic of Cote d'Ivoire, UMIC Cote d'Ivoire Corporation and Societe Nationale d'Operations Petrolieres de la Cote d'Ivoire (English translation), incorporated by reference to Exhibit 10.16 to United Meridian Corporation's 1994 Form 10-K filed with the Securities and Exchange Commission on March 10, 1995. 10.19 Production Sharing Contract on Block CI-02 dated December 5, 1994 among The Republic of Cote d'Ivoire, UMIC Cote d'Ivoire Corporation and Societe Nationale d'Operations Petrolieres de la Cote d'Ivoire (English translation), incorporated by reference to Exhibit 10.17 to United Meridian Corporation's 1994 Form 10-K filed with the Securities and Exchange Commission on March 10, 1995. 10.20 Production Sharing Contract of Block CI-12 dated April 27 1995 among The Republic of Cote d'Ivoire, UMIC Cote d'Ivoire Corporation and others (English translation), incorporated by reference to Exhibit 10.18 to United Meridian Corporation's 1995 Form 10-K filed with the Securities and Exchange Commission on March 7, 1996. 10.21 Production Sharing Contract dated April 5, 1995 between The Republic of Equatorial Guinea and UMIC Equatorial Guinea Corporation (Area D - Offshore Bioco), incorporated by reference to Exhibit 10.20 to United Meridian Corporation's Form 10-Q for the period ended September 30, 1995 filed with the Securities and Exchange Commission on August 10, 1995. 10.22* Indenture, dated as of July 8, 1998, among the Company, its Subsidiary Guarantors, and U.S. Bank Trust National Association, relating to the 8 3/8% Series A Senior Subordinated Notes due 2008 and the 8 3/8% Series B Senior Subordinated Notes due 2008.
22 10.23* Indenture, dated as of July 8, 1998, among the Company, its Subsidiary Guarantors, and Norwest Bank Minnesota, National Association (Norwest Bank) as Trustee, relating to the 7 5/8% Senior Notes due 2005. 10.24* Indenture, dated as of July 8, 1998, among the Company, its Subsidiary Guarantors, and Norwest Bank as Trustee, relating to the 8 1/4% Senior Notes due 2018. 10.25* Registration Rights Agreement, dated as of July 8, 1998, among the Company as Issuer, OEI Louisiana as Subsidiary Guarantor and Merrill Lynch & Co., Chase Securities, Inc., Lehman Brothers, Inc., and Salomon Brothers, Inc. 27.1* Financial Data Schedule, included solely in the Form 10-Q filed electronically with the Securities and Exchange Commission.
___________________________________________ * Filed herewith 23 EX-10.3 2 AMENDED RESTATED GLOBAL CREDIT AGREEMENT Exhibit 10.3 AMENDED AND RESTATED GLOBAL CREDIT AGREEMENT Dated as of July 8, 1998 among Ocean Energy, Inc., a Delaware Corporation, Chase Bank of Texas, National Association, as Administrative Agent, Morgan Guaranty Trust Company Of New York, as Syndication Agent, Barclays Bank PLC, as Documentation Agent, ABN Amro Bank, N.V., Bank Of America National Trust & Savings Association, Paribas, Nationsbank, N.A., Societe Generale, Southwest Agency, and Wells Fargo Bank (Texas), N.A., as Co-Agents, and The Lenders Now or Hereafter Parties Hereto Chase Bank Of Texas, National Association Morgan Guaranty Trust Company Of New York Barclays Bank PLC Nationsbank, N.A. Co-Arrangers TABLE OF CONTENTS Page ARTICLE I Definitions and Accounting Matters.............................. 1 Section 1.01 Terms Defined in Recitals.................................. 1 Section 1.02 Certain Defined Terms...................................... 1 Section 1.03 Accounting Terms and Determinations........................ 21 ARTICLE II Commitments.................................................... 21 Section 2.01 Loans and Letters of Credit................................ 21 Section 2.02 Borrowings, Continuations and Conversions; Issuance of Letters of Credit.......................................... 23 Section 2.03 Extensions and Changes of Commitments...................... 27 Section 2.04 Facility Fee and Other Fees................................ 29 Section 2.05 Lending Offices............................................ 30 Section 2.06 Several Obligations........................................ 30 Section 2.07 Notes...................................................... 30 Section 2.08 Prepayments................................................ 30 Section 2.09 Borrowing Base............................................. 32 ARTICLE III Payments of Principal and Interest............................ 35 Section 3.01 Repayment of Loans......................................... 35 Section 3.02 Interest................................................... 35 ARTICLE IV Payments; Pro Rata Treatment; Computations; Etc................ 36 Section 4.01 Payments................................................... 36 Section 4.02 Pro Rata Treatment......................................... 37 Section 4.03 Computations............................................... 37 Section 4.04 Non-receipt of Funds by the Administrative Agent........... 38 Section 4.05 Sharing of Payments, Etc................................... 38 Section 4.06 Assumption of Risks........................................ 39 Section 4.07 Obligation to Reimburse and to Prepay...................... 40 Section 4.08 Obligations for Letters of Credit.......................... 41 ARTICLE V Yield Protection and Illegality................................. 42 Section 5.01 Additional Costs........................................... 42 Section 5.02 Limitation on Eurodollar Loans............................. 43 Section 5.03 Illegality................................................. 43 Section 5.04 Base Rate Loans pursuant to Sections 5.01, 5.02 and 5.03... 43 Section 5.05 Compensation............................................... 43 Section 5.06 Additional Cost in Respect of Tax.......................... 44 Section 5.07 Avoidance of Taxes and Additional Costs.................... 45 Section 5.08 Lender Tax Representation.................................. 45 Section 5.09 Limitation on Right to Compensation........................ 46 Section 5.10 Compensation Procedure..................................... 46 i ARTICLE VI Conditions Precedent........................................... 47 Section 6.01 Effectiveness.............................................. 47 Section 6.02 All Loans and Letters of Credit............................ 48 Section 6.03 Conditions Relating to Letters of Credit................... 49 ARTICLE VII Representations and Warranties................................ 49 Section 7.01 Corporate Existence........................................ 49 Section 7.02 Financial Condition........................................ 49 Section 7.03 Litigation................................................. 50 Section 7.04 No Breach.................................................. 50 Section 7.05 Corporate Action; Binding Obligation....................... 50 Section 7.06 Approvals.................................................. 50 Section 7.07 Use of Loans and Letters of Credit......................... 51 Section 7.08 ERISA...................................................... 51 Section 7.09 Taxes...................................................... 51 Section 7.10 Insurance.................................................. 51 Section 7.11 Titles, etc................................................ 51 Section 7.12 No Material Misstatements.................................. 52 Section 7.13 Investment Company Act..................................... 52 Section 7.14 Public Utility Holding Company Act......................... 52 Section 7.15 Subsidiaries and Partnerships.............................. 52 Section 7.16 Location of Business and Offices........................... 52 Section 7.17 Rate Filings............................................... 52 Section 7.18 Environmental Matters...................................... 53 Section 7.19 Defaults................................................... 54 Section 7.20 Compliance with the Law.................................... 54 Section 7.21 Risk Management Agreements................................. 54 Section 7.22 Gas Imbalances............................................. 54 Section 7.23 Solvency................................................... 54 Section 7.24 Year 2000 Compliance....................................... 54 ARTICLE VIII Affirmative Covenants........................................ 55 Section 8.01 Financial Statements....................................... 55 Section 8.02 Litigation................................................. 58 Section 8.03 Corporate Existence, Etc................................... 58 Section 8.04 Environmental Matters...................................... 59 Section 8.05 Engineering Reports........................................ 59 Section 8.06 Stock of Restricted Subsidiaries........................... 60 Section 8.07 Further Assurances......................................... 60 Section 8.08 Performance of Obligations................................. 61 ARTICLE IX Negative Covenants............................................. 61 Section 9.01 Debt....................................................... 61 Section 9.02 Liens...................................................... 63 Section 9.03 Investments, Loans and Advances............................ 64 ii Section 9.04 Dividends, Distributions and Redemptions.................. 66 Section 9.05 Financial Covenants....................................... 66 Section 9.06 Nature of Business........................................ 67 Section 9.07 Limitation on Operating Leases and Sale-Leaseback Transactions.............................................. 67 Section 9.08 Mergers, Etc.............................................. 67 Section 9.09 Proceeds of Notes......................................... 68 Section 9.10 ERISA Compliance.......................................... 68 Section 9.11 Sale or Discount of Receivables........................... 68 Section 9.12 Risk Management Agreements................................ 68 Section 9.13 Transactions with Affiliates.............................. 68 Section 9.14 Negative Pledge Agreements................................ 68 Section 9.15 Subsidiaries and Partnerships............................. 69 Section 9.16 Sale of Oil and Gas Properties............................ 69 Section 9.17 Environmental Matters..................................... 69 Section 9.18 Payment Restrictions...................................... 69 Section 9.19 Subordinated and Long-Term Pari Passu Debt................ 70 Section 9.20 Maintenance of Deposits................................... 70 Section 9.21 Unrestricted Subsidiaries................................. 71 Section 9.22 Gas Imbalances, Take-or-Pay or Other Prepayments.......... 71 ARTICLE X Events of Default............................................... 72 Section 10.01 Events of Default......................................... 72 Section 10.02 Cash Collateral for Letters of Credit..................... 74 ARTICLE XI The Agents..................................................... 74 Section 11.01 Appointment, Powers and Immunities........................ 74 Section 11.02 Reliance by Agents........................................ 75 Section 11.03 Defaults.................................................. 75 Section 11.04 Rights as a Lender........................................ 75 Section 11.05 Indemnification........................................... 76 Section 11.06 Non-Reliance on Agents and other Lenders.................. 76 Section 11.07 Action by Agents.......................................... 77 Section 11.08 Resignation or Removal of Agents.......................... 77 ARTICLE XII Miscellaneous................................................. 78 Section 12.01 Waiver.................................................... 78 Section 12.02 Notices................................................... 78 Section 12.03 Payment of Expenses, Indemnities, etc..................... 78 Section 12.04 Amendments, Etc........................................... 80 Section 12.05 Successors and Assigns.................................... 80 Section 12.06 Assignments and Participations............................ 80 Section 12.07 Invalidity................................................ 82 Section 12.08 Entire Agreement.......................................... 82 Section 12.09 References................................................ 82 Section 12.10 Survival.................................................. 82 Section 12.11 Captions.................................................. 82 iii Section 12.12 Counterparts.............................................. 83 Section 12.13 GOVERNING LAW; SUBMISSION TO JURISDICTION................. 83 Section 12.14 Confidentiality........................................... 84 Section 12.15 Interest.................................................. 84 Section 12.16 Effectiveness............................................. 85 Section 12.17 Survival of Obligations................................... 85 Section 12.18 Debt Characterization for Indenture Purposes; Specified or Designated Senior Indebtedness............................ 86 Section 12.19 EXCULPATION PROVISIONS.................................... 86 iv ANNEX, EXHIBITS AND SCHEDULES Annex I -- List of U.S. Commitments and Canadian Subcommitment; Global Commitment Percentages Exhibit A-1 -- Form of Conventional Loan Note Exhibit A-2 -- Form of Bid Rate Loan Note Exhibit B-1 -- Form of Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P. Exhibit B-2 -- Form of Opinion of Onebane, Bernard, Torian, Diaz, McNamera & Abell Exhibit C-1 -- Form of Borrowing Request Exhibit C-2 -- Form of Competitive Bid Request Exhibit C-3 -- Form of Bid Loan Quote/Response to Competitive Bid Request Exhibit D -- Restricted and Unrestricted Subsidiaries Exhibit E -- Partnerships Exhibit F -- Loan Documents Exhibit G -- Form of Assignment and Acceptance Schedule 2.01 -- Assumed Letters of Credit Schedule 7.03 -- Litigation Schedule 7.18 -- Environmental Matters Schedule 7.21 -- Risk Management Agreements Schedule 7.22 -- Gas Imbalances v This Amended And Restated Global Credit Agreement dated as of July 8, 1998 is among: Ocean Energy, Inc., a corporation duly organized and validly existing under the laws of the state of Delaware (the "Company"); each of the financial institutions that is now or hereafter a signatory hereto (individually, a "Lender" and, collectively, the "Lenders"); Chase Bank of Texas, National Association, as Administrative Agent for the Lenders (in such capacity, the "Administrative Agent"), Morgan Guaranty Trust Company Of New York, as Syndication Agent for the Lenders (in such capacity, the "Syndication Agent"), Barclays Bank PLC, as Documentation Agent for the Lenders (in such capacity, the "Documentation Agent"), and ABN Amro Bank, N.V., Bank of America National Trust & Savings Association, Paribas, Nationsbank, N.A., Societe Generale, Southwest Agency and Wells Fargo Bank (Texas), N.A., as Co-Agents for the Lenders (in such capacity, the "Co-Agents"). Recitals A. The Company, as guarantor, Ocean Energy, Inc., a Louisiana corporation ("OEI-Louisiana"), as borrower, and certain of the Agents and the Lenders entered into that certain Global Credit Agreement dated as of March 27, 1998 (such credit agreement, the "Prior Credit Agreement"). B. For their own corporate purposes and not at the request of the Lenders or the Agents, the Company and OEI-Louisiana have requested that the Agents and the Lenders (i) amend, restate and restructure the Prior Credit Agreement such that, under the credit facilities evidenced by this Agreement, the Company will assume all of the obligations and liabilities as borrower under the Prior Credit Agreement and OEI-Louisiana will cease to be liable as the borrower and become liable as a guarantor and (ii) make credit available on the terms and conditions stated herein. C. The Agents and the Lenders, subject to the terms and conditions stated herein, are willing to amend, restate and restructure the Prior Credit Agreement and to make such credit facilities available. D. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties agree as follows: ARTICLE I DEFINITIONS AND ACCOUNTING MATTERS SECTION 1.01 TERMS DEFINED IN RECITALS. As used in this Agreement, the terms defined in the Recitals shall have the meanings indicated in the Recitals. SECTION 1.02 CERTAIN DEFINED TERMS. As used herein, including the Recitals, the following terms shall have the following meanings: "Absolute Rate" shall mean, with respect to any Bid Rate Loan, such rate of interest as a Lender may offer the Company for any given Interest Period therefor, which rate shall be fixed for the duration of such Interest Period. "Absolute Rate Loans" shall mean Bid Rate Loans which bear interest at the Absolute Rate. "Additional Costs" shall have the meaning assigned to that term in Section 5.01(a). "Affected Loans" shall have the meaning assigned to that term in Section 5.04. "Affiliate" of any Person shall mean (a) any Person directly or indirectly controlled by, controlling or under common control with such first Person and (b) any director or executive officer of such first Person. "Affiliated Canadian Lender" shall mean, with regard to any Lender, the Canadian Lender designated as such on Annex I, if any. "Agent" shall mean any one or more of the Administrative Agent, the Paying Agent, the Syndication Agent, the Documentation Agent, the Technical Agents, the Competitive Bid Auction Agent and/or the Co-Agents, or if the context so indicates, all of the foregoing collectively. References to any Agent shall include its successors. "Aggregate Commitments" at any time shall equal the sum of the Commitments of all of the Lenders. "Agreement" shall mean this Amended and Restated Global Credit Agreement, as amended, supplemented or modified from time to time. "Allocated Canadian Borrowing Base" shall mean, as of any date, an amount in U.S. Dollars designated as such by the Company pursuant to Section 2.09(a)(iii). A Canadian Lender's Share of the Allocated Canadian Borrowing Base shall equal such Canadian Lender's Canadian Commitment Percentage of the Allocated Canadian Borrowing Base. "Allocated U.S. Borrowing Base" shall mean an amount equal to the Borrowing Base then in effect minus the Allocated Canadian Borrowing Base. A Lender's Share of the Allocated U.S. Borrowing Base shall equal such Lender's Commitment Percentage of the Allocated U.S. Borrowing Base. "Applicable Lending Office" shall mean, for each Lender and for each Type of Loan, the lending office of such Lender (or an Affiliate of such Lender) designated for such Type of Loan on the signature pages hereof or such other office of such Lender (or of an Affiliate of such Lender) as such Lender may from time to time specify to the Administrative Agent and the Company as the office at which its Loans of such Type are to be made and maintained. "Applicable Margin" shall mean, with respect to Conventional Loans, as of any date of determination, the following rate per annum as is applicable based upon the Percentage Usage as of such date of determination: 2
Percentage Usage Eurodollar Applicable Margin Base Rate Applicable Margin - --------------------------------------------------------------------------------------------------- Less than or equal to 50% 0.700% 0.000% - --------------------------------------------------------------------------------------------------- Greater than 50%, but Less than or equal to 60% 0.850% 0.000% - --------------------------------------------------------------------------------------------------- Greater than 60%, but Less than or equal to 75% 0.950% 0.000% - --------------------------------------------------------------------------------------------------- Greater than 75% 1.275% 0.000% - ---------------------------------------------------------------------------------------------------
"Assignment and Acceptance" shall have the meaning assigned such term in Section 12.06(b). "Available Canadian Subcommitment" shall mean, as of any date of determination, the lesser of (a) the Canadian dollar amount of the Allocated Canadian Borrowing Base (converted from U.S. Dollars to Canadian dollars by multiplying the exchange ratio of Canadian dollars to U.S. Dollars in effect on such date of determination, as determined in good faith by the Administrative Agent on such date pursuant to the following sentence, and the Allocated Canadian Borrowing Base); or (b) the aggregate Canadian Subcommitments as then in effect. The exchange ratio shall be calculated (i) on the date a reallocation pursuant to Section 2.09(a) between the Available Canadian Borrowing Base and Available U.S. Borrowing Base occurs, (ii) on each Redetermination Date, or (iii) in any event, at ninety (90) day intervals following the most recent Redetermination Date. "Available U.S. Commitment" shall mean the obligation of the Lenders to make Loans to the Company and to participate in Letters of Credit issued by the Administrative Agent for the account of the Company and its Subsidiaries in an aggregate amount not to exceed the lesser of either (a) the Aggregate Commitments, as then in effect, or (b) the then applicable Allocated U.S. Borrowing Base. "Bankers Acceptances" shall mean any banker's acceptance issued to any of the Canadian Lenders pursuant to the Canadian Credit Agreement. "Base Rate" shall mean, with respect to any Base Rate Loan, for any day, the higher of (a) the Federal Funds Rate for any such day plus 1/2 of 1% or (b) the Prime Rate for such day. Each change in any interest rate provided for herein based upon the Base Rate resulting from a change in the Base Rate shall take effect at the time of such change in the Base Rate. "Base Rate Loans" shall mean Loans which bear interest at rates based upon the Base Rate. "Bid Loan Quote" shall mean an offer by any Lender to make Bid Rate Loans pursuant to Section 2.01(c), such offer being substantially in the form of Exhibit C-3. 3 "Bid Rate" shall mean, with respect to any Bid Rate Loan, the rate per annum offered by any Lender in its sole discretion to the Company pursuant to Section 2.01(c) for any Bid Rate Loan, which rate shall be either (a) determined on the basis of the rates referred to in the definition of "Eurodollar Rate" in this Section 1.02 or (b) an Absolute Rate. "Bid Rate Loan" shall mean any loan made pursuant to Section 2.01(c) under the procedures set forth in Section 2.02(g). "Bid Rate Note" shall mean a promissory note, described in Section 2.07(b) and being substantially in the form of Exhibit A-2, issued by the Company to the order of a Lender evidencing Bid Rate Loans made to the Company by such Lender. "Borrowing Base" shall mean at any time an amount equal to the amount determined in accordance with Section 2.09. "Borrowing Base Deficiency" shall have the meaning assigned to that term in Section 2.08(c). "Business Day" shall mean any day on which commercial banks are not authorized or required to close in Houston, Texas; and where such term is used in the definition of "Quarterly Date" in this Section 1.02 or if such day relates to a borrowing of, a payment or prepayment of principal of or interest on, a continuation of, or a conversion of or into, or the Interest Period for, a Eurodollar Loan or a notice by the Company with respect to any such borrowing, payment, prepayment, continuation, conversion or Interest Period, any day which is also a day on which dealings in Dollar deposits are carried out in the London interbank market. "Canadian Agent" shall mean The Chase Manhattan Bank of Canada, as administrative agent for the Canadian Lenders, together with its successors in such capacity. "Canadian Commitment Percentage" shall mean a Canadian Lender's share, expressed as a percentage, of the Canadian Subcommitments as set forth under the caption "Canadian Subcommitment Percentage" in Annex I, as modified from time to time to reflect any assignments permitted by Section 12.03(b) of the Canadian Credit Agreement. "Canadian Credit Agreement" shall mean that certain Amended and Restated Credit Agreement dated as of even date herewith among Ocean Canada, the Canadian Agent and the Canadian Lenders, as the same may be amended, restated, supplemented or modified from time to time. "Canadian Indebtedness" shall mean an amount, converted into U.S. Dollars using the exchange ratio specified in the definition of "Available Canadian Subcommitment", of the loans made and Bankers Acceptances issued and accepted to or for Ocean Canada pursuant to the Canadian Credit Agreement. "Canadian Lenders" shall mean the lenders now or hereafter parties to the Canadian Credit Agreement. 4 "Canadian Subcommitments" shall mean the "Commitments" of the Canadian Lenders (in Canadian dollars) under the Canadian Credit Agreement. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Commitment" shall mean, as to each Lender, the obligation of such Lender to make Conventional Loans to the Company and to participate in the Letters of Credit issued by the Administrative Agent for the account of the Company or any of its Subsidiaries, in an aggregate amount at any one time outstanding equal to the amount set forth opposite such Lender's name on Annex I under the caption "U.S. Commitment", as the same may be reduced pursuant to Section 2.03 or may be modified pursuant to Assignment and Acceptances pursuant to Section 12.06(b). "Commitment Percentage" shall mean, as of any date of determination, as to any Lender, the percentage of the Commitments to be provided by a Lender under this Agreement as indicated on Annex I under the caption "U.S. Commitment Percentage", as modified from time to time to reflect any assignments permitted by Section 12.06(b). "Competitive Bid Auction Agent" shall mean The Chase Manhattan Bank in its capacity as bid administrator under Section 2.02(g). "Competitive Bid Request" shall have the meaning assigned such term in Section 2.02(g)(i). "Consolidated Net Income" shall mean, for any period, the consolidated net income (or loss) of the Company and its Consolidated Restricted Subsidiaries for such period as determined in accordance with GAAP, adjusted by excluding, without duplication, (a) any extraordinary or non-recurring net gains or losses together with any related provision for taxes on such gain or loss, realized in connection with any extraordinary or nonrecurring gains or losses, (b) any expenses associated with the Merger to the extent such expenses occur prior to December 31, 1998 and are not in excess of $40,000,000 in the aggregate, (c) the amount of noncash write downs of long-lived assets in compliance with GAAP or SEC guidelines, and (d) foreign currency translation adjustments. "Consolidated Restricted Subsidiary" shall mean a Consolidated Subsidiary that is a Restricted Subsidiary. "Consolidated Subsidiary" shall mean, with respect to any Person, any Subsidiary of such Person (whether now existing or hereafter acquired) whose financial statements should be (or should have been) consolidated with the financial statements of such Person in accordance with GAAP. "Consolidated Tangible Net Worth" shall mean, with respect to the Company and its Consolidated Subsidiaries, the sum of preferred stock (if any), par value of common stock, capital in excess of par value of common stock and retained earnings, less treasury stock (if any), goodwill, cost in excess of fair value of net assets acquired and all other assets that are properly classified as intangible assets, but plus any expenses associated with the Merger occurring prior to December 31, 1998 and not in excess of $40,000,000 in the aggregate, the amount of noncash 5 write downs of long-lived assets in compliance with GAAP or SEC guidelines, and excluding any extraordinary or non-recurring net gains or losses together with any related provision for taxes on such gain or loss, realized in connection with any extraordinary or nonrecurring gains or losses, and plus or minus, as appropriate, foreign currency translation adjustments, all as determined on a consolidated basis. Notwithstanding the foregoing, "Consolidated Tangible Net Worth" shall not be reduced to reflect redemptions or repurchases of equity securities permitted by the terms of Section 9.04. "Conventional Loan Note" shall mean a promissory note, described in Section 2.07(a) and being substantially in the form of Exhibit A-1, issued by the Company to the order of any Lender evidencing the Conventional Loans made to the Company by such Lender. "Conventional Loans" shall mean the loans made pursuant to Section 2.01(a). "Debt" shall mean, for any Person the sum of the following (without duplication): (a) all obligations of such Person for borrowed money or evidenced by bonds, debentures, notes or other similar instruments; (b) all obligations of such Person (whether contingent or otherwise) in respect of letters of credit, bankers' acceptances, surety or other bonds and similar instruments; (c) all obligations of such Person to pay the deferred purchase price of Property or services, except trade accounts payable (other than for borrowed money) arising in the ordinary course of business of such Person; (d) all obligations under leases which shall have been, or should have been, in accordance with GAAP, recorded as capital leases in respect of which such Person is liable, contingently or otherwise, as obligor, guarantor or otherwise; (e) all Debt of others secured by a Lien on any asset of such Person, whether or not such Debt is assumed by such Person, provided that if such Debt is Non-recourse except with respect to the asset subject to such Lien, then only that portion of such Debt equal to the lesser of the amount of such Debt and the fair market value of such asset; (f) all Debt of others guaranteed by such Person or upon which such Person is otherwise liable as a partner or otherwise to the extent of the lesser of the amount of such Debt and the maximum stated amount of such guarantee or other liability; (g) the undischarged balance of any production payment created by such Person or for the creation of which such Person directly or indirectly received payment; and (h) obligations to deliver goods or services including Hydrocarbons in consideration of advance payments other than (1) obligations to sell or purchase Hydrocarbons, (2) obligations with pipelines for firm transportation of natural gas of such Person, and (3) oil and gas balancing agreements, take or pay agreements or other prepayment obligations in respect of Hydrocarbons, in each case, incurred in the ordinary course of business and which are customary in the oil and gas industry. "Debt Coverage Ratio" shall mean the ratio, calculated as of any date of determination, of (a) Total Debt as of such date of determination to (b) EBITDA of the Company and its Consolidated Restricted Subsidiaries for the immediately preceding four (4) fiscal quarters of the Company and its Consolidated Restricted Subsidiaries ending on the date of determination, after giving effect to the pooling of interests treatment of the Merger. "Default" shall mean an event which with notice or lapse of time or both would become an Event of Default. 6 "Dollars", "U.S. Dollars" and "$" shall mean lawful money of the United States of America. "EBITDA" shall mean, with respect to the Company and its Consolidated Restricted Subsidiaries, net earnings (excluding, without duplication, gains and losses resulting from the sale or retirement of assets, non-cash write downs, charges resulting from accounting convention changes and any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with any extraordinary or nonrecurring gains or losses, any expenses associated with the Merger occurring prior to December 31, 1998 and not in excess of $40,000,000 in the aggregate, and foreign currency translation adjustments) before deduction for taxes, interest expenses, exploration expenses, depreciation, and depletion and amortization expenses, all determined on a consolidated basis in accordance with GAAP; provided that if the Company or any Restricted Subsidiary shall acquire any Person or sell any Subsidiary or acquire or dispose of any Properties outside the ordinary course of business or engage in any other material transaction, EBITDA for the preceding four fiscal quarter period prior to such transaction may be determined on a pro forma basis using or excluding, as applicable, the revenue attributable to such Properties or Person's Properties, as appropriate, net of operating expenses, severance and ad valorem taxes incurred with respect to such Properties during the relevant period, as appropriate, and otherwise as if such transaction had occurred at the start of such four fiscal quarter period. "Effective Date" shall have the meaning assigned such term in Section 12.16. "Engineering Reports" shall have the meaning assigned to that term in Section 2.09(c). "Environmental Laws" shall mean any and all laws, statutes, ordinances, rules, regulations, orders, or determinations of any Governmental Authority pertaining to health or the environment in effect in any and all jurisdictions in which the Company or any of its Subsidiaries are conducting or at any time have conducted business, or where any Property of the Company or any of its Subsidiaries is located, or where any hazardous substances generated by or disposed of by the Company or any of its Subsidiaries are located, including without limitation, the Oil Pollution Act of 1990 ("OPA"), the Clean Air Act, as amended, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the Federal Water Pollution Control Act, as amended, the Occupational Safety and Health Act of 1970, as amended, the Resource Conservation and Recovery Act of 1976 ("RCRA"), as amended, the Safe Drinking Water Act, as amended, the Toxic Substances Control Act, as amended, the Superfund Amendments and Reauthorization Act of 1986, as amended. For purposes of this definition, the term "oil" shall have the meaning specified in OPA; the terms "hazardous substance," "release" and "threatened release" have the meanings specified in CERCLA, and the terms "solid waste" and "disposal" (or "disposed") have the meanings specified in RCRA; provided that, in the event either OPA, CERCLA or RCRA is amended so as to broaden the meaning of any term defined thereby, such broader meaning shall apply subsequent to the effective date of such amendment with respect to all provisions of this Agreement other than Article VII hereof, and provided further that, to the extent the laws of the state in which any Property of the Company or its Subsidiaries is located establish a meaning for "oil," "hazardous substance," "release," "solid waste" or "disposal" which is broader than that specified in either OPA, CERCLA or RCRA, such broader meaning shall apply. 7 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. "ERISA Affiliate" shall mean any corporation or trade or business which is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Code) as the Company or is under common control (within the meaning of Section 414(c) of the Code) with the Company. "Eurodollar Loans" shall mean Loans the interest rates on which are determined on the basis of rates referred to in the definition of "Eurodollar Rate" in this Section 1.02. "Eurodollar Rate" shall mean, with respect to a Eurodollar Loan, the rate per annum (rounded upwards, if necessary to the nearest 1/100 of 1%) quoted by the Administrative Agent at approximately 11:00 a.m. London time (or as soon thereafter as practicable) two (2) Business Days prior to the first day of the Interest Period for such Loan for the offering by the Administrative Agent to leading banks in the London interbank market of Dollar deposits having a term comparable to such Interest Period and in an amount comparable to the principal amount of the Eurodollar Loan to be made by the Lenders for such Interest Period. "Event of Default" shall have the meaning assigned to that term in Section 10.01. "Excepted Liens" shall mean: (i) Liens for taxes, assessments or other governmental charges or levies not yet delinquent or which are being contested in good faith by appropriate action; (ii) Liens in connection with workmen's compensation, unemployment insurance or other social security, old age pension or public liability obligations not yet due or which are being contested in good faith by appropriate action; (iii) (A) vendors', carriers', operators', warehousemen's, repairmen's, mechanics', workmen's, materialmen's, construction, maritime, landlords' and other like Liens arising by operation of law and (B) Liens arising by agreement (provided that no such Liens secure any obligations constituting Debt for borrowed money or contingent obligations relating to borrowed money), in each case, in the ordinary course of business or incident to the exploration, development, operation and maintenance of Oil and Gas Properties (including without limitation, Liens created in the ordinary course of business under oil and gas leases, farm-out agreements, divisions orders, partnership agreements, production sharing contracts or other petroleum concessions, licenses or similar agreements, royalty agreements, contracts for the sale or transportation of Hydrocarbons, operating agreements, development agreements or compulsory pooling or unitization orders, declarations and agreements and contractual landlord's liens), in any such case, in respect of obligations which have not been outstanding more than 90 days or which are being contested in good faith by appropriate proceedings; (iv) Liens securing the performance of bids, tenders, contracts (other than for the repayment of borrowed money or for the deferred purchase price of Property or services), leases (other than leases which constitute Debt) and government contracts, statutory or regulatory obligations, surety and appeal bonds, and other Liens of like nature, in each case made in the ordinary course of business; (v) any Liens securing Debt, neither assumed nor guaranteed by the Company or any of its Subsidiaries nor on which any one of them pays interest, existing upon real estate or rights in or relating to real estate acquired by the Company or any Subsidiary for substation, metering station, pump station, storage, gathering line, transmission line, transportation line, distribution line or right of way purposes, and any Liens reserved in leases 8 for rent and for compliance with the terms of the leases in the case of leasehold estates, to the extent that any such Lien referred to in this clause (v) does not materially impair the use of the Property covered by such Lien for the purposes for which such Property is held by the Company or such Subsidiary; (vi) encumbrances (other than to secure the payment of borrowed money or the deferred purchase price of Property or services), easements, restrictions, servitudes, permits, conditions, covenants, exceptions or reservations in any rights of way or other Property of the Company or any of its Subsidiaries for the purpose of roads, pipelines, transmission lines, transportation lines, distribution lines for the removal of gas, oil, coal or other minerals or timber, and other like purposes, or for the joint or common use of real estate, rights of way, facilities and equipment, and defects, irregularities and deficiencies in title of any rights of way or other Property which in the aggregate do not materially impair the use of such rights of way or other Property for the purposes of which such rights of way and other Property are held by the Company or any of its Subsidiaries; (vii) inchoate Liens on pipelines or pipeline facilities that arise by operation of law which have not attached to the Property subject of such Lien, (viii) rights of collecting banks having rights of setoff, revocation, refund or chargeback with respect to money or instruments of the Company or any of its Subsidiaries or on deposit with or in the possession of such banks, and (ix) judgment and attachment Liens not giving rise to an Event of Default or Liens created by or existing from any litigation or legal proceedings that are currently being contested in good faith by appropriate proceedings, promptly instituted and diligently conducted, and for which adequate reserves have been made to the extent required by GAAP. "Excluded Taxes" shall have the meaning assigned such term in Section 5.01(a). "Facility Fee Rate" shall mean, as of any date of determination, the following rate per annum as is applicable based upon the Percentage Usage as of such date of determination: Percentage Usage Facility Fee Rate - ----------------------------------------------------------- Less than or equal to 50% 0.200% - ----------------------------------------------------------- Greater than 50%, but less than or equal to 60% 0.250% - ----------------------------------------------------------- Greater than 60%, but less than or equal to 75% 0.300% - ----------------------------------------------------------- Greater than 75% 0.375% - ----------------------------------------------------------- "Federal Funds Rate" shall mean, for any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of Dallas on the Business Day next succeeding such day, provided that (i) if the day for which such rate is to be determined is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions for the next preceding day as so published on the next succeeding Business Day, and 9 (ii) if such rate is not so published for any Business Day, the Federal Funds Rate for such day shall be the average rate charged to the Administrative Agent on such day on such similar transactions as determined by the Administrative Agent. "Fee Letters" shall mean (i) that certain letter agreement dated March 3, 1998 among, inter alia, the Company, the Administrative Agent and an Affiliate of the Administrative Agent; and (ii) that certain letter agreement dated March 27, 1998 among, inter alia, the Company and Morgan Guaranty Trust Company of New York. "Financial Statements" shall mean the annual consolidated financial statements of the Company and its Consolidated Subsidiaries described or referred to in Section 7.02(a). "GAAP" shall mean generally accepted accounting principles as in effect on the Effective Date. "Global Commitment Percentage" shall mean, as to any Lender, the percentage of the Indebtedness (plus, without duplication, if such Lender is also a Canadian Lender or has an Affiliated Canadian Lender, the Dollar amount of Canadian Indebtedness) to be provided by such Lender under this Agreement (and, as applicable, by such Lender or its Affiliated Canadian Lender under the Canadian Credit Agreement) as indicated on Annex I, as modified from time to time to reflect any assignments permitted by Section 12.06(b) and Section 12.03(b) of the Canadian Credit Agreement and any decreases pursuant to Section 2.03 or Section 2.03 of the Canadian Credit Agreement. "Governmental Authority" shall mean (a) any governmental authority wherever located, including the federal governments of the United States, Canada and any other foreign country or nation, and any state, county, parish, province, municipal and political subdivisions in which any Property of the Company or any of its Subsidiaries is located or which exercises jurisdiction over any such Property; and (b) any court, agency, department, commission, board, bureau or instrumentality of any of them which exercises jurisdiction over any such Person or Property. "Governmental Requirement" shall mean any law, statute, code, ordinance, order, rule, regulation, judgment, decree, injunction, franchise, permit, certificate, license, authorization or other direction or requirement (including, without limitation, Environmental Laws, energy regulations and occupational, safety and health standards or controls) of any Governmental Authority. "Guaranty Agreement" shall mean the guaranty agreement executed by OEI- Louisiana in form and substance satisfactory to the Administrative Agent and the Documentation Agent guarantying payment of the Indebtedness. "Havre" shall mean Havre Pipeline Company, LLC, a limited liability company established under the laws of the State of Texas of which the Company or a Subsidiary of the Company is the manager and a majority member. "Havre Credit Facility" shall mean that certain Credit Agreement, dated as of September 29, 1995, by and between Union Bank and Havre, the promissory notes described therein, the Pledge and Estoppel Agreement executed by OEI-Louisiana (as successor by merger 10 to UMC), as assumed by OERI, in connection therewith, all guarantees of any of the foregoing and all amendments, restatements, refinancings (whether with the same lender or other lenders) and other modifications (including increases so long as the aggregate principal amount owing in connection therewith is less than $20,000,000) to the foregoing from time to time. "Highest Lawful Rate" shall mean, with respect to each Lender, the maximum nonusurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the Notes or on other Indebtedness under laws applicable to such Lender which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than applicable laws now allow. "Hydrocarbon Interests" shall mean all rights, titles, interests and estates in and to oil and gas leases; oil, gas and mineral leases; other liquid or gaseous hydrocarbon leases; production sharing contracts or other petroleum concessions, licenses or similar agreements made by or on behalf of a sovereign; mineral fee interests; overriding royalty and royalty interests; net profit interests and production payment interests in Hydrocarbons, including any reserve or residual interest of whatever nature. "Hydrocarbons" shall mean oil, gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all products refined therefrom and all other minerals. "Indebtedness" shall mean any and all amounts owing or to be owing by the Company or OEI-Louisiana to any Agent and/or the Lenders in connection with the Notes or any Loan Document, including this Agreement and the Letter of Credit Agreements, and all renewals, extensions and/or rearrangements thereof, but excluding the Canadian Indebtedness. "Indemnity Matters" shall mean actions, suits, proceedings (including any investigations, litigation or inquiries), claims, demands, causes of action, costs, losses, liabilities, damages or expenses of any kind or nature whatsoever. "Indentures" shall mean any or all of the following, as the context requires: (a) the 95 Indenture, (b) the 96 Indenture, (c) the 97 Indenture and (d) the 98 Indentures. "Initial Funding" shall mean the funding of the initial Loans pursuant to Section 6.01. "Initial Reserve Reports" shall mean: the reports of (a) Ryder Scott Company Petroleum Engineers and McDaniel & Associates Consultants Ltd. with respect to Oil and Gas Properties formerly owned by UMC evaluating such Properties as of January 1, 1998; (b) McDaniel & Associates Consultants Ltd. with respect to the Oil and Gas Properties of Ocean Canada evaluating such Properties as of January 1, 1998; (c) Netherland, Sewell & Associates, Inc. with respect to the Oil and Gas Properties of certain Subsidiaries of the Company named therein conducting operations in Africa evaluating such Properties as of January 1, 1998; (d) Netherland, Sewell & Associates with respect to the Oil and Gas Properties of the Company evaluating such Properties as of December 31, 1997; and (e) the chief petroleum engineer of the Company with respect to its Oil and Gas Properties evaluating such Properties as of December 31, 1997. 11 "Intercreditor Agreement" shall mean that certain Amended and Restated Intercreditor Agreement of even date herewith among the Agents, the Lenders, the Canadian Agent, the Canadian Lenders, the Company, OEI-Louisiana and Ocean Canada, as amended from time to time. "Interest Coverage Ratio" shall mean the ratio, calculated as of the last day of any fiscal quarter of the Company, of (a) EBITDA for the immediately preceding four (4) fiscal quarters of the Company and its Consolidated Restricted Subsidiaries ending on the date of determination to (b) interest expenses (including capitalized interest expenses and excluding to the extent included in the calculation of interest expenses, amortization of capitalized debt issuance costs of the Company and its Consolidated Restricted Subsidiaries) on all Debt of the Company and its Consolidated Restricted Subsidiaries for the immediately preceding four (4) fiscal quarters of the Company and its Consolidated Restricted Subsidiaries ending on the date of determination, after giving effect to the pooling of interests treatment of the Merger; provided that if the Company or any Restricted Subsidiary shall acquire any Person or dispose of any Subsidiary or acquire or dispose of any Properties outside the ordinary course of business or engage in any other material transaction, interest expense for the preceding four fiscal quarter period prior to such transaction may be determined on a pro forma basis as if such transaction had occurred at the start of such four fiscal quarter period. "Interest Period" shall mean: (a) with respect to any Eurodollar Loan, the period commencing on the date such Eurodollar Loan is made or converted from a Base Rate Loan or the last day of the next preceding Interest Period with respect to such Loan and ending on the numerically corresponding day in the first, second, third or sixth calendar month thereafter, as the Company may select as provided in Section 2.02 (or, in the case of a Conventional Loan that is a Eurodollar Loan, such longer period as may be requested by the Company and agreed to by all of the Lenders, and, in the case of a Bid Rate Loan that is a Eurodollar Loan, nine or twelve months as may be requested by the Company and agreed to by the Lender making such Loan), except that each Interest Period which commences on the last Business Day of a calendar month (or on any day for which there is no numerically corresponding day in the appropriate subsequent calendar month) shall end on the last Business Day of the appropriate subsequent calendar month; and (b) with respect to any Absolute Rate Loan, the period commencing on the date such Loan is made and ending on such day thereafter, of not less than seven (7) days and not more than 360 days, as the Company may select as provided in Section 2.02(g). Notwithstanding the foregoing (unless, in the case of a Conventional Loan that is a Eurodollar Loan, agreed to by the Company and all of the Lenders, or, in the case of a Bid Rate Loan, the Company and the Lender making such Loan): (i) no Interest Period for a Loan may end after the Termination Date; (ii) each Interest Period which would otherwise end on a day which is not a Business Day shall end on the next succeeding Business Day unless the next succeeding Business Day falls in the next succeeding calendar month, then on the next preceding Business Day; and (iii) notwithstanding clause (i) above, no Interest Period for any Eurodollar Loans shall have a duration of less than one month and, if the Interest Period for any Eurodollar Loans would otherwise be a shorter period, such Loans shall not be available hereunder. 12 "LC Exposure" shall mean at any time the aggregate undrawn face amount of all outstanding Letters of Credit and the aggregate of all amounts drawn under Letters of Credit and not yet reimbursed or funded as a Loan pursuant to Section 4.07(b), minus the aggregate face amount of all letters of credit issued for the benefit of the Company or the Administrative Agent, which in each instance has been specifically accepted by the Administrative Agent as acceptable collateral supporting the Letters of Credit. "LC Fee Rate" shall mean, as of any date of determination, the Applicable Margin for Eurodollar Loans as of such date. "Lender Group" shall mean collectively the Agents, the Lenders, the Canadian Agent and the Canadian Lenders. "Letter of Credit Agreements" shall mean the written agreements between the Company and the Administrative Agent or one of its Affiliates executed or hereafter executed in connection with the issuance by the Administrative Agent or its Affiliate of the Letters of Credit, such agreements to be on the Administrative Agent's or such Affiliate's customary form for letters of credit of comparable amount and purpose, as from time to time in effect or as otherwise agreed to by the Company and the Administrative Agent or its Affiliate. "Letters of Credit" shall mean: (a) the letters of credit hereafter issued by the Administrative Agent or one of its Affiliates on behalf of the Lenders pursuant to Section 2.01(b), (b) all letters of credit heretofore issued by the Administrative Agent, as agent, or one of its Affiliates under the Prior Credit Agreement, which are outstanding on the date of the Initial Funding, and (c) all reimbursement obligations pertaining to any such letters of credit; and "Letter of Credit" shall mean any one of the Letters of Credit and the reimbursement obligation pertaining thereto. "Liens" shall mean, with respect to any asset, any mortgage, lien, pledge, charge (including, without limitation, production payments and the like payable out of Oil and Gas Properties), security interest or encumbrance of any kind in respect of such asset. For the purposes of this Agreement, the Company and its Subsidiaries shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset. "Lion" shall mean Lion GPL, S.A. "Loan Documents" shall mean this Agreement, the Notes, the Letter of Credit Agreements, the Guaranty Agreement, the Fee Letters, the agreements or instruments described or referred to in Exhibit F, and any and all other agreements or instruments now or hereafter executed and delivered by the Company or any other Person (other than participation or similar agreements between any Lender and any other lender or creditor with respect to any Indebtedness or Canadian Indebtedness) in connection with, or as security for the payment or performance of, the Notes, the Letter of Credit Agreements or this Agreement, as such agreements may be amended or supplemented from time to time. 13 "Loans" shall mean the Conventional Loans and Bid Rate Loans provided for by Section 2.01. "Long-Term Pari Passu Debt" shall mean, as of any date of determination, any Pari Passu Debt that has no amortization of principal prior to maturity and an initial final maturity of twenty (20) years or more as of the date such Debt is issued, including, without limitation, the 8-1/4% $125,000,000 Senior Notes due 2018 issued by the Company pursuant to the 98 Senior (20-year) Indenture. "Majority Lenders" shall mean: (a) if no Event of Default has occurred and is continuing, Lenders and Canadian Lenders (who are not in default of their obligations under this Agreement or the Canadian Credit Agreement ) having, without duplication, greater than fifty percent (50%) of the sum of the Aggregate Commitments and the Canadian Subcommitments; and (b) if an Event of Default has occurred and is continuing, Lenders and Canadian Lenders holding (or, as to Letters of Credit, participating in) greater than fifty percent (50%) of the outstanding aggregate principal amount of the Conventional Loans, Canadian Indebtedness and Letters of Credit (without regard to any sale by a Lender or a Canadian Lender of a participation in any Loan, Canadian Indebtedness or Letter of Credit). For purposes of this determination, Canadian dollar amounts shall be converted to Dollars at an exchange ratio specified in the definition of "Available Canadian Subcommitment". "Material Adverse Effect" shall mean any material and adverse effect on: (a) the business, condition (financial or otherwise), results of operations, assets, liabilities or prospects of the Company and its Restricted Subsidiaries on a consolidated basis, (b) the ability of the Company and its Restricted Subsidiaries to perform their obligations under the Loan Documents to which they are party, taken as a whole, or (c) the rights and remedies of the Agents and the Lenders under the Loan Documents, taken as a whole. "Merger" shall mean the merger pursuant to the Merger Agreement of United Meridian into the Company, with the Company being the surviving Person. "Merger Agreement" shall mean that certain Agreement and Plan of Merger dated as of December 22, 1997 between the Company and United Meridian, as amended by amendments thereto dated as of January 7, 1998 and February 20, 1998. "Multiemployer Plan" shall mean a Plan defined as such in Section 3(37) of ERISA to which contributions have been made by the Company or any ERISA Affiliate and which is covered by Title IV of ERISA. "95 Indenture" shall mean that certain Indenture among the Company (as successor by merger to United Meridian), as issuer, OEI-Louisiana (as successor by merger to UMC), as initial subsidiary guarantor, and U.S. Bank Trust National Association (formerly known as First Bank of New York, National Association), as trustee, dated as of October 30, 1995, providing for the issuance of the Company's $150,000,000 10-3/8% Senior Subordinated Notes due 2005, as amended by the First Supplemental Indenture thereto dated as of November 4, 1997 and the Second Supplemental Indenture thereto dated as of March 27, 1998, and all notes or securities issued under any of the foregoing, any subsidiary guarantees issued pursuant to the terms of any 14 of the foregoing, and all amendments and supplements to the foregoing permitted under Section 9.19(b) or a consent thereunder. "96 Indenture" shall mean that certain Indenture dated as of September 26, 1996 among the Company (formerly known as Flores & Rucks, Inc.), as issuer, the subsidiaries guarantors named therein, and State Street Bank and Trust Company, as trustee, providing for the issuance of the Company's $160,000,000 9-3/4% Senior Subordinated Notes due 2006, as amended by the First Supplemental Indenture thereto dated as of March 27, 1998, and all notes or securities issued under any of the foregoing, any subsidiary guarantees issued pursuant to the terms of any of the foregoing, and all amendments and supplements to the foregoing permitted under Section 9.19(b) or a consent thereunder. "97 Indenture" shall mean that certain Indenture dated as of July 2, 1997 among the Company, as issuer, the subsidiary guarantors named therein, and State Street Bank and Trust Company, as trustee, providing for the issuance of the Company's $200,000,000 8-7/8% Senior Subordinated Notes due 2007, as amended by the First Supplemental Indenture thereto dated as of March 27, 1998, and all notes or securities issued under any of the foregoing, any subsidiary guarantees issued pursuant to the terms of any of the foregoing, and all amendments and supplements to the foregoing permitted under Section 9.19(b) or a consent thereunder. "98 Indentures" shall mean the 98 Senior (7-year) Indenture, 98 Senior (20- year) Indenture and the 98 Senior Subordinated Indenture. "98 Senior (7-year) Indenture" shall mean shall mean that certain Indenture dated as of July 8, 1998 among the Company, as issuer, the subsidiary guarantors named therein, and Norwest Bank Minnesota, National Association, as trustee, providing for the issuance of the Company's $125,000,000 7-5/8% Senior Notes due 2005 and all notes or securities issued under any of the foregoing, any subsidiary guarantees issued pursuant to the terms of any of the foregoing, and all amendments and supplements to the foregoing permitted under Section 9.19(b) or a consent thereunder. "98 Senior (20-year) Indenture" shall mean shall mean that certain Indenture dated as of July 8, 1998 among the Company, as issuer, the subsidiary guarantors named therein, and Norwest Bank Minnesota, National Association, as trustee, providing for the issuance of the Company's $125,000,000 8-1/4% Senior Notes due 2018 and all notes or securities issued under any of the foregoing, any subsidiary guarantees issued pursuant to the terms of any of the foregoing, and all amendments and supplements to the foregoing permitted under Section 9.19(b) or a consent thereunder. "98 Senior Subordinated Indenture" shall mean that certain Indenture dated as of July 8, 1998 among the Company, as issuer, the subsidiary guarantors named therein, U.S. Bank Trust National Association, as trustee, providing for the issuance of the Company's $250,000,000 8-3/8% Senior Subordinated Notes due 2008 and all notes or securities issued under any of the foregoing, any subsidiary guarantees issued pursuant to the terms of any of the foregoing, and all amendments and supplements to the foregoing permitted under Section 9.19(b) or a consent thereunder. 15 "Non-recourse" with respect to an obligation and a Person shall mean that such Person has no liability to the holder of such obligation for the payment or repayment of such obligation, except that such Person may have liability to the holder of such obligation for damages with respect to such obligation arising out of fraudulent acts or omissions, willful misrepresentations, willful misconduct and similar acts or omissions by such Person. "Non-Recourse Debt" shall mean Debt as to which neither the Company nor any of its Restricted Subsidiaries (a) provides any guarantee or credit support of any kind (including any undertaking, guarantee, indemnity, agreement or instrument that would constitute Debt), or (b) is directly or indirectly liable (as guarantor or otherwise), in each case, other than Debt permitted by Section 9.01(m). "Notes" shall mean the Conventional Loan Notes and Bid Rate Notes, together with any and all renewals, extensions for any period, increases, rearrangements or replacements thereof. "Ocean Canada" shall mean Ocean Energy Resources Canada, Ltd., a company amalgamated under the laws of the Province of British Columbia. "OEI-Louisiana" shall mean Ocean Energy, Inc., a corporation duly formed and existing under the laws of the state of Louisiana, which is a wholly-owned Subsidiary of the Company. "OERI" shall mean Ocean Energy Resources, Inc., a Delaware corporation, formerly known as Norfolk Holdings Inc., which is the parent of Ocean Canada and a Subsidiary of OEI-Louisiana. "Oil and Gas Properties" shall mean Hydrocarbon Interests; the Properties now or hereafter pooled or unitized with Hydrocarbon Interests; all presently existing or future unitization or pooling agreements and declarations of pooled units and the units created thereby (including without limitation all units created under orders, regulations and rules of any Governmental Authority having jurisdiction) which may affect all or any portion of the Hydrocarbon Interests; all operating agreements, contracts and other agreements which relate to any of the Hydrocarbon Interests or the production, sale, purchase, exchange or processing of Hydrocarbons from or attributable to such Hydrocarbon Interests; all Hydrocarbons in and under and which may be produced and saved or attributable to the Hydrocarbon Interests, the lands covered thereby and all oil in tanks and all rents, issues, profits, proceeds, products, revenues and other incomes from or attributable to the Hydrocarbon Interests; all tenements, hereditaments, appurtenances and Properties in anywise appertaining, belonging, affixed or incidental to the Hydrocarbon Interests, Properties, rights, titles, interests and estates described or referred to above, including any and all Property, real or personal, now owned or hereinafter acquired and situated upon, used, held for use or useful in connection with the operating, working or development of any of such Hydrocarbon Interests or Property (excluding drilling rigs, automotive equipment or other personal property which may be on such premises for the purpose of drilling a well or for other similar temporary uses) and including any and all oil wells, gas wells, injection wells or other wells, buildings, structures, fuel separators, liquid extraction plants, plant compressors, pumps, pumping units, field gathering systems, tanks and tank batteries, fixtures, valves, fittings, machinery and parts, engines, boilers, meters, apparatus, equipment, appliances, tools, implements, cables, wires, towers, casing, tubing and rods, surface 16 leases, rights-of-way, easements and servitudes together with all additions, substitutions, replacements, accessions and attachments to any and all of the foregoing. "Pari Passu Debt" shall mean, as of any date of determination, any Debt of the Company or OEI-Louisiana that is pari passu in right of payment to the Indebtedness. "Partnerships" shall mean the general and limited partnerships listed on Exhibit E. "Paying Agent" shall mean Chase Bank of Texas, National Association, in its capacity as the Paying Agent under the Intercreditor Agreement. "PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. "Percentage Usage" shall mean as of any date of determination, the fraction, expressed as a percentage, the numerator of which is the sum of Loans, the LC Exposure and the Canadian Indebtedness outstanding as of such date of determination and the denominator of which is the Borrowing Base in effect as of such date of determination. "Person" shall mean any individual, corporation, limited liability company, voluntary association, partnership, joint venture, trust, unincorporated organization or government or any agency, instrumentality or political subdivision thereof, or any other form of entity. "Plan" shall mean an employee pension benefit or other plan established or maintained by the Company or any ERISA Affiliate and which is covered by Title IV of ERISA, other than a Multiemployer Plan. "Pledge of Production and Trust Agreements" shall mean collectively, (i) that certain Pledge of Production Proceeds and Trust Agreements dated as of May 12, 1993 among Shell Offshore Inc., OEI-Louisiana and First National Bank of Commerce, New Orleans, Louisiana, as Trustee, as the same may from time to time be amended, and (ii) that certain Pledge of Production Proceeds and Trust Agreements dated as of May 12, 1992 among Shell Offshore Inc., OEI-Louisiana and First National Bank of Commerce, New Orleans, Louisiana, as Trustee, as amended, and as the same may be further amended from time to time. "Post-Default Rate" shall mean, in respect of any principal of any Loan or any other amount payable by the Company or OEI-Louisiana under this Agreement, any Note or any Loan Document which is not paid when due (whether at stated maturity, by acceleration or otherwise), a rate per annum during the period commencing on the due date until such amount is paid in full or the default is cured or waived equal to 2% per annum above the Base Rate as in effect from time to time plus the Applicable Margin (if any), but in no event to exceed the Highest Lawful Rate; provided that, if such amount in default is principal of a Eurodollar Loan or Absolute Rate Loan and the due date is a day other than the last day of the Interest Period therefor, the "Post-Default Rate" for such principal shall be, for the period commencing on the due date and ending on the last day of the Interest Period therefor, 2% per annum above the interest rate for such Loan as provided in Section 3.02(a), but in no event to exceed the Highest Lawful Rate, and thereafter, the rate provided for above in this definition. 17 "Prime Rate" shall mean the rate of interest from time to time announced by the Administrative Agent at the Principal Office as its prime commercial lending rate. Such rate is set by the Administrative Agent as a general reference rate of interest, taking into account such factors as it may deem appropriate, it being understood that many of the Administrative Agent's commercial or other loans are priced in relation to such rate, that it is not necessarily the lowest or best rate actually charged to any customer and that the Administrative Agent may make various commercial or other loans at rates of interest having no relationship to such rate. "Principal Office" shall mean the principal office of the Administrative Agent, presently located at 707 Travis, Houston, Texas 77002. "Property" shall mean any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible. "Quarterly Dates" shall mean the last day of each March, June, September and December in each year, commencing September 30, 1998; provided that if any such day is not a Business Day, then such Quarterly Date shall be the next succeeding Business Day. "Redetermination Date" shall mean the annual, semi-annual or other date that the redetermined Borrowing Base becomes effective. "Redetermination Period" shall mean the period between any two consecutive Redetermination Dates, regardless of the length of such period. "Regulation D" shall mean Regulation D of the Board of Governors of the Federal Reserve System (or any successor), as the same may be amended or supplemented from time to time. "Regulations T, U and X" shall mean Regulations T, U and X of the Board of Governors of the Federal Reserve System (or any successor), as the same may be amended or supplemented from time to time. "Regulatory Change" shall mean, with respect to any Lender, any change after the date of this Agreement in United States Federal, state or foreign law or regulations (including Regulation D) or the adoption or making after such date of any interpretations, directives or requests applying to a class of lenders or insurance companies, including such Lender or its Applicable Lending Office, of or under any United States Federal, state or foreign law or regulations (whether or not having the force of law) by any court or governmental or monetary authority charged with the interpretation or administration thereof. "Required Lenders" shall mean: (a) if no Event of Default has occurred and is continuing, Lenders and Canadian Lenders (who are not in default of their obligations under this Agreement or the Canadian Credit Agreement ) having, without duplication, greater than sixty-six and two-thirds percent (66-2/3%) of the sum of the Aggregate Commitments and the Canadian Subcommitments; and (b) if an Event of Default has occurred and is continuing, Lenders and Canadian Lenders holding (or, as to Letters of Credit, participating in) greater than sixty-six and two-thirds percent (66-2/3%) of the outstanding aggregate principal amount of the Conventional Loans, Canadian Indebtedness and Letters of Credit (without regard to any sale by a Lender or a 18 Canadian Lender of a participation in any Loan, Canadian Indebtedness or Letter of Credit). For purposes of this determination, Canadian dollar amounts shall be converted to Dollars at an exchange ratio specified in the definition of "Available Canadian Subcommitment". "Required Payment" shall have the meaning assigned to that term in Section 4.04. "Reserve Report" shall mean a report, in form and substance reasonably satisfactory to the Technical Agents, setting forth, as of each January 1 and July 1 (or such other date in the event of an unscheduled redetermination): (i) the oil and gas reserves attributable to Oil and Gas Properties of the Company and its Restricted Subsidiaries which the Company desires to include in the Borrowing Base, together with a projection of the rate of production and future net income, taxes, operating expenses and capital expenditures with respect thereto as of such date, based upon the pricing assumptions consistent with SEC reporting requirements at the time; and (ii) such other information as the Technical Agents may reasonably request. The term "Reserve Report" shall also include the information to be provided by the Company pursuant to Section 8.05(c). "Restricted Subsidiary" shall at all times mean OEI-Louisiana, OERI, Ocean Canada and any other Subsidiary of the Company, whether existing on or after the Effective Date, unless such Subsidiary is (i) an Unrestricted Subsidiary as of the Effective Date or is thereafter designated as an Unrestricted Subsidiary in accordance with Section 9.21 or (ii) a Subsidiary of an Unrestricted Subsidiary. "Risk Management Agreements" shall mean any commodity, interest rate or currency swap, rate cap, rate floor, rate collar, forward agreement or other exchange, price or rate protection or risk management agreements or any option with respect to any such transaction. "SEC" shall mean the Securities and Exchange Commission or any successor agency thereto. "SEC Value" shall mean the future net revenues before income taxes from proved reserves, estimated assuming that oil and natural gas prices and production costs remain constant, then discounted at the rate of 10% per year to obtain the present value. "Share" of the Allocated Canadian Borrowing Base or the Allocated U.S. Borrowing Base shall have the meaning set forth within such terms. "Short-Term Pari Passu Debt" shall mean, as of any date of determination, any Pari Passu Debt that is not Long Term Pari Passu Debt (including, without limitation, 7-5/8% $125,000,000 Senior Notes due 2005 issued by the Company pursuant to the 98 Senior (7-year) Indenture). "Subordinated Debt" shall mean: (a) the Debt of the Company and OEI- Louisiana under the 95 Indenture, the 96 Indenture, the 97 Indenture, the 98 Senior Subordinated Indenture and other Debt permitted under Section 9.01(e)(i); (b) the obligations under or in connection with the Pledge of Production and Trust Agreements; and (c) any Debt of the Company or OEI-Louisiana incurred in accordance with the terms of Section 9.01(e)(iii). 19 "Subsidiary" shall mean, with respect to any Person, any corporation or limited liability company of which at least a majority of the outstanding shares of stock or interests having by the terms thereof ordinary voting power to elect a majority of the board of directors of such corporation or a manager of such limited liability company (irrespective of whether or not at the time stock or interests of any other class or classes shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more of its Subsidiaries or by such Person and one or more of the Subsidiaries. "Tax" shall mean any present or future tax, levy, impost, duty, charge, assessment or fee of any nature (including interest, penalties and additions thereto) that is imposed by any government or other taxing authority in respect of any payment under this Agreement (or, if applicable in the context, the Canadian Credit Agreement) other than a stamp, registration, documentation or similar tax. "Tax Partnerships" shall mean partnerships or joint ventures arising out of routine joint operating agreements or farmout agreements entered into with the Company or any of its Restricted Subsidiaries with respect to Oil and Gas Properties. "Technical Agents" shall mean the Administrative Agent, the Syndication Agent and the Documentation Agent. "Termination Date" shall mean March 31, 2003, unless the Commitments are sooner terminated pursuant to Section 2.03(b) or Section 10.01, or extended pursuant to Section 2.03(a). "Total Debt" shall mean as of any date of determination, all Debt of the Company and its Consolidated Restricted Subsidiaries of the types described in clauses (a), (b) (but only letters of credit and bankers' acceptances), (c), (d), (e) and (f) of the definition of "Debt", determined on a consolidated basis in accordance with GAAP. "Type" shall mean, with respect to any Loan, an Absolute Rate Loan, a Eurodollar Loan or a Base Rate Loan, each being a "Type" of Loan. "UMC" shall mean UMC Petroleum Corporation, a Delaware corporation which merged into OEI-Louisiana in connection with the Merger Agreement. "United Meridian" shall mean United Meridian Corporation, a Delaware corporation which merged into the Company pursuant to the Merger Agreement. "Unrestricted Subsidiary" shall mean, as of the Effective Date, each Subsidiary of the Company specified as such on Exhibit D, and any other Subsidiary of the Company which (i) the Board of Directors of the Company has determined will be designated an Unrestricted Subsidiary as provided in Section 9.21 and (ii) is a Subsidiary of an Unrestricted Subsidiary. "Voting Stock" shall mean, with respect to any Person, any class or classes of capital stock 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 any 20 Person (irrespective of whether or not, at the time, 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" shall mean any Restricted Subsidiary to the extent (i) all of the capital stock or other ownership interests in such Restricted Subsidiary, other than any directors' qualifying shares mandated by applicable law, is owned directly or indirectly by the Company or (ii) such Restricted Subsidiary is organized in a foreign jurisdiction and is required by the applicable laws and regulations of such foreign jurisdiction to be partially owned by the government of such foreign jurisdiction or individuals or corporate citizens of such foreign jurisdiction in order for such Restricted Subsidiary to transact business in such foreign jurisdiction, provided that the Company, directly or indirectly, owns the remaining capital stock or ownership interest in such Restricted Subsidiary and, by contract or otherwise, controls the management and business of such Restricted Subsidiary to substantially the same extent as if such Restricted Subsidiary were a wholly owned Subsidiary. SECTION 1.03 ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all determinations with respect to accounting matters hereunder shall be made, and all financial statements and certificates and reports as to financial matters required to be furnished to any Agent or the Lenders hereunder shall be prepared, in accordance with GAAP, applied on a basis consistent with the Financial Statements. Unless otherwise specified, all amounts referred to herein and in the other Loan Documents (other than the Canadian Credit Agreement and any guaranty executed in connection with the Canadian Credit Agreement) are in Dollars. ARTICLE II COMMITMENTS SECTION 2.01 LOANS AND LETTERS OF CREDIT. (A) CONVENTIONAL LOANS. (i) Each Lender severally agrees, on the terms and conditions of this Agreement, to make revolving credit loans (each a "Conventional Loan") to the Company during the period from and including the Effective Date to and including the Termination Date, in an aggregate principal amount at any one time outstanding up to but not exceeding the lesser of (1) such Lender's Commitment and (2) the amount of such Lender's Share of the Allocated U.S. Borrowing Base as then in effect; provided that the aggregate principal amount of all Conventional Loans and all Bid Rate Loans made by all of the Lenders hereunder at any one time outstanding shall not exceed the Available U.S. Commitment, as then in effect, minus the LC Exposure then outstanding. Subject to the terms of this Agreement, during the period from the Effective Date to and including the Termination Date, the Company may borrow, repay and reborrow the amount of the Available U.S. Commitment as then in effect. Conventional Loans may be Base Rate Loans or Eurodollar Loans. (ii) Unless consented to in writing by the Administrative Agent, no more than seven (7) Eurodollar Loans that are Conventional Loans may be outstanding from each 21 Lender at any time. For purposes of this Section 2.01(a)(ii), Eurodollar Loans having different Interest Periods, regardless of whether they commence on the same date, shall be considered separate Loans. (B) LETTERS OF CREDIT. (i) During the period from and including the Effective Date to and including the Termination Date, the Administrative Agent agrees, on behalf of the Lenders, to extend credit to the Company by issuing, renewing, extending or reissuing Letters of Credit for the account of the Company or any of its Subsidiaries; provided that the aggregate LC Exposure at any one time outstanding shall not exceed the lesser of (A) the Available U.S. Commitment as then in effect minus the aggregate amount of all Conventional Loans and Bid Rate Loans then outstanding or (B) $50,000,000. (ii) Each of the Letters of Credit shall (A) be issued by the Administrative Agent or The Chase Manhattan Bank, an Affiliate of the Administrative Agent, (B) contain such terms and provisions as are reasonably required by the Administrative Agent in accordance with its customary procedures, (C) be for the account of the Company or one of its Subsidiaries, and (D) expire not later than the earlier of three (3) years after the issue date of such Letter of Credit or five (5) days before the Termination Date. (iii) In conjunction with the issuance of a Letter of Credit, the Company shall execute a Letter of Credit Agreement. In the event of any conflict between any provision of a Letter of Credit Agreement and this Agreement, the Company, the Agents and the Lenders hereby agree that the provisions of this Agreement shall govern. Such conflicts include, without limitation, provisions in a Letter of Credit Agreement providing for an interest rate different from the interest rate provided in this Agreement and provisions in a Letter of Credit Agreement requiring or relating to collateral to secure the obligations thereunder. (C) BID RATE LOANS. (i) Each Lender severally agrees that the Company from time to time may request one or more of the Lenders to make loans to the Company on a non-pro rata basis (each a "Bid Rate Loan") in the manner set forth in Section 2.02(g) during the period from and including the Effective Date to and including the Termination Date; provided that (A) no Lender shall be obligated to make Bid Rate Loans to the Company unless such Lender has irrevocably offered to make a Bid Rate Loan pursuant to Section 2.02(g)(iii); and (B) following the making of any Bid Rate Loan by any Lender, the aggregate principal amount of all Conventional Loans and all Bid Rate Loans made by all of the Lenders hereunder at any one time outstanding shall not exceed the Available U.S. Commitment, as then in effect, minus the LC Exposure then outstanding. Bid Rate Loans may be Eurodollar Loans or Absolute Rate Loans. For purposes of this Section 2.01(c)(i) and Section 2.02(g), Bid Rate Loans having different Interest Periods, regardless of whether they commence on the same date, shall be considered separate Loans. 22 (ii) The making of any Bid Rate Loan to the Company by any Lender shall not be deemed to be a utilization of such Lender's Commitment (although it shall be deemed to be a utilization of the Available U.S. Commitment to effect the above stated limitation and for all other purposes of this Agreement). (D) LOANS UNDER PRIOR CREDIT AGREEMENT. On the Effective Date: (i) the Company shall pay all accrued and unpaid fees outstanding under the Prior Credit Agreement for the account of each "Lender" under the Prior Credit Agreement; (ii) to the extent outstanding on the Effective Date, each "Base Rate Loan" and "Eurodollar Loan" under the Prior Credit Agreement shall be repaid and the Company shall pay to the lenders thereunder any amounts due under Section 5.05 of the Prior Credit Agreement; (iii) all letters of credit issued under the Prior Credit Agreement (which are scheduled on Schedule 2.01) shall be deemed to be issued under Section 2.02(d) hereof as of the Effective Date; and (iv) the Prior Credit Agreement and the commitments thereunder shall be superseded by this Agreement and such commitments shall be amended and restated as set forth herein. SECTION 2.02 BORROWINGS, CONTINUATIONS AND CONVERSIONS; ISSUANCE OF LETTERS OF CREDIT. (A) BORROWINGS. The Company shall give the Administrative Agent (which shall promptly notify the Lenders) advance notice as hereinafter provided of each borrowing, continuation, and conversion hereunder of a Conventional Loan, which shall specify the aggregate amount of such borrowing, continuation or conversion, the Type and date (which shall be a Business Day) of the Conventional Loans to be borrowed, continued or converted, and (in the case of Eurodollar Loans) the duration of the Interest Period therefor. (B) MINIMUM AMOUNTS. All Base Rate Loans (as part of the same borrowing) shall be in aggregate amounts among all Lenders of at least $1,000,000 (or whole multiples thereof) or the remaining unused portion of the Commitments. All Eurodollar Loans (as part of the same borrowing) shall be in aggregate amounts among all Lenders of at least $3,000,000 (or a whole multiple of $1,000,000 in excess thereof). All Bid Rate Loan borrowings under Section 2.02(g) shall be in amounts of at least $5,000,000. (C) NOTICES, ETC. FOR CONVENTIONAL LOANS. All borrowings, continuations and conversions relating to Conventional Loans shall require advance written notice from the Company to the Administrative Agent, in the form of Exhibit C-1, or such other form as may be accepted by the Administrative Agent from time to time, which in each case shall be irrevocable and effective only upon receipt by the Administrative Agent not later than (i) in the case of a Base Rate Loan, 11:00 a.m. Houston time on the date of such borrowing, continuation or conversion; and (ii) in the case of a Eurodollar Loan, 12:00 noon Houston time on a day which is 23 not less than three (3) Business Days prior to the date of such borrowing, continuation or conversion. Not later than 12:00 noon Houston time on the date specified for each borrowing hereunder of a Conventional Loan, each Lender shall make available the amount of the Conventional Loan to be made by such Lender on such date to the Administrative Agent, at an account maintained by the Administrative Agent at the Principal Office, in immediately available funds for the account of the Company. The amounts so received by the Administrative Agent shall, subject to the terms and conditions of this Agreement, be made available to the Company by depositing the same, in immediately available funds, in an account of the Company designated by the Company and maintained with the Administrative Agent at the Principal Office. (D) LETTERS OF CREDIT. The Company shall give the Administrative Agent (which shall promptly notify the Lenders) advance notice as provided in Section 2.02(c) not less than one (1) Business Day prior thereto of each request for the issuance, renewal, or extension of a Letter of Credit hereunder which request shall specify the amount of such Letter of Credit, the date (which shall be a Business Day) such Letter of Credit is to be issued, renewed or extended, the duration thereof, the beneficiary thereof, and such other terms as the Administrative Agent may reasonably request, all of which shall be reasonably satisfactory to the Administrative Agent. Subject to the terms and conditions of this Agreement, on the date specified for the issuance, renewal or extension of a Letter of Credit, the Administrative Agent shall issue such Letter of Credit to the beneficiary thereof. (E) CONTINUATION OPTIONS. Subject to the terms of this Agreement, the Company may elect to continue all or any part of any Eurodollar Loan that is a Conventional Loan beyond the expiration of the then current Interest Period relating thereto by giving advance notice to the Administrative Agent of such election, specifying the amount of such Eurodollar Loan to be continued and the Interest Period therefor. In the absence of such a timely and proper election, the Company shall be deemed to have elected to convert such Eurodollar Loan to a Base Rate Loan. All or any part of any Eurodollar Loan may be continued as provided herein, provided that (i) the principal amount of all or any part of a Loan so continued shall be not less than $3,000,000 in the aggregate for all Lenders and (ii) no Default shall have occurred and be continuing. If a Default shall have occurred and be continuing, each Eurodollar Loan shall be converted to a Base Rate Loan on the last day of the Interest Period applicable thereto. The Company may not continue Bid Rate Loans. (F) CONVERSION OPTIONS. The Company may elect to convert any Eurodollar Loan that is a Conventional Loan on the last day of the then current Interest Period relating thereto to a Base Rate Loan by giving advance notice to the Administrative Agent of such election. Subject to the terms of this Agreement, the Company may elect to convert all or any part of a Base Rate Loan that is a Conventional Loan at any time and from time to time to a Eurodollar Loan by giving advance notice to the Administrative Agent of such election. All or any part of any outstanding Loan may be converted as provided herein, provided that any conversion of any Base Rate Loan into a Eurodollar Loan shall be (as to each such Loan into which there is a conversion for an applicable Interest Period) in the principal amount not less than $3,000,000 in the aggregate for all Lenders. If no Default shall have occurred and be continuing, each Loan may be converted as provided in this Section. If a Default shall have occurred and be 24 continuing, no Loan may be converted into a Eurodollar Loan. The Company may not convert Bid Rate Loans. (G) BID RATE LOANS. The procedure for making Bid Rate Loans shall be as follows: (i) The Company may request Bid Rate Loans pursuant to this Section 2.02(g) from time to time from the Lenders by giving to the Competitive Bid Auction Agent a notice of a proposed bid rate borrowing in substantially the form of Exhibit C-2 hereto (a "Competitive Bid Request"), which notice shall be given not later than 10:00 a.m., Houston time, on a Business Day not less than four (4) Business Days prior to the proposed date the Bid Rate Loans are to be borrowed if such Bid Rate Loans are Eurodollar Loans and not less than one (1) Business Day prior to the proposed date the Bid Rate Loans are to be borrowed if such Bid Rate Loans are Absolute Rate Loans. The Competitive Bid Request shall specify the proposed date of the Bid Rate Loans to be borrowed (which shall be a Business Day), the aggregate amount of the proposed Bid Rate Loans to be made, which shall be not less than $5,000,000, the duration therefor, the Type, the interest payment date or dates relating thereto, and any other terms to be applicable to such Bid Rate Loan. The Company may request offers to make Bid Rate Loans for up to three (3) different Interest Periods in a single Competitive Bid Request. The terms of a Competitive Bid Request may not waive or modify any of the conditions precedent set forth herein. The Competitive Bid Auction Agent, as bid administrator, shall promptly notify the Administrative Agent and each Lender of the Company's request for Bid Rate Loans by sending each Lender a copy of the Competitive Bid Request. (ii) Each Competitive Bid Request must be in writing and may be delivered (whether by the Company or the Competitive Bid Auction Agent as bid administrator) by telegraph, telex, telecopy, other facsimile transmission or other suitable means. All responses to any Competitive Bid Request shall be in writing and may be delivered to the Competitive Bid Auction Agent by telegraph, telex, telecopy, other facsimile transmission or other suitable means. (iii) Upon receipt of such Competitive Bid Request, each Lender may, if, in its sole discretion, it elects to do so, irrevocably offer to make one or more Bid Rate Loans to the Company at a rate or rates of interest specified by such Lender in its sole discretion by notifying the Competitive Bid Auction Agent, as bid administrator (which shall promptly convey such response to the Company), in writing by supplying a Bid Rate Quote in substantially the form of Exhibit C-3 hereto of its decision not later than 2:00 p.m., Houston time, on the Business Day not less than four (4) Business Days prior to the proposed date the Bid Rate Loans are to be borrowed if such Bid Rate Loans are Eurodollar Loans and before 10:00 a.m. Houston time on the same Business Day as the Bid Rate Loans are to be borrowed if such Bid Rate Loans are Absolute Rate Loans (provided that if the Administrative Agent, in its capacity as a Lender, desires to submit a Bid Rate Quote, it shall on the relevant date submit its quote not later than 1:45 p.m. and 9:45 a.m., respectively), of the minimum amount and maximum amount of each Bid Rate Loan such Lender would be willing to make as part of such proposed Bid Rate Loan (which shall be not less than $5,000,000), the rate or rates of interest therefor, the 25 Applicable Lending Office therefor, if different, and the period of time during which such Lender's offer with respect to such rate or rates of interest shall remain open. Such rate or rates of interest may be either an Absolute Rate or based on the definition of "Eurodollar Rate," adding or subtracting any margin which such Lender deems appropriate. Unless otherwise agreed by the Competitive Bid Auction Agent and the Company, no Bid Rate Quote shall contain qualifying, conditional or similar language, propose terms other than or in addition to those set forth in the relevant Competitive Bid Request, or be conditioned upon acceptance by the Company of all of the Bid Rate Loans for which such offer is being made. Bid Rate Quotes not in compliance with this clause (iii) may be disregarded by the Company in its sole discretion. (iv) The Company shall, in turn, not later than the expiration of the period of time specified by such Lender during which its offer would remain open (but in no event later than 10:30 a.m. Houston time on the Business Day that is three (3) Business Days prior to the proposed borrowing date if such Bid Rate Loans are Eurodollar Loans and not later than 11:00 a.m. Houston time on the proposed borrowing date if such Bid Rate Loans are Absolute Rate Loans), in its sole discretion, either (A) cancel its request by giving the Competitive Bid Auction Agent, as bid administrator, notice to that effect, or (B) accept one or more offers made by Lenders to make one or more Bid Rate Loans, in its sole discretion, by giving notice to the Competitive Bid Auction Agent, as bid administrator, of the amount of each Bid Rate Loan to be made by such Lender (which amount shall be equal to or greater than the minimum amount and less than or equal to the maximum amount, that such Lender specified to the Company for such Bid Rate Loan pursuant to clause (iii) above, but in no event shall such amount be less than $5,000,000). In the event the Company fails to cancel its request or to accept the offer of a Lender to make one or more Bid Rate Loans within the time periods specified in this clause (iv), the Company shall be deemed to have canceled its request for such Bid Rate Loan. Upon notice that a Competitive Bid Request has been canceled, the Competitive Bid Auction Agent, as bid administrator, shall give prompt notice thereof to the Administrative Agent and the Lenders. (v) The Company shall have no obligation to accept any offers, but if the Company accepts offers, it shall do so on the basis of the lowest Bid Rate offered; and in the event bids are equal, the Company may accept any such offers in its sole discretion. If the Company accepts one or more of the offers made by the Lenders, the Competitive Bid Auction Agent, as bid administrator, shall promptly notify the Administrative Agent and each Lender whose offer was accepted of the date and aggregate amount of such Bid Rate Loan and shall promptly notify all other Lenders whose offers were not accepted of such fact. The benefit of any notice or time periods specified above in this Section 2.02(g) relating to Bid Rate Loans from any Lender may be waived by the Company or such Lender, as the case may be, without the consent or approval of the Competitive Bid Auction Agent or any other Lender. (vi) Not later than 1:00 p.m., Houston time, on the date specified for each borrowing hereunder of a Bid Rate Loan, each Lender that has had its bids accepted shall make available the amount of such Bid Rate Loan to be made by it on such date to the Administrative Agent, at an account maintained by the Administrative Agent at the 26 Principal Office, in immediately available funds, for the account of the Company. The amounts so received by the Administrative Agent shall, subject to the terms and conditions of this Agreement, including without limitation the satisfaction of all conditions precedent specified in Section 6.02, be made available to the Company by depositing the same, in immediately available funds, in an account of the Company, designated by the Company, maintained with the Administrative Agent at the Principal Office. (vii) If any Lender makes a new Bid Rate Loan hereunder on a day on which the Company is to repay all or any part of any outstanding Bid Rate Loan from such Lender, such Lender shall apply the proceeds of its new Bid Rate Loan to make such repayment and only an amount equal to the difference (if any) between such amount being borrowed and such amount being repaid shall be made available by such Lender to the Company or remitted by the Company to such Lender, as the case may be. (viii) The indebtedness of the Company resulting from each Bid Rate Loan made to the Company shall be evidenced by the records of each Lender making a Bid Rate Loan and by the Bid Rate Note therefor. Such records shall be presumed correct; provided that the failure of any Lender to make any such notation on its Bid Rate Note shall not affect the Company's obligations in respect of its Bid Rate Loan from such Lender. (ix) All notices to any Lender required by this Section 2.02(g) shall be made in accordance with Section 12.02 and the Competitive Bid Administrative Questionnaire most recently placed on file by each Lender with the Competitive Bid Auction Agent or the Administrative Agent. (x) The Chase Manhattan Bank, an Affiliate of the Administrative Agent, hereby agrees to be a party to this Agreement for the sole purpose of acting as Competitive Bid Auction Agent and performing all duties assigned to the Competitive Bid Auction Agent as the bid administrator hereunder. SECTION 2.03 EXTENSIONS AND CHANGES OF COMMITMENTS. (A) EXTENSION OF TERMINATION DATE. (i) At any time during the 60-day period beginning February 1st of a year and ending on April 1st of such year, the Company may request in writing that, in connection with the forthcoming redetermination of the Borrowing Base, the Lenders and the Canadian Lenders extend the Termination Date for a period of one (1) additional year; provided, that any such extension shall require the consent of all of the Lenders and the Canadian Lenders, which consent may be withheld in each such Person's sole discretion; and provided, further, that if any Lender or Canadian Lender has not responded to such request in writing within 45 days after receipt of the written request of the Company by the Administrative Agent, such failure shall be deemed a denial of said request. (ii) Notwithstanding the foregoing clause (i), if the Required Lenders (but not all Lenders and Canadian Lenders) have agreed to extend the then applicable Termination Date as provided in Section 2.03(a)(i), then the Company (or Ocean Canada) may 27 terminate, in whole but not in part, the Commitment of any Lender or the Canadian Subcommitment of any Canadian Lender which has refused to grant such extension (a "Terminated Lender") upon five (5) Business Days' notice, during the period commencing on the expiration of the 45-day notice period referred to above (or, if earlier, the date of receipt by the Company of notice of such Terminated Lender's refusal) and ending on the date thirty (30) days after the end of such 45-day period, by giving written notice to the Terminated Lender and the Administrative Agent (or the Canadian Agent) (such notice referred to herein as a "Notice of Termination"). In order to effect the termination of the Commitment (or Canadian Subcommitment) of the Terminated Lender, the Company (or Ocean Canada) shall: (1) obtain an agreement with one or more Lenders (or Canadian Lenders) to increase its respective Commitment (or Canadian Subcommitment) and/or (2) request any one or more other financial institutions to become parties to this Agreement (or the Canadian Credit Agreement) in place of such Terminated Lender; provided, that any such financial institution is reasonably acceptable to the Administrative Agent (or the Canadian Agent) and becomes party to this Agreement (or the Canadian Credit Agreement) by executing an Assignment and Acceptance (or its equivalent under the Canadian Credit Agreement) (the Lender or other financial institutions that agree to accept in whole or in part the Commitment (or Canadian Subcommitment) of the Terminated Lender being referred to herein as the "Replacement Lender") and to assume the Loans of the Terminated Lender, such that the aggregate increased and/or accepted Commitments (or Canadian Subcommitments) of the Replacement Lender(s) under clauses (1) and (2) equal the Commitment (or Canadian Subcommitment) of the Terminated Lender. If the Company (or Ocean Canada) is unable to obtain one or more Replacement Lenders to accept the Commitment (or Canadian Subcommitment) and to assume the Loans of the Terminated Lender, then, if no Default or Event of Default has occurred at the time of such proposed extension, the Company shall either elect by written notice to the Administrative Agent to forego the requested extension or reduce the Aggregate Commitments (or, if applicable, the aggregate Canadian Subcommitments) by an amount equal to the Commitment (or Canadian Subcommitment) of the Terminated Lender. (The failure to give such notice will be deemed an election by the Company to forego the requested extension.) If a Default or Event of Default has occurred and is continuing, no extension will be permitted without the consent of all Lenders and the Canadian Lenders. Any assignment to a Replacement Lender shall be effected pursuant to Section 12.06(b) or Section 12.03(b) of the Canadian Credit Agreement, as applicable. (B) OPTIONAL REDUCTION. The Company shall have the right to terminate or to reduce the Aggregate Commitments at any time or from time to time upon not less than one (1) Business Day's prior written notice to the Administrative Agent (which shall promptly notify the Lenders) of each such termination or reduction, which notice shall specify the effective date thereof and the amount of any such reduction (which shall not be less than $5,000,000, or any whole multiple of $1,000,000 in excess thereof). Such notice shall be irrevocable and effective only upon receipt by the Administrative Agent. (C) REINSTATEMENT. The Aggregate Commitments once terminated or reduced may not be reinstated. The amount of the Available U.S. Commitment may increase or decrease from time to time in accordance with the terms hereof, including, but not limited to Section 2.09. 28 SECTION 2.04 FACILITY FEE AND OTHER FEES. (A) FACILITY FEE. The Company shall pay to the Administrative Agent for the account of the Lenders a facility fee (the "Facility Fee") in an aggregate amount equal to the Facility Fee Rate times an amount equal to the average daily Available U.S. Commitment. The Facility Fee will accrue for the period from and including the Effective Date to and including the Termination Date, without regard to the outstanding principal amount of Loans outstanding. Accrued Facility Fees shall be payable in arrears on each Quarterly Date and on the Termination Date. (B) LETTER OF CREDIT FEE. The Company agrees to pay to the Administrative Agent for the account of the Lenders a quarterly fee for issuing the Letters of Credit, calculated separately for each Letter of Credit, in an aggregate amount for each Letter of Credit equal to 1/4 of the product of (i) the LC Fee Rate, as then in effect, and (ii) the daily average balance during such quarter of the amount of the Letter of Credit upon which drafts may be drawn from time to time commencing on the date of issuance of such Letter of Credit (or on the date of Initial Funding for Letters of Credit issued under the Prior Credit Agreement and outstanding on the date of Initial Funding); provided that each respective Letter of Credit shall bear an aggregate minimum quarterly fee equal to $350, or such other fee as may be specifically agreed by the Company and the Administrative Agent in each respective Letter of Credit Agreement. All fees for all Letters of Credit (including all fees incurred for any amendments to Letters of Credit) shall be payable in arrears on each Quarterly Date. (C) ISSUING FEE. In addition to the fees described in Section 2.04(b), the Company shall pay to the Administrative Agent for its own account a quarterly fee for issuing each Letter of Credit, calculated separately for each Letter of Credit, in an aggregate amount for each Letter of Credit equal to 1/4 of the product of (i) .125% per annum and (ii) the daily average balance during such quarter of the amount of the Letter of Credit upon which drafts may be drawn from time to time commencing on the date of issuance of such Letter of Credit (or on the date of Initial Funding for Letters of Credit issued under the Prior Credit Agreement and outstanding on the date of Initial Funding). All fees for all Letters of Credit (including all fees incurred for any amendments to Letters of Credit) shall be payable in arrears on each Quarterly Date. (D) COMPETITIVE BID ADMINISTRATION FEE. Upon delivery of each Competitive Bid Request to the Administrative Agent, the Company shall pay to the Competitive Bid Auction Agent, as bid administrator, for its own account, a bid administration fee of $1,000, which fee shall be due and payable regardless of whether or not the Company cancels its request or accepts any offers from any Lender. (E) BORROWING BASE INCREASES. Upon any increase in the Borrowing Base to an amount greater than $300,000,000 and on the occasion of each increase in the amount of the Borrowing Base thereafter, the Company shall pay to the Administrative Agent for the account of the Lenders a one-time aggregate additional non-refundable facility fee of 0.15% of such increase on each Redetermination Date on which the Borrowing Base shall increase above the highest Borrowing Base outstanding under this Agreement prior to such date. 29 (F) FEE LETTERS. The Company shall pay to the Administrative Agent and its Affiliates and the Syndication Agent such other amounts as are set forth in the Fee Letters on the dates set forth therein. SECTION 2.05 LENDING OFFICES. The Loans of each Type made by each Lender shall be made and maintained at such Lender's Applicable Lending Office for Loans of such Type. SECTION 2.06 SEVERAL OBLIGATIONS. The failure of any Lender to make any Loan to be made by such Lender or to provide funds for disbursements under Letters of Credit on the date specified therefor shall not relieve any other Lender of its obligation to make its Loan or provide such funds on such date, but no Lender shall be responsible for the failure of any other Lender to make a Loan to be made by such other Lender or to provide funds to be provided by such other Lender. SECTION 2.07 NOTES. (A) CONVENTIONAL NOTES. The Conventional Loans made by each Lender shall be evidenced by a single promissory note of the Company in substantially the form of Exhibit A-1, dated as of the Effective Date or such later date that a Lender becomes a party hereto, payable to the order of such Lender in a principal amount equal to the maximum amount of its Commitment as originally in effect and otherwise duly completed. The date, amount, Type and interest rate of each Conventional Loan made by each Lender, and all payments made on account of the principal thereof, shall be recorded by such Lender on its books and, prior to any transfer of the Conventional Loan Note held by it, endorsed by such Lender on the schedule attached to such Note or any continuation thereof; provided that the failure of a Lender to make any notation shall not affect the Company's obligations in respect of such Loan. (B) BID RATE NOTES. The Bid Rate Loans made by each Lender shall be evidenced by a single promissory note of the Company in substantially the form of Exhibit A-2, dated as of the Effective Date or such later date that a Lender becomes a party hereto, payable to such Lender and otherwise duly completed. The date, amount, Type, interest rate and maturity date of each Bid Rate Loan made by each Lender, and all payments made on account of the principal thereof, shall be recorded by such Lender on its books and, prior to any transfer of the Bid Rate Note held by it, endorsed by such Lender on the schedule attached to such Note or any continuation thereof; provided that the failure of a Lender to make any notation shall not affect the Company's obligations in respect of such Loan. (C) NO RIGHT TO SUBDIVIDE. No Lender shall be entitled to have its Notes subdivided, by exchange for promissory notes of lesser denominations or otherwise, except in connection with a permitted assignment of all or any portion of such Lender's Commitment, Loans and Notes pursuant to Section 12.06(b). SECTION 2.08 PREPAYMENTS. (A) OPTIONAL PREPAYMENTS. The Company may prepay Conventional Loans on any Business Day upon notice to the Administrative Agent (which shall promptly notify the Lenders), which notice (i) shall be given by the Company not later than 12:00 noon Houston time on such Business Day, (ii) shall specify the amount of the prepayment (which shall be not 30 less than $1,000,000 or the remaining balance of Base Rate Loans outstanding, if less) and (iii) shall be irrevocable and effective only upon receipt by the Administrative Agent. Interest on the principal prepaid, accrued to the prepayment date, shall be paid on the prepayment date. Any prepayment of any Eurodollar Loans shall be subject to the provisions of Section 5.05. The Company may not prepay Bid Rate Loans; provided that the foregoing shall not prevent an acceleration of the maturity of a Bid Rate Loan upon the occurrence and continuance of an Event of Default. (B) MANDATORY PREPAYMENT UPON REDUCTION OF COMMITMENT. If, after giving effect to any termination or reduction of the Aggregate Commitments pursuant to Section 2.03, the sum of the outstanding aggregate principal amount of the Loans and the LC Exposure exceeds the Aggregate Commitments, then the Company shall on the date of such termination or reduction pay or prepay the amount of such excess for application first, towards reduction of all amounts previously drawn under Letters of Credit, but not yet funded as a Conventional Loan pursuant to Section 4.07(b) or reimbursed, second, if necessary, towards reduction of the outstanding principal balance of the Conventional Loan Notes by prepaying Base Rate Loans, if any, then outstanding, third, if necessary, toward a reduction of the outstanding principal balance of the Conventional Loan Notes by prepaying Eurodollar Loans, if any, then outstanding, fourth, if necessary, paying such amount to the Administrative Agent as cash collateral for outstanding Letters of Credit, which amount shall be held by the Administrative Agent as cash collateral to secure the Company's obligation to reimburse the Administrative Agent and the Lenders for drawings under the Letters of Credit and fifth, if necessary, paying such amount to the Administrative Agent as cash collateral for outstanding Bid Rate Loans, which amount shall be held by the Administrative Agent as cash collateral to secure the Company's obligation under such Loans. The Company shall on the date of such termination or reduction also pay any amounts payable pursuant to Section 5.05 in connection therewith. (C) MANDATORY PREPAYMENT UPON REDETERMINATION. Upon any adjustment or redetermination of the amount of the Borrowing Base in accordance with (i) Section 2.09, (ii) 8.05(d), (iii) 9.01(e), (iv) 9.01(h)(ii), (v) Section 9.01(o), (vi) Section 9.16(b) or (vii) Section 9.21 or otherwise, if the adjusted or redetermined Borrowing Base is less than the sum of the aggregate outstanding principal amount of the Loans, the LC Exposure and the Canadian Indebtedness (a "Borrowing Base Deficiency"), then the Company shall within 90 days of receipt of written notice thereof either (i) take such steps as may be approved by the Administrative Agent to increase the Borrowing Base by an amount equal to or greater than the amount of such Borrowing Base Deficiency or (ii) prepay the amount of such Borrowing Base Deficiency for application first, towards reduction of all amounts previously drawn under Letters of Credit, but not yet funded as a Conventional Loan pursuant to Section 4.07(b) or reimbursed, second, if necessary, towards reduction of the outstanding principal balance of the Conventional Loan Notes and Canadian Indebtedness by prepaying Base Rate Loans, as defined herein and as defined in the Canadian Credit Agreement, if any, then outstanding, third, if necessary, towards prepayment of Bankers' Acceptances issued and outstanding under the Canadian Credit Agreement, fourth, if necessary, towards a reduction of the outstanding principal balance of the Conventional Loan Notes by prepayment of Eurodollar Loans, if any, then outstanding, fifth, if necessary, towards payment of such amount to the Administrative Agent as cash collateral for outstanding Letters of Credit, which amount shall be held by the Administrative Agent as cash collateral to secure the Company's obligation to reimburse the Administrative Agent and the 31 Lenders for drawings under the Letters of Credit and sixth, if necessary, towards payment of such amount to the Administrative Agent as cash collateral for outstanding Bid Rate Loans, which amount shall be held by the Administrative Agent as cash collateral to secure the Company's obligation under such Loans. The Company shall also pay any amounts payable pursuant to Section 5.05 in connection therewith. (D) PREPAYMENT FOLLOWING REALLOCATION. Upon any reallocation of the Borrowing Base in accordance with Section 2.09, if either (i) the Available U.S. Commitment is less than the sum of the aggregate outstanding principal amount of the Loans and the LC Exposure or (ii) the Available Canadian Subcommitment is less than the Canadian Indebtedness, then in either case, the Company shall within 90 days of receipt of written notice thereof, prepay the amount of such excess in a manner consistent with the application order specified in Section 2.08(c). (E) NO PENALTY OR PREMIUMS. Subject to compensation requirements of Section 5.05, all prepayments shall be without premium or penalty. SECTION 2.09 BORROWING BASE. (A) ALLOCATION. (i) For the period from and including the Effective Date to but not including the first Redetermination Date, the amount of the Borrowing Base shall be $300,000,000. The Borrowing Base may not exceed the Aggregate Commitments. (ii) Subject to the terms of Section 2.09(a)(i), the Borrowing Base shall be determined in accordance with Sections 2.09(b), (c) and (d) by the Technical Agents with the approval or deemed approval of the Required Lenders (provided that any increase in the Borrowing Base shall require the approval or deemed approval of all the Lenders and the Canadian Lenders). The Borrowing Base will be redetermined semi-annually on May 1st and November 1st of each year in accordance with Section 2.09(b), commencing May 1, 1999. Upon any redetermination of the Borrowing Base, such redetermination shall remain in effect until the next successive Redetermination Date. (iii) The Borrowing Base may be allocated between the Company under this Agreement and Ocean Canada under the Canadian Credit Agreement. Subject to the other terms of this Agreement, the Allocated U.S. Borrowing Base in effect from time to time shall represent the maximum amount of credit in the form of Loans and Letters of Credit (subject to the Aggregate Commitments and the other provisions of this Agreement) that the Lenders will extend to the Company at any one time prior to the Termination Date. On the Effective Date, the Allocated Canadian Borrowing Base shall be $7,000,000 resulting in an initial Allocated U.S. Borrowing Base of $293,000,000. (iv) The Company at any time shall have the right to request in writing to the Administrative Agent, Canadian Agent and the Canadian Lenders that the Canadian Lenders, in their sole discretion, increase the Allocated Canadian Borrowing Base; provided that any such increase shall require the approval of all of the Canadian Lenders; and provided further that the Company may not make such request more than three (3) times during any twelve month period. Within ten (10) Business Days of the receipt by 32 the Canadian Lenders of such request, the Canadian Lenders shall give written notice to the Company and the Administrative Agent of their approval or disapproval of such increase. If such increase is approved, each Lender which is also a Canadian Lender (or who has an Affiliated Canadian Lender) shall have its pro rata share of the Allocated U.S. Borrowing Base reduced by an amount equal to its corresponding increase in the Allocated Canadian Borrowing Base. The revised Allocated U.S. Borrowing Base and Allocated Canadian Borrowing Base (and, if applicable, Commitment Percentages) shall become effective upon the distribution by the Administrative Agent to the Company, all Lenders and all Canadian Lenders of written notice thereof which shall occur not later than three (3) Business Days after its receipt of the notice of increase. (v) The Company at any time shall have the right to request in writing to the Administrative Agent, the Canadian Agent and the Lenders who are also Canadian Lenders (or who have Affiliated Canadian Lenders) that such Lenders who are also Canadian Lenders (or who have Affiliated Canadian Lenders), in their sole discretion, permit the Company to decrease the Allocated Canadian Borrowing Base; provided that any such change shall require the approval of all of such Lenders; and provided further that the Company may not make such request more than three (3) times during any twelve month period. Within ten (10) Business Days of the receipt by such Lenders of such request, such Lenders shall give written notice to the Company and the Administrative Agent of their approval or disapproval of such change. If such decrease is approved, each such Lender shall have its pro rata share of the Allocated U.S. Borrowing Base increased by an amount equal to its corresponding decrease in the Allocated Canadian Borrowing Base. The revised Allocated U.S. Borrowing Base and Allocated Canadian Borrowing Base (and, if applicable, Commitment Percentages) shall become effective upon the distribution by the Administrative Agent to the Company, all Lenders and all Canadian Lenders of written notice thereof which shall occur not later than three (3) Business Days after its receipt of the notice of increase. (vi) Reallocations of the Allocated U.S. Borrowing Base and Allocated Canadian Borrowing Base may affect the Commitment Percentage set forth on Annex I, but shall not, without the prior agreement of all the Lenders and the Company, affect the Global Commitment Percentage. (B) REDETERMINATION. On or before April 1st and October 1st of each year, commencing April 1, 1999, the Technical Agents shall propose in writing to the Company, the Lenders and the Canadian Lenders a new Borrowing Base in accordance with Section 2.09(c) (assuming receipt by the Technical Agents of the Engineering Reports in a timely and complete manner). After having received notice of such proposal by the Technical Agents, each Lender and each Canadian Lender shall have ten (10) days to agree with such proposal or disagree by proposing an alternate Borrowing Base. If at the end of ten (10) days, any Lender or Canadian Lender has not communicated its approval or disapproval, such silence shall be deemed to be an approval. If, however, at the end of such 10- day period, the Required Lenders have not approved or deemed to have approved, as aforesaid, the proposed Borrowing Base, then the Borrowing Base shall be determined in accordance with Section 2.09(d). After such redetermined Borrowing Base is approved by the Required Lenders or is otherwise determined as provided in Section 2.09(d), it shall become effective and applicable to the Company, the Agents, the 33 Lenders and the Canadian Lenders as of the next succeeding May 1st or November 1st, as applicable. (C) ENGINEERING REPORTS. Upon receipt of the Reserve Reports and such other reports, data, and supplemental information as may, from time to time, be reasonably requested by the Required Lenders (the "Engineering Reports"), together with a certificate from the President or chief financial officer of the Company that, to the best of his knowledge and in all material respects, (i) the information contained in the Engineering Reports is true and correct, (ii) the certificate identifies the Properties covered by the Engineering Reports that have not been previously included in any prior Engineering Reports, and (iii) no other Oil and Gas Properties have been sold since the date of the last Borrowing Base determination except as set forth on an exhibit to the certificate, which certificate shall list all Oil and Gas Properties sold or disposed of in compliance with Section 9.16 (or pursuant to a waiver thereof) and in such detail as reasonably required by the Technical Agents, the Technical Agents will evaluate such information. The Technical Agents, with the approval or deemed approval of the Required Lenders as set forth in Section 2.09(b), but subject to the terms of Section 2.09(d), shall redetermine the Borrowing Base based upon such information and such other information (including, without limitation, the Indebtedness) as the Technical Agents deem appropriate and consistent with their normal oil and gas lending criteria as it exists at the particular time (including, without limitation, the status of title information with respect to Properties in the Engineering Reports and the existence of any other Debt including, without limitation, the Debt of Ocean Canada under the Canadian Credit Agreement). Such redetermination shall be accomplished not later than and effective as of the first (1st) day of each May and November of each calendar year, assuming that the Company shall have furnished the Engineering Reports in a timely and complete manner. (D) CONSENSUS AND FAILURE OF CONSENSUS. Except as hereinafter provided, the decision of the Required Lenders with respect to any Borrowing Base determination shall control; however, if the Required Lenders have not approved or are not deemed to have approved the Borrowing Base as of the date such a determination is called for in Section 2.09(b), the Technical Agents shall poll the Lenders and the Canadian Lenders to ascertain the highest Borrowing Base then acceptable to a number of Lenders and Canadian Lenders sufficient to constitute the Required Lenders for purposes of this Section 2.09 and such amounts shall then become the Borrowing Base for the next Redetermination Period. Notwithstanding the foregoing, however, any increase in the Borrowing Base shall require the consent of all the Lenders and the Canadian Lenders. (E) INTERIM REDETERMINATIONS. The Company may, at its option one time during a 12 month period, initiate an interim redetermination of the Borrowing Base. The Administrative Agent (at the direction of the Required Lenders, in their option) may, one time during any 12 month period, initiate an interim redetermination of the Borrowing Base. (F) SHORT-TERM PARI PASSU DEBT; OTHER ADJUSTMENTS. (i) The Technical Agents shall calculate the Borrowing Base for any Redetermination Period by reducing the amount which would have been the Borrowing Base in the absence of any Short-Term Pari Passu Debt by an amount equal to the amount 34 of Short-Term Pari Passu Debt outstanding as of the Redetermination Date for such Redetermination Period. In addition, if during any Redetermination Period, any Short-Term Pari Passu Debt is incurred or assumed, the amount of the then effective Borrowing Base shall automatically reduce for the remainder of such Redetermination Period by an amount equal to the amount of Short-Term Pari Passu Debt so incurred or assumed. (ii) The Borrowing Base is also subject to adjustment as set forth in Sections 8.05(d), 9.01(e)(iii), 9.01(h)(ii), 9.01(o), 9.16(b) and 9.21. ARTICLE III PAYMENTS OF PRINCIPAL AND INTEREST SECTION 3.01 REPAYMENT OF LOANS. The Company will pay on the Termination Date to the Administrative Agent for the account of each Lender the then- outstanding principal amount of each Conventional Loan made by such Lender. Notwithstanding the foregoing sentence, each Bid Rate Loan will mature and be payable in full on the last day of the Interest Period therefor and the Company agrees to pay to the Administrative Agent for the account of the Lender making such Bid Rate Loan the amount of such Bid Rate Loan in full on such day. SECTION 3.02 INTEREST. (a) The Company will pay to the Administrative Agent for the account of each Lender interest on the unpaid principal amount of each Loan made by such Lender for the period commencing on the date of such Loan to but excluding the date such Loan shall be paid in full, at the following rates per annum: (i) if such Loan is a Base Rate Loan, the Base Rate (as in effect from time to time) plus the Applicable Margin for Base Rate Loans, but in no event to exceed the Highest Lawful Rate; (ii) if such Loan is a Eurodollar Loan that is a Conventional Loan, for each Interest Period relating thereto, the Eurodollar Rate for such Loan plus the Applicable Margin for Eurodollar Loans that are Conventional Loans, but in no event to exceed the Highest Lawful Rate; (iii) if such Loan is a Eurodollar Loan that is a Bid Rate Loan, for each Interest Period relating thereto, the Eurodollar Rate for Eurodollar Loans plus or minus any margin as may be agreed between the Company and the Lender making such Bid Rate Loan, but in no event to exceed the Highest Lawful Rate; and (iv) if such Loan is an Absolute Rate Loan, for each Interest Period relating thereto, such rate per annum as may be agreed between the Company and the Lender making such Bid Rate Loan, but in no event to exceed the Highest Lawful Rate. Notwithstanding the foregoing, the Company will pay to the Administrative Agent for the account of each Lender interest at the applicable Post-Default Rate on any principal of any Loan made by such Lender, and, to the fullest extent permitted by law, on any other amount payable by the Company or OEI- Louisiana hereunder or under any Loan Document, that shall not be paid 35 in full when due (whether at stated maturity, by acceleration or otherwise), for the period commencing on the due date thereof until the same is paid in full, but in no event to exceed the Highest Lawful Rate. (b) Accrued interest on each Base Rate Loan shall be payable quarterly on each Quarterly Date. Accrued interest on each Eurodollar Loan and Absolute Rate Loan shall be payable on the last day of the Interest Period therefor and, if such Interest Period is longer than three months or ninety (90) days, at three- month or ninety (90) day intervals, as appropriate, following the first day of such Interest Period. In any event, interest payable at the Post-Default Rate shall be payable from time to time on demand and interest on any Eurodollar Loan that is converted into a Base Rate Loan pursuant to Section 5.04 shall be payable on the date of conversion (but only to the extent so converted). (c) Promptly after the determination of any interest rate provided for herein or any change therein, the Administrative Agent shall notify the Company and the Lenders to which such interest is payable thereof. Upon notice to the Administrative Agent of the incurrence of Debt pursuant to Section 8.01(g), the incurrence of any Pari Passu Debt or Subordinated Debt and/or any change in the amount of the Indebtedness (including the LC Exposure) outstanding hereunder or the amount of the Canadian Indebtedness under the Canadian Credit Agreement, the Administrative Agent shall promptly determine the Percentage Usage and, in the event such circumstances result in a change in the Applicable Margin, the Facility Fee Rate and the LC Fee Rate, the Administrative Agent shall notify the Lenders and the Company. Such new Applicable Margin, the Facility Fee Rate and the LC Fee Rate will be applicable until the next day on which events described in this Section 3.02(c) result in a change and notice thereof is given by the Administrative Agent. ARTICLE IV PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC. SECTION 4.01 PAYMENTS. Except to the extent otherwise provided herein, all payments of principal, interest and other amounts to be made by the Company under this Agreement, the Notes and other Loan Documents shall be made in Dollars, in immediately available funds, to the Administrative Agent at an account maintained by the Administrative Agent at the Principal Office, not later than 1:00 p.m. Houston time on the date on which such payments shall become due (each such payment made after such time on such due date to be deemed to have been made on the next succeeding Business Day). The Company shall, subject to Section 4.02, at the time of making each payment under this Agreement, any Note or any other Loan Document, specify to the Administrative Agent the Loans, Letters of Credit or other amounts payable by the Company hereunder to which such payment is to be applied (and in the event that it fails to so specify, and such day is not a Quarterly Date or other day on which a payment of either interest or principal is due, then such payments shall be applied in the following order: first, to interest accrued on Conventional Loans maintained as Base Rate Loans, second, any excess to reduce the aggregate principal amount then outstanding on Conventional Loans maintained as Base Rate Loans, third, any excess to interest accrued on Conventional Loans maintained as Eurodollar Loans, and fourth any excess to reduce the aggregate principal amount then outstanding on Conventional Loans maintained as Eurodollar Loans; provided that if an Event of Default has occurred and is continuing, the Administrative Agent may distribute such payment to the 36 Lenders in such manner as it or the Majority Lenders may determine to be appropriate, subject to Section 4.02). Each payment received by the Administrative Agent under this Agreement, any Note or any other Loan Document for the account of a Lender shall be paid promptly to such Lender, in immediately available funds, for account of such Lender's Applicable Lending Office for the Loan, Letter of Credit or other amount in respect of which such payment is made. Except as provided in clause (ii) of the provisions of the definition of Interest Period, if the due date of any payment under this Agreement, any Note or any other Loan Document would otherwise fall on a day which is not a Business Day such date shall be extended to the next succeeding Business Day and interest shall be payable for any principal so extended for the period of such extension. SECTION 4.02 PRO RATA TREATMENT. Except with respect to Bid Rate Loans made by any Lender, as set forth in Sections 2.03(a)(ii) or Section 5.07(b) or to the extent otherwise provided herein: (a) (i) each borrowing from the Lenders under Section 2.01 shall be made from the Lenders in such amounts as may be necessary so that, after giving effect to such borrowing, the outstanding Conventional Loans shall have been made pro rata by the Lenders based on their respective Commitment Percentages as then in effect, (ii) each payment of Facility Fee or other fees under Sections 2.04(a) and (b) shall be made for the account of the Lenders pro rata according to their respective Commitment Percentages, and (iii) each termination or reduction of the amount of the Commitments under Section 2.03 shall be applied to the Commitments of the Lenders pro rata according to their respective Global Commitment Percentages (or, if there is a contemporaneous and corresponding termination or reduction of the amount of the Canadian Subcommitments, such amounts as may be necessary so that, after giving effect to such reduction, the Global Commitment Percentages shall have been reduced pro rata); (b) each payment of principal of Conventional Loans by the Company shall be made for the account of the Lenders pro rata in accordance with the respective unpaid principal amount of the Conventional Loans held by the Lenders; (c) each payment of interest on Conventional Loans by the Company shall be made for the account of the Lenders pro rata in accordance with the amounts of interest due and payable on such Conventional Loans to the respective Lenders; and (d) each reimbursement by the Company of disbursements under Letters of Credit shall be made for the account of the Lenders pro rata in accordance with the amounts of reimbursement obligations due and payable on such Letters of Credit to the respective Lenders. If, on any day on which payments on account of one or more Bid Rate Loans are due, payments on account of Conventional Loans or on account of other items otherwise under this Agreement are also due and the Administrative Agent has received insufficient funds to pay all amounts due and owing on such date, then the Administrative Agent shall distribute all funds so received first pro rata among the Lenders in accordance with the unpaid amounts due on such day, and thereafter to the payment of such Bid Rate Loans, pro rata. SECTION 4.03 COMPUTATIONS. Interest on Eurodollar Loans and Absolute Rate Loans shall be computed on the basis of a year of 360 days and actual days elapsed (including the first day but excluding the last day) occurring in the period for which such interest is payable (unless such calculation would result in a rate of interest that would exceed the Highest Lawful Rate for any Lender in which event such calculation for such Lender shall be computed on the basis of a year of 365 or 366 days, as the case may be). Interest on Base Rate Loans and fees shall be computed on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed (including the first day but excluding the last day) occurring in the period for which payable. 37 SECTION 4.04 NON-RECEIPT OF FUNDS BY THE ADMINISTRATIVE AGENT. Unless the Administrative Agent shall have been notified by a Lender or the Company prior to the date on which a payment is scheduled to be made to the Administrative Agent of (in the case of a Lender) the proceeds of a Loan to be made by it hereunder or under a Letter of Credit or (in the case of the Company) a payment to the Administrative Agent for account of one or more of the Lenders hereunder (such payment being herein called a "Required Payment"), which notice shall be effective upon receipt, that it does not intend to make the Required Payment to the Administrative Agent, the Administrative Agent may assume that the Required Payment has been made and may, in reliance upon such assumption (but shall not be required to), make the amount thereof available to the intended recipient(s) on such date. If such Lender or the Company (as the case may be) has not in fact made the Required Payment to the Administrative Agent, the recipient(s) of such payment shall, on demand, repay to the Administrative Agent the amount so made available together with interest thereon in respect of each day during the period commencing on the date such amount was so made available by the Administrative Agent until the date the Administrative Agent recovers such amount at a rate per annum equal to the Base Rate for such day, but in no event to exceed the Highest Lawful Rate. SECTION 4.05 SHARING OF PAYMENTS, ETC. (a) The Company agrees that, in addition to (and without limitation of) any right of set-off, bankers' lien or counterclaim a Lender may otherwise have, each Lender shall be entitled (after consultation with the Administrative Agent), at its option, during the existence of an Event of Default, to offset balances held by it for account of the Company at any of its offices, in Dollars or in any other currency, against any principal of or interest on any of such Lender's Loans or any other amount payable to such Lender hereunder or under any other Loan Document which is not paid when due (regardless of whether such balances are then due to the Company), in which case such Lender shall promptly notify the Company and the Administrative Agent thereof, provided that such Lender's failure to give such notice shall not affect the validity thereof. (b) If any Lender shall obtain payment of any principal of or interest on any Loan made by it to the Company under this Agreement or payment of any reimbursement obligation under a Letter of Credit Agreement through the exercise of any right of set-off, banker's lien or counterclaim or similar right or otherwise, and, as a result of such payment, such Lender shall have received a greater percentage of the principal or interest or reimbursement obligation then due hereunder or under the respective Letter of Credit Agreement, as the case may be, by the Company to such Lender than the percentage received by any other Lenders, such Lender shall promptly purchase from such other Lenders participations in (or, if and to the extent specified by such Lender, direct interests in) the Loans made by such other Lenders (or in interest due thereon, as the case may be) or reimbursement obligations under the Letter of Credit Agreements in such amounts, and make such other adjustments from time to time as shall be equitable, to the end that all the Lenders shall share the benefit of such excess payment (net of any expenses which may be incurred by such Lender in obtaining or preserving such excess payment) pro rata in accordance with the unpaid principal and/or interest on the Loans held by each of the Lenders or pro rata in accordance with the unpaid reimbursement obligation owed to each of the Lenders. To such end, all the Lenders shall make appropriate adjustments among themselves (by the resale of participations sold or otherwise) if such payment is rescinded or must otherwise be 38 restored. The Company agrees that any Lender so purchasing a participation (or direct interest) in the Loans made by other Lenders (or in interest due thereon, as the case may be) or in the reimbursement obligations owed to the other Lenders may exercise all rights of set-off, bankers' lien, counterclaim or similar rights with respect to such participation as fully as if such Lender were a direct holder of Loans or reimbursement obligations, as the case may be, in the amount of such participation. Nothing contained herein shall require any Lender to exercise any such right or shall affect the right of any Lender to exercise, and retain the benefits of exercising, any such right with respect to any other indebtedness or obligation of the Company. If under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu of a set-off to which this Section 4.05 applies, such Lender shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of the Lenders entitled under this Section 4.05 to share the benefits of any recovery on such secured claim. (c) Without limitation of the last sentence of Section 4.02, if an Event of Default has occurred and is continuing and the Notes have been declared to be immediately due and payable, the Administrative Agent shall distribute funds received pro rata among the Lenders in accordance with the respective unpaid principal amounts of the Loans (whether Conventional Loans or Bid Rate Loans) held by the Lenders. SECTION 4.06 ASSUMPTION OF RISKS. The Company assumes all risks of the acts or omissions of beneficiaries of any of the Letters of Credit with respect to its use of the Letters of Credit. Except in the case of gross negligence or willful misconduct on the part of such Person or any of its employees, neither the Administrative Agent, the Administrative Agent's correspondents, any other Agent, nor any Lender shall be responsible: (a) for the validity or genuineness of certificates or other documents, even if such certificates or other documents should in fact prove to be invalid, fraudulent or forged; (b) for errors, omissions, interruptions or delays in transmissions or delivery of any messages by mail, telex, or otherwise, whether or not they be in code; (c) for errors in translation or for errors in interpretation of technical terms; or (d) for any other consequences arising from causes beyond the Administrative Agent's control. In addition, neither the Administrative Agent, any other Agent nor any Lender shall be responsible for any error, neglect, or default of any of the Administrative Agent's correspondents which were chosen in good faith; and none of the above shall affect, impair or prevent the vesting of any of the Administrative Agent's rights or any Lender's rights or powers hereunder or under the Letter of Credit Agreements, all of which rights shall be cumulative. The Administrative Agent and the Administrative Agent's correspondents may accept certificates or other documents that appear on their face to be in order, without responsibility for further investigation. In furtherance and not in limitation of the foregoing provisions, the Company agrees that any action, inaction or omission taken or not taken by the Administrative Agent or any correspondent in the absence of gross negligence or willful misconduct by the Administrative Agent or any correspondent in connection with any Letter of Credit, or any related drafts, certificates, documents or instruments, shall be binding on the Company and shall not put the Administrative Agent or its correspondents or any Lender under any resulting liability to the Company. 39 SECTION 4.07 OBLIGATION TO REIMBURSE AND TO PREPAY. (a) If any draft or claim shall be presented for payment under a Letter of Credit, after confirming that such draft or claim complies with all requirements of the relevant Letter of Credit, the Administrative Agent shall promptly notify the Company and each Lender orally (confirming such notice promptly in writing) of the date and the amount of the draft or claim presented for payment, the Business Day on which such draft or claim is to be honored and, in the case of each Lender, the ratable share of such draft or claim attributable to such Lender on the basis of its Commitment Percentage then in effect. (b) If a disbursement by the Administrative Agent is made under any Letter of Credit and no Default under this Agreement shall have occurred and be continuing, the Company may elect, and if no election is made, the Company shall be deemed to have elected, to have the amount of such disbursement up to the amount of the Available U.S. Commitment then available treated as a Conventional Loan to the Company as provided in Section 2.01(a), subject to the terms and conditions set forth in this Agreement. With respect to any disbursement under a Letter of Credit after and during the continuance of a Default, the amount of such disbursement shall be due and payable immediately and the Company shall pay to the Administrative Agent, promptly after notice of such disbursement is received by the Company, in federal or other immediately available funds, the amount of such disbursement, together with interest on the amount disbursed from and including the date of disbursement until payment in full of such disbursed amount at a varying rate per annum equal to (i) the Base Rate (as in effect from time to time) plus the Applicable Margin for Base Rate Loans (but in no event to exceed the Highest Lawful Rate) for the first Business Day following the date of such disbursement and (ii) the Post-Default Rate for Base Rate Loans for the period from and including the second Business Day following the date of such disbursement to and including the date of repayment in full of such disbursed amount. (c) The Company's obligation to make each such payment shall be absolute and unconditional and shall not be subject to any defense or be affected by any right of setoff, counterclaim or recoupment which the Company may now or hereafter have against any beneficiary of any Letter of Credit, the Administrative Agent, any other Agent, any Lender or any other Person for any reason whatsoever (but, without prejudice to any other provisions hereof, any such payment shall not waive, impair or otherwise adversely affect any claim, if any, that the Company may have against any beneficiary of a Letter of Credit, the Administrative Agent, any other Agent, any Lender or any other Person). (d) If an Event of Default shall have occurred and be continuing, the Company shall, upon request of the Majority Lenders, pay to the Paying Agent as cash collateral an amount equal to the LC Exposure. The Company's obligation to provide such cash collateral shall be absolute and unconditional without regard to whether any beneficiary of any such Letter of Credit has attempted to draw down all or a portion of such amount under the terms of a Letter of Credit. In addition, the Company's obligation shall not be subject to any defense or be affected by a right of setoff, counterclaim or recoupment which the Company may now or hereafter have against any such beneficiary, any Agent, any Lender or any other Person for any reason whatsoever (but, without prejudice to any other provisions hereof, any such payment shall not waive, impair or otherwise adversely affect any claim, if any, that the Company may have 40 against any beneficiary of a Letter of Credit, the Administrative Agent, any other Agent, any Lender or any other Person). The Company hereby grants to the Paying Agent, for the benefit of the Agents and the Lenders, a security interest in all such cash to secure the LC Exposure and any and all other Indebtedness now or hereafter owing hereunder. If the Company shall provide cash collateral under this Section 4.07 or shall prepay any Letter of Credit pursuant to Section 2.08 and thereafter either (i) drafts or other demands for payment complying with the terms of such Letters of Credit are not made prior to the respective expiration dates thereof, or (ii) such Event of Default shall have been waived or cured, then the Agents and the Lenders agree that the Paying Agent is hereby authorized, without further action by any other Agent or Lender, to release the Lien in such cash and will direct the Paying Agent to remit to the Company amounts for which the contingent obligations evidenced by such Letters of Credit have ceased. SECTION 4.08 OBLIGATIONS FOR LETTERS OF CREDIT. (a) Immediately, (i) upon issuance of any Letter of Credit by the Administrative Agent and (ii) effective on the date of the Initial Funding with respect to Letters of Credit outstanding under the Prior Credit Agreement on the date of Initial Funding, each Lender shall be deemed to be a participant through the Administrative Agent in the obligation of the Administrative Agent under such Letter of Credit. Upon the delivery by such Lender to the Administrative Agent of funds requested for a disbursement pursuant to Section 4.08(c), such Lender shall be deemed as having purchased a participating interest in the Company's reimbursement obligations with respect to such Letter of Credit in an amount equal to such funds delivered to the Administrative Agent. (b) Each Lender severally agrees with the Administrative Agent and the Company that it shall be unconditionally liable to the Administrative Agent, without regard to the occurrence of any Default or Event of Default, for its pro rata share, based upon its Commitment Percentage, of disbursements under any Letter of Credit, and agrees to reimburse on demand the Administrative Agent for its pro rata share of each such disbursement. (c) The Administrative Agent shall promptly request from each Lender its ratable share of any disbursement under any Letter of Credit that the Company has not elected hereunder to treat as a Conventional Loan pursuant to Section 4.07, which amount shall be made available by each Lender to the Administrative Agent at the Principal Office in immediately available funds no later than 2:00 p.m. Houston time on the date requested. If such amount due to the Administrative Agent is made available later than 2:00 p.m. Houston time on the date requested, then such Lender shall pay to the Administrative Agent such amount with interest thereon in respect of each day during the period commencing on the date such amount was requested until the date the Administrative Agent receives such amount at a rate per annum equal to the Base Rate (but not to exceed the Highest Lawful Rate). 41 ARTICLE V YIELD PROTECTION AND ILLEGALITY SECTION 5.01 ADDITIONAL COSTS. (A) EURODOLLAR REGULATIONS. The Company shall pay directly to each Lender such amounts as such Lender may determine to be necessary to compensate it for any increased costs incurred by the Lender which such Lender determines are attributable to its making or maintaining any Eurodollar Loans or its obligation to make any Eurodollar Loans hereunder, or any reduction in any amount receivable by such Lender hereunder in respect of any of such Loans or such obligation (such increases in costs and reductions in amounts receivable being herein called "Additional Costs"), resulting from any Regulatory Change which: (i) changes the basis of taxation of any amounts payable to such Lender under this Agreement or its Notes in respect of any of such Loans (other than franchise taxes, taxes on capital and/or gross receipts or taxes imposed on the overall net income of such Lender or of its Applicable Lending Office for any of such Loans by the jurisdiction in which such Lender has its principal office or such Applicable Lending Office ("Excluded Taxes")); or (ii) imposes or modifies any reserve, special deposit, minimum capital, capital ratio or similar requirements relating to any extensions of credit or other assets of, or any deposits with or other liabilities of, such Lender (including any of such Loans or any deposits referred to in the definition of "Eurodollar Rate" in Section 1.02 hereof), or any Commitment of such Lender; or (iii) imposes any other condition affecting this Agreement or its Notes (or any of such extensions of credit or liabilities) or Commitment. (B) SUSPENSION OF EURODOLLAR LOANS. If any Lender requests compensation from the Company under Section 5.01(a), the Company may, by notice to such Lender (with a copy to the Administrative Agent), suspend the obligation of such Lender to make additional Loans of the Type with respect to which such compensation is requested until the Regulatory Change giving rise to such request ceases to be in effect (in which case the provisions of Section 5.04 shall be applicable). Without limiting the effect of the foregoing provisions of this Section 5.01(b), in the event that, by reason of any Regulatory Change, any Lender either (i) incurs Additional Costs based on or measured by the excess above a specified level of the amount of a category of deposits or other liabilities of such Lender which includes deposits by reference to which the interest rate on Eurodollar Loans is determined as provided in this Agreement or a category of extensions of credit or other assets of such Lender which includes Eurodollar Loans or (ii) becomes subject to restrictions on the amount of such a category of liabilities or assets which it may hold, then, such Lender may elect by notice to the Company (with a copy to the Administrative Agent), to suspend its obligation to make additional Eurodollar Loans until such Regulatory Change ceases to be in effect (in which case the provisions of Section 5.04 shall be applicable). (C) CAPITAL ADEQUACY. Without limiting the effect of Section 5.01(a) and (b), but without duplication, after any Regulatory Change, the Company shall pay directly to each Lender such amounts as such Lender may reasonably determine to be necessary as a result of such Regulatory Change to compensate such Lender (or its parent or holding company) for any costs which it determines are attributable to the maintenance by such Lender (or its parent or holding company or its Applicable Lending Office) of its capital in respect of its Commitment, its Note, any Loans and/or any interest held by it in any Letter of Credit. Such compensation 42 shall include, without limitation, an amount equal to any reduction of the rate of return on assets or equity of such Lender (or any Applicable Lending Office) to a level below that which such Lender (or any Applicable Lending Office) could have achieved but for such law, regulation, interpretation, directive or request. SECTION 5.02 LIMITATION ON EURODOLLAR LOANS. Notwithstanding any other provision of this Agreement, if, on or prior to the determination of any Eurodollar Rate for any Interest Period: (a) the Administrative Agent determines (which determination shall be conclusive, absent manifest error) that quotations of interest rates for the relevant deposits referred to in the definition of "Eurodollar Rate" in Section 1.02 are not being provided in the relevant amounts or for the relevant maturities for purposes of determining rates of interest for Eurodollar Loans as provided herein; or (b) the Administrative Agent shall determine (which determination shall be conclusive, absent manifest error) that the relevant rates of interest referred to in the definition of "Eurodollar Rate" in Section 1.02 upon the basis of which the rate of interest for Eurodollar Loans for such Interest Period is to be determined are not sufficient to adequately cover the cost to the Lenders of making or maintaining Eurodollar Loans; then the Administrative Agent shall give the Company and each Lender prompt notice thereof and so long as such condition remains in effect, the Lenders shall be under no obligation to make additional Eurodollar Loans (in which case the provisions of Section 5.04 shall be applicable). SECTION 5.03 ILLEGALITY. Notwithstanding any other provision of this Agreement, in the event that it becomes unlawful for any Lender or its Applicable Lending Office to honor its obligation to make or maintain Eurodollar Loans hereunder, then such Lender shall promptly notify the Company thereof (with a copy to the Administrative Agent) and such Lender's obligation to make Eurodollar Loans shall be suspended until such time as such Lender may again make and maintain Eurodollar Loans (in which case the provisions of Section 5.04 shall be applicable). SECTION 5.04 BASE RATE LOANS PURSUANT TO SECTIONS 5.01, 5.02 AND 5.03. If the obligation of any Lender to make Eurodollar Loans shall be suspended pursuant to Section 5.01, 5.02 or 5.03 ("Affected Loans"), all Affected Loans which would otherwise be made by such Lender shall be made instead as Base Rate Loans (and, if an event referred to in Section 5.03 has occurred and such Lender so requests by notice to the Company with a copy to the Administrative Agent, all Affected Loans of such Lender then outstanding shall be automatically converted into Base Rate Loans on the date specified by such Lender in such notice). To the extent that Affected Loans are so made as (or converted into) Base Rate Loans, all payments of principal which would otherwise be applied to such Lender's Affected Loans shall be applied instead to the Loans so converted. SECTION 5.05 COMPENSATION. The Company shall pay to the Administrative Agent for account of each Lender, upon the request of such Lender through the Administrative Agent, such 43 amount or amounts as shall be sufficient (in the reasonable opinion of such Lender) to compensate it for any loss, cost or expense which such Lender determines are attributable to: (a) any payment, prepayment or conversion of a Eurodollar Loan for any reason (including, without limitation, the acceleration of the Loans pursuant to Section 10.01) on a date other than the last day of the Interest Period for such Loan; or (b) any failure by the Company for any reason (including but not limited to, the failure of any of the conditions precedent specified in Article VI to be satisfied, but excluding failures arising out of the negligence, gross negligence or wilful misconduct of a Lender or Agent) to borrow, continue or convert a Eurodollar Loan from such Lender on the date for such borrowing, continuation or conversion specified in the relevant notice of borrowing given pursuant to Section 2.02. Without limiting the effect of the preceding sentence, such compensation shall include an amount equal to the excess, if any, of (x) the amount of interest which otherwise would have accrued on the principal amount so paid, prepaid or converted for the period from the date of such payment, prepayment or conversion to the last day of the then current Interest Period for such Loan (or, in the case of a failure to borrow, convert or continue, the Interest Period for such Loan which would have commenced on the date specified for such borrowing, conversion or continuation) at the applicable rate of interest for such Loan provided for herein over (y) the interest component of the amount such Lender would have bid in the London interbank market for Dollar deposits of leading banks in amounts comparable to such principal amount and with maturities comparable to such period (as reasonably determined by such Lender). SECTION 5.06 ADDITIONAL COST IN RESPECT OF TAX. (A) PAYMENTS FREE AND CLEAR. Each payment to be made by the Company hereunder or in connection herewith to any Agent or Lender or any other Person shall be made free and clear of and without deduction for or on account of any Tax unless the Company is required to make such payment subject to the deduction or withholding of Tax, in which case (except for Excluded Taxes) the sum payable by the Company in respect of which such deduction or withholding is required to be made shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, such Person receives and retains (free from any liability in respect of any such deduction or withholding) a net sum equal to the sum which it would have received and so retained had not such deduction or withholding been made or required to be made. (B) OBLIGATION TO INDEMNIFY. If (i) any Agent or Lender is required by law to make any payment on account of any Tax (except for Excluded Taxes) on or in relation to any sum received or receivable hereunder by such Agent or Lender or (ii) any liability in respect of any such payment is asserted, imposed, levied or assessed against such Agent or Lender, then the Company shall promptly pay to such Agent or Lender, as the case may be, any additional amounts necessary to compensate it for such payment together with any interest, penalties and expenses payable or incurred in connection therewith. If an Agent or a Lender has paid over on account of Tax (other than Excluded Taxes) an amount paid to it by the Company pursuant to the foregoing indemnification and the amount so paid over is subsequently refunded to the recipient 44 Agent or Lender, in whole or in part, then the recipient Agent or Lender shall promptly remit such amount refunded to the Company. (C) NOTICE OF CHANGES; PROOF OF PAYMENT. If at any time the Company is required by law to make any deduction or withholding from any sum payable by it hereunder or in connection herewith (or if thereafter there is any change in the rates at which or the manner in which such deductions or withholdings are calculated), the Company shall promptly notify the Administrative Agent thereof. If the Company makes any payment hereunder or in connection herewith for which it is required by law to make any deduction or withholding, it shall pay the full amount to be deducted or withheld to the relevant taxation or other authority within the time allowed for such payment under applicable law and shall deliver to the Administrative Agent within thirty (30) days after it has made such payment to the applicable authority (i) a receipt issued by such authority or (ii) other evidence reasonably satisfactory to the Administrative Agent evidencing the payment to such authority of all amounts so required to be deducted or withheld from such payment. SECTION 5.07 AVOIDANCE OF TAXES AND ADDITIONAL COSTS. (A) CHANGE APPLICABLE FUNDING OFFICE. If a Lender makes any claim under Section 5.01 or Section 5.06 in respect of Additional Costs of Taxes, such Lender shall be obligated to use reasonable efforts to designate a different Applicable Lending Office for the Commitment or the Loans of such Lender affected by such event if such designation will avoid the need for, or reduce the amount of, such compensation or the imposition of any Taxes and will not, in the sole opinion of such Lender, be disadvantageous to such Lender; provided that such Lender shall have no obligation to so designate an Applicable Lending Office located in the United States. (B) REPLACEMENT. If any Lender claims (i) payment of Additional Costs, (ii) the inability to make or maintain the Eurodollar Rate for its Loans pursuant to Section 5.01 or 5.03 (when such inability is not then being claimed by substantially all of the Lenders) or (iii) payment of any Taxes pursuant to Section 5.06, then the Company shall have the right, upon payment of such requested Additional Costs or Taxes, if applicable, to (i) prepay the Loans made by such Lender and terminate the Commitment of such Lender on a non pro rata basis or (ii) subject to the approval of the Administrative Agent (such approval not to be unreasonably withheld or delayed), find one or more Persons willing to assume the Loans, Commitment and other obligations of such Lender and replace such Lender pursuant to an Assignment and Acceptance. Any such assumption shall be effected pursuant to Section 12.06(b). The Company shall not, however, be entitled to replace any Lender if an event which with notice or lapse of time, or both, would constitute a Default or an Event of Default exists at the time. SECTION 5.08 LENDER TAX REPRESENTATION. Each Lender represents that it is either (a) a corporation organized under the laws of the United States of America or any state thereof or (b) entitled to complete exemption from United States withholding tax imposed on or with respect to any payments, including fees, to be made to it pursuant to this Agreement, the Notes and the other Loan Documents (i) under an applicable provision of a tax convention to which the United States of America is a party or (ii) because it is acting through a branch, agency or office in the United States of America and any payment to be received by it hereunder is effectively connected with a trade or business in the United States of America. Each Lender that is not a 45 corporation organized under the laws of the United States of America or any state thereof agrees to provide to the Company and the Administrative Agent on the Effective Date, or on the date of its delivery of the Assignment and Acceptance pursuant to which it becomes a Lender, and at such other times as required by United States law, two accurate and complete original signed copies of either Internal Revenue Service Form 4224 (or successor form) certifying that all payments to be made to it hereunder will be effectively connected to a United States trade or business or Internal Revenue Service Form 1001 (or successor form) certifying that it is entitled to the benefit of a tax convention to which the United States of America is a party which completely exempts from United States withholding tax all payments to be made to it hereunder. If a Lender determines, as a result of any Regulatory Change or other change in its circumstances, that it is unable to submit any form or certificate that it is obligated to submit pursuant to this Section 5.08, or that it is required to withdraw or cancel any such form or certificate previously submitted, it shall promptly notify the Company and the Administrative Agent of such fact. SECTION 5.09 LIMITATION ON RIGHT TO COMPENSATION. Any demand for compensation pursuant to Article V (other than Section 5.06) must be made on or before six (6) months after the Lender incurs the expense, cost or economic loss referred to or such Lender shall be deemed to have waived the right to such compensation. Any demand for compensation pursuant to Section 5.06 must be made on or before twelve (12) months after the Lender incurs the expense, cost or economic loss referred to or such Lender shall be deemed to have waived the right to such compensation. 46 SECTION 5.10 COMPENSATION PROCEDURE. Each Lender will notify the Administrative Agent and the Company of any event occurring after the date of this Agreement which will entitle such Lender to compensation or indemnification pursuant to this Article V as promptly as practicable after it obtains knowledge thereof and determines to request such compensation. Each Lender will furnish the Administrative Agent and the Company with a certificate setting forth the basis and amount of each request by such Lender for compensation or indemnification and specify the Section pursuant to which it is claiming compensation or indemnitication. Such certificate shall also include (i) calculations in reasonable detail computing such claim, and (ii) a statement from such Lender that it is asserting its right for indemnity or compensation not solely with respect to the Indebtedness outstanding under this Agreement, but is generally making such claims with respect to similar borrowers in connection with transactions similar to the one contemplated in this Agreement. Determinations and allocations by any Lender for purposes of this Article V of the effect of any Regulatory Change pursuant to Sections 5.01(a) or (b) or, of the effect of capital maintained pursuant to Section 5.01(c), on its costs or rate of return of maintaining Loans or issuing or participating in Letters of Credit or its obligation to make Loans or issue or participate in Letters of Credit, or on amounts receivable by it in respect of Loans or such obligations, and of the additional amounts required to compensate such Lender under Section 5.01, 5.05 or 5.06, shall be conclusive, provided that such determinations and allocations are made on a reasonable basis. 47 ARTICLE VI CONDITIONS PRECEDENT SECTION 6.01 EFFECTIVENESS. The effectiveness of this amendment and restatement of the Prior Credit Agreement is subject to the receipt by the Administrative Agent of the following documents and satisfaction of the other conditions provided in this Section 6.01, each of which shall be satisfactory to the Administrative Agent in form and substance unless otherwise indicated: (a) A certificate of the Secretary or Assistant Secretary of the Company setting forth (i) that the resolutions of its board of directors attached to such certificate are in full force and effect with respect to the authorization of the execution, delivery and performance of the obligations contained in the Notes, this Agreement and the other Loan Documents to which it is a party, (ii) that the officers of the Company specified in such Secretary's Certificate are authorized to sign this Agreement, the Notes, and the other Loan Documents to which it is a party and who, until replaced by another officer or officers duly authorized for that purpose, will act as the Company's representative(s) for the purposes of signing documents and giving notices and other communications in connection with this Agreement, the other Loan Documents to which it is a party and the transactions contemplated hereby and thereby, (iii) specimen signatures of the officers so authorized, and (iv) that no amendments or modifications have been made to the certificate of incorporation and the bylaws of the Company since March 27, 1998. The Agents and the Lenders may conclusively rely on such certificate until the Administrative Agent receives notice in writing from the Company to the contrary. (b) A certificate of the Secretary or Assistant Secretary of OEI-Louisiana setting forth (i) that the resolutions of its board of directors attached to such certificate are in full force and effect with respect to the authorization of the execution, delivery and performance of the obligations contained in the Loan Documents to which it is a party, (ii) that the officers specified in such Secretary's Certificate are authorized to sign the Loan Documents to which it is a party and who, until replaced by another officer or officers duly authorized for that purpose, will act as its representative(s) for the purposes of signing documents and giving notices and other communications in connection with such Loan Documents and the transactions contemplated thereby, (iii) specimen signatures of the officers so authorized, and (iv) that no amendments or modifications have been made to the articles or certificate of incorporation and the bylaws of OEI-Louisiana since March 27, 1998. The Agents and the Lenders may conclusively rely on such certificate until the Administrative Agent receives notice in writing from the Company to the contrary. (c) Certificates of the appropriate state agencies with respect to the existence, qualification and good standing of the Company, OEI-Louisiana and certain material Restricted Subsidiaries in certain specified jurisdictions. (d) The Notes, the Guaranty Agreement and the other Loan Documents listed on Exhibit F, each duly completed and executed. (e) The following opinions: 48 (i) an opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel to the Company, substantially in the form of Exhibit B-1. (ii) an opinion of Onebane, Bernard, Torian, Diaz, McNamera & Abell, special Louisiana counsel to OEI-Louisiana, substantially in the form of Exhibit B-2. (f) All conditions to closing the Canadian Credit Agreement shall have been satisfied or waived contemporaneously with the Initial Funding. (g) Appropriate UCC search certificates of the Company and its Restricted Subsidiaries reflecting no Liens on any of their Properties except for such Liens permitted by Section 9.02. (h) The Lender Group shall have received all fees due and payable pursuant to Section 2.04 on or prior to the Effective Date. (i) Such other documents as the Administrative Agent or Technical Agents or special counsel to the Administrative Agent may reasonably request. SECTION 6.02 ALL LOANS AND LETTERS OF CREDIT. (A) GENERALLY. The obligation of the Lenders to make Loans to the Company upon the occasion of each borrowing hereunder (other than Base Rate Loans which are made pursuant to the terms hereof solely to replace existing Eurodollar Loans which have matured in the normal course on the last day of an Interest Period therefor or pursuant to Section 5.03) or of the Administrative Agent to issue Letters of Credit is subject to the further conditions precedent that, as of the date of such Loans and after giving effect thereto: (i) no Default or Event of Default shall have occurred and be continuing; (ii) no event or circumstance having a Material Adverse Effect shall have occurred since the date of the Financial Statements, and (iii) the representations and warranties made by the Company and OEI-Louisiana in Article VII and the Loan Documents shall be true in all material respects on and as of the date of the making of such Loans or the issuance of such Letter of Credit with the same force and effect as if made on and as of such date and following such new borrowing or issuance, except as such representations and warranties are modified to give effect to transactions expressly permitted hereby or to the extent expressly limited to an earlier date. (B) CERTIFICATION AS TO REPRESENTATIONS. Each notice of borrowing, conversion or continuation and selection of an Interest Period (other than Base Rate Loans which are made pursuant to the terms hereof solely to replace existing Eurodollar Loans which have matured in the normal course on the last day of an Interest Period therefor or pursuant to Section 5.03) or request for the issuance, renewal, extension or reissuance of a Letter of Credit by the Company hereunder shall constitute a certification by the Company to the effect set forth in Section 6.02(a) (both as of the date of such notice and, unless the Company otherwise notifies the Administrative Agent prior to the date of or immediately following such borrowing or such issuance, as of the date of such borrowing or issuance, as the case may be). (C) CERTIFICATE REGARDING INCURRENCE OF DEBT UNDER INDENTURES. The obligation of the Lenders to make Loans to the Company or of the Administrative Agent to issue Letters of 49 Credit, if, after giving effect thereto, the aggregate principal amount of all the Loans then outstanding, the LC Exposure and the Canadian Indebtedness would be in excess of $100,000,000, is subject to the further condition precedent that the Company deliver a certificate from an authorized officer, in form and substance reasonably satisfactory to the Administrative Agent, certifying that, as of the date of incurrence, the Company is permitted to incur such Indebtedness or Canadian Indebtedness under the Indentures and setting forth in reasonable detail calculations to support the certification. SECTION 6.03 CONDITIONS RELATING TO LETTERS OF CREDIT. In addition to the satisfaction of all other conditions precedent set forth in this Article VI, the issuance, renewal, extension or reissuance of the Letters of Credit referred to in Section 2.01(b) is subject to the following conditions precedent: (a) At least one (1) Business Day prior to the date of the issuance, renewal, extension or reissuance of each Letter of Credit, the Administrative Agent shall have received a written request for a Letter of Credit as described in Section 2.02. (b) The Company shall have duly and validly executed and delivered to the Administrative Agent a Letter of Credit Agreement pertaining to the Letter of Credit. ARTICLE VII REPRESENTATIONS AND WARRANTIES The Company represents and warrants to the Agents and the Lenders as follows: SECTION 7.01 CORPORATE EXISTENCE. The Company, OEI-Louisiana, Ocean Canada and each Restricted Subsidiary: (a) is duly organized and validly existing under the laws of the jurisdiction of its formation (or, if appropriate, the laws of the jurisdiction under which it is continued); (b) has all requisite power, and has all material governmental licenses, authorizations, consents and approvals necessary to own its assets and carry on its business as now being conducted; and (c) is qualified to do business in all jurisdictions in which the nature of the business conducted by it makes such qualification necessary and where failure so to qualify would have a Material Adverse Effect. SECTION 7.02 FINANCIAL CONDITION. (a) The unaudited pro forma combined balance sheet of the Company and its Consolidated Subsidiaries as at December 31, 1997, consolidated for the preceding fiscal year of the Company and United Meridian, which is presented to give effect to the Merger under the pooling of interests method of accounting, as reflected in SEC Form S-4, and the related consolidated statement of income of the Company and its Consolidated Subsidiaries for the fiscal period ended on said date, heretofore furnished to each of the Lenders, fairly present in all material respects the consolidated financial condition of the Company and its Consolidated Subsidiaries and the consolidated results of their operations as at said date and for the period stated (subject to the absence of a statement of changes in stockholders' equity and cash flows). The Company believes that its assumptions contained in the foregoing unaudited pro forma financial statements are reasonable for presenting the significant financial and accounting effects attributable to the Merger in accordance with SEC rules for such pro forma financial statements. 50 (b) The Company and its Consolidated Subsidiaries, as of December 31, 1997, had no material events of loss or casualties, material contingent liabilities, liabilities for taxes, Liens, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments, except as referred to or reflected or provided for in the Financial Statements or otherwise contemplated by this Agreement. Since December 31, 1997, there has been no change or event which has had or could reasonably be expected to have a Material Adverse Effect. SECTION 7.03 LITIGATION. Except as disclosed on Schedule 7.03, there are no legal or arbitral proceedings or any proceedings by or before any Governmental Authority, now pending or (to the knowledge of the Company) threatened against the Company or any of its Restricted Subsidiaries or against any of their respective Property which could reasonably be expected to have a Material Adverse Effect. SECTION 7.04 NO BREACH. The execution and delivery by the Company and its Restricted Subsidiaries of this Agreement, the Notes, the other Loan Documents, the consummation of the transactions herein or therein contemplated and the compliance with the terms and provisions hereof will not (a) conflict with or result in a breach of, or require any consent under (i) the respective charter or by-laws of such Person, or (ii) any applicable law or regulation, or any order, writ, injunction or decree of any court or other Governmental Authority, or any agreement or instrument to which any such Person is a party or by which it is bound or to which it is subject, in each case in such manner as could reasonably be expected to have a Material Adverse Effect; or (b) constitute a default under any such agreement or instrument, or result in the creation or imposition of any Lien upon any of the revenues or Property of such Person, in each case in such manner as could reasonably be expected to have a Material Adverse Effect. SECTION 7.05 CORPORATE ACTION; BINDING OBLIGATION. Each of the Company and OEI-Louisiana has all necessary corporate power and authority to execute, deliver and perform its respective obligations under this Agreement, the Notes and the Loan Documents to which it is a party; and the execution, delivery and performance by each of the Company and OEI-Louisiana of this Agreement, the Notes and the Loan Documents to which it is party have been duly authorized by all necessary corporate action on its part. This Agreement, the Notes and the Loan Documents to which it is a party constitute the legal, valid and binding obligation of each of such Person, enforceable against it in accordance with their terms, except as may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting creditors' rights and general principles of equity. SECTION 7.06 APPROVALS. Other than (i) Approvals heretofore obtained, (ii) the Approvals described in the last sentence of this Section 7.06 and (iii) Approvals the absence of which could not reasonably be expected to have a Material Adverse Effect, no authorizations, approvals or consents of, and no filings or registrations with, any Governmental Authority ("Approvals") are necessary for the execution, delivery or performance by the Company or OEI- Louisiana of this Agreement, the Notes, the Loan Documents to which it is a party or for the validity or enforceability thereof. It is understood that continued performance by the Company and its Subsidiaries of this Agreement and the other Loan Documents to which such Persons are a party will require various Approvals, such as filings related to environmental matters, ERISA 51 matters, Taxes and intellectual property, filings required to maintain corporate and similar standing and existence, filings pursuant to the Uniform Commercial Code and other security filings and recordings, filings required by the SEC, routine filings in the ordinary course of business, and filings required in connection with the exercise by the Lenders and the Agents of remedies in connection with the Loan Documents. SECTION 7.07 USE OF LOANS AND LETTERS OF CREDIT. The proceeds of the Loans and the Letters of Credit shall be used by the Company for general corporate purposes of the Company and its Subsidiaries, including without limitation, (i) the acquisition of Oil and Gas Properties and related Property and Persons owning Oil and Gas Properties and related Property; (ii) the financing of the Company's and its Subsidiaries' share of North American and international oil and gas exploration, development and production costs; (iii) the financing of ongoing working capital requirements of the Company and its Subsidiaries; and (iv) the making of other payments as otherwise permitted under this Agreement. Neither the Company nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying margin stock within the meaning of Regulation T, U or X and no part of the proceeds of any Loan hereunder will be used to buy or carry any margin stock. SECTION 7.08 ERISA. Each of the Company and the ERISA Affiliates (a) have fulfilled its respective obligations under the minimum funding standards of ERISA and the Code with respect to each Plan, (b) are in compliance, with respect to each Plan, in all material respects with the presently applicable provisions of ERISA and the Code, and (c) have not incurred any liability to the PBGC or any Plan or Multiemployer Plan. The Company and its Subsidiaries have no ERISA Affiliates. SECTION 7.09 TAXES. Each of the Company and its Subsidiaries has filed all United States Federal income tax returns and all other material tax returns which are required to be filed by it and has paid all taxes due pursuant to such returns or pursuant to any assessment received by it, except for such taxes as are being contested in good faith by appropriate proceedings and for which adequate reserves are being maintained. The charges, accruals and reserves on the books of the Company and its Subsidiaries in respect of taxes and other governmental charges are, in the opinion of the Company, adequate. SECTION 7.10 INSURANCE. The Company has, and has caused all its Restricted Subsidiaries to, have (a) all insurance policies sufficient for the compliance by each of them with all material Governmental Requirements, and (b) insurance coverage in at least such amounts and against such risks (including public liability) that are usually insured against by companies similarly situated engaged in the same or a similar business for the assets and operations of the Company and its Restricted Subsidiaries. SECTION 7.11 TITLES, ETC. The Company and its Restricted Subsidiaries own the material Oil and Gas Properties included in the Borrowing Base, free and clear of all Liens except Liens permitted under Section 9.02. Other than Liens permitted under Section 9.02, the Company (directly or indirectly through its Restricted Subsidiaries) will own in the aggregate, in all material respects, the net interests in production attributable to the wells and units evaluated in the Initial Reserve Reports. The ownership of such Properties shall not in the aggregate in any 52 material respect obligate the Company and its Restricted Subsidiaries to bear the costs and expenses relating to the maintenance, development and operations of such Properties in an amount materially in excess of the working interest of such Properties set forth in the Initial Reserve Reports. The Company has, or has caused its Restricted Subsidiaries to, pay all royalties payable under the Hydrocarbon Interests to which it is operator, except those contested in accordance with the terms of the applicable joint operating agreement or otherwise contested in good faith by appropriate proceedings. Upon delivery of each Reserve Report furnished to the Lenders pursuant to Sections 8.05(a) or (b), the statements made in the preceding sentences of this Section 7.11 shall be true with respect to such Reserve Reports. All information contained in the Initial Reserve Reports is true and correct in all material respects as of the date thereof. SECTION 7.12 NO MATERIAL MISSTATEMENTS. At the time delivery is made, no information, exhibit or report furnished to any Agent or Lender by the Company or any of its Restricted Subsidiaries in connection with the negotiation of this Agreement or any Loan Document contained any material misstatement of fact or omitted to state a material fact or any fact necessary to make the statement contained therein not materially misleading. Notwithstanding the foregoing, the financial statements described in Section 7.02 and Section 8.01 shall be subject to the standards set forth in Section 7.02. SECTION 7.13 INVESTMENT COMPANY ACT. Neither the Company nor any of its Subsidiaries is an "investment company" or a company "controlled" by an "investment company," within the meaning of the Investment Company Act of 1940, as amended. SECTION 7.14 PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Company nor any of its Subsidiaries is a "holding company," or a "subsidiary company" of a "holding company," or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company," or a "public utility" within the meaning of the Public Utility Holding Company Act of 1935, as amended. SECTION 7.15 SUBSIDIARIES AND PARTNERSHIPS. Except as shown in Exhibit D, (a) the Company has no Subsidiaries, (b) the Company owns 100% of all of the issued and outstanding shares of each class of stock issued by each of its Subsidiaries, and (c) all Subsidiaries of the Company are Restricted Subsidiaries. The Company and its Subsidiaries have no interest in any partnerships other than Tax Partnerships and the partnerships identified in Exhibit E. SECTION 7.16 LOCATION OF BUSINESS AND OFFICES. The principal place of business and chief executive offices of the Company and each its Subsidiaries are located at either the address stated on the signature page of this Agreement or on Exhibit D. SECTION 7.17 RATE FILINGS. To the best of the Company's knowledge, (a) neither the Company nor any of its Restricted Subsidiaries have violated any provisions of The Natural Gas Act or any other Federal or State law or any of the regulations thereunder, including those of any Governmental Authority having jurisdiction over the Oil and Gas Properties of the Company or such Restricted Subsidiary, which violation could reasonably be expected to have a Material Adverse Effect; and (b) the Company and its Restricted Subsidiaries have made all necessary rate filings, certificate applications, well category filings, interim collection filings and notices, and any other filings or certifications, and have received all necessary regulatory authorizations 53 (including without limitation necessary authorizations, if any, with respect to any processing arrangements conducted by any one of them or others respecting said Oil and Gas Properties or production therefrom) required under said laws and regulations with respect to all of the Oil and Gas Properties or production therefrom so as not to have a Material Adverse Effect. To the best of the Company's knowledge, said material rate filings, certificate applications, well category filings, interim collection filings and notices, and other filings and certifications contain no untrue statements of material facts nor do they omit any statements of material facts necessary in said filings. SECTION 7.18 ENVIRONMENTAL MATTERS. Except as provided in Schedule 7.18 or as would not have a Material Adverse Effect (or with respect to (c), (d), and (e) below, where the failure to take such actions would not have such a Material Adverse Effect): (a) Neither any Property of the Company and its Subsidiaries nor the operations conducted thereon violate any Environmental Laws or order of any court or Governmental Authority with respect to Environmental Laws; (b) Without limitation of Section 7.18(a), no Property of the Company and its Subsidiaries nor the operations conducted thereon (including operations by any prior owner or operator of such Property), are in violation of or subject to any existing, pending or (to the knowledge of the Company) threatened action, suit, investigation, inquiry or proceeding by or before any court or Governmental Authority with respect to Environmental Laws or to any remedial obligations under Environmental Laws; (c) All notices, permits, licenses or similar authorizations, if any, required to be obtained or filed in connection with the operation or use of any and all Property of the Company and its Subsidiaries, including without limitation past or present treatment, storage, disposal or release of a hazardous substance or solid waste into the environment, have been duly obtained or filed; (d) All hazardous substances generated at any and all Property of the Company and its Subsidiaries have in the past been transported, treated and disposed of only by carriers maintaining valid permits under RCRA and any other Environmental Law and only at treatment, storage and disposal facilities maintaining valid permits under RCRA and any other Environmental Law, which carriers and facilities (to the best knowledge of the Company) have been and are operating in compliance with such permits; (e) The Company and its Subsidiaries have taken all steps necessary to determine and have determined that no hazardous substances or solid waste have been disposed of or otherwise released and there has been no threatened release of any hazardous substances on or to any Property of the Company and its Subsidiaries except in compliance with Environmental Laws; and (f) The Company and its Subsidiaries have no material liability in connection with any release or threatened release of any hazardous substance or solid waste into the environment. (g) To the extent applicable, the Company and its Subsidiaries have complied with all financial responsibility, spill prevention facility design, operation and equipment requirements 54 imposed by OPA or will comply with such requirements scheduled to be imposed by OPA in the future during the term of this Agreement; and the Company has no reason to believe that either it or its Subsidiaries will not be able to maintain compliance with all applicable OPA requirements during the term of this Agreement. SECTION 7.19 DEFAULTS. The Company and its Restricted Subsidiaries are not in default and no event or circumstance has occurred which, but for the passage of time or the giving of notice, or both, would constitute a default under any agreement or other instrument to which either the Company or any of its Restricted Subsidiaries is a party or by which it is bound in any manner that could reasonably be expected to have a Material Adverse Effect. No Default or Event of Default hereunder has occurred and is continuing. SECTION 7.20 COMPLIANCE WITH THE LAW. The Company and its Restricted Subsidiaries have not violated any Governmental Requirement or failed to obtain any license, permit, franchise or other governmental authorization necessary for the ownership of any of their respective Properties or the conduct of their respective business which violation or failure could reasonably be expected to have a Material Adverse Effect. SECTION 7.21 RISK MANAGEMENT AGREEMENTS. Schedule 7.21 sets forth, as of the Effective Date, a true and complete list of all Risk Management Agreements (including commodity price swap agreements, forward agreements or contracts of sale which provide for prepayment for deferred shipment or delivery of oil, gas or other commodities) of the Company and its Restricted Subsidiaries, the material terms thereof (including the type, term, effective date, termination date and notional amounts or volumes), the net mark to market value thereof, all credit support agreements relating thereto (including any margin required or supplied), and the counterparty to each such agreement. SECTION 7.22 GAS IMBALANCES. As of the Effective Date, except as set forth on Schedule 7.22 or on the most recent certificate delivered pursuant to Section 8.05(c), on a net basis there are no gas imbalances, take or pay or other prepayments with respect to the Company and its Restricted Subsidiaries' Oil and Gas Properties which would require the Company or such Subsidiary to deliver Hydrocarbons produced from the Oil and Gas Properties at some future time without then or thereafter receiving substantially full payment therefor exceeding 10,000,000 mcf of gas in the aggregate. SECTION 7.23 SOLVENCY. The Company (a) is not insolvent and will not be rendered insolvent as a result of the execution, delivery and performance of the Notes and this Agreement or the making of the Loans or issuance of Letters of Credit hereunder, (b) is not engaged in business or a transaction, or about to engage in a business or a transaction, for which it has unreasonably small capital, and (c) does not intend to incur, or believe it will incur, debts that will be beyond its ability to pay as such debts mature. SECTION 7.24 YEAR 2000 COMPLIANCE. Except where failure to do so would not have a Material Adverse Effect, any reprogramming required to permit the proper functioning, in and following the year 2000, of (i) the computer systems of the Company and its Subsidiaries and (ii) equipment containing embedded microchips (including systems and equipment supplied by others or with which the systems of the Company and its Subsidiaries interface) and the testing 55 of all such systems and equipment, as so reprogrammed, will be completed by August 1, 1999. The cost to the Company and its Subsidiaries of such reprogramming and testing and of the reasonably foreseeable consequences of year 2000 to the Company and its Subsidiaries (including, without limitation, reprogramming errors and the failure of others' systems or equipment) will not result in a Default or Event of Default or otherwise have a Material Adverse Effect. Except for such of the reprogramming referred to in the preceding sentence as may be necessary, the computer and management information systems of the Company and its Subsidiaries are and, with ordinary course upgrading and maintenance, will continue for the term of this Agreement to be, sufficient to permit the Company and its Subsidiaries to conduct their business without Material Adverse Effect. ARTICLE VIII AFFIRMATIVE COVENANTS The Company agrees that, so long as any of the Commitments are in effect and until payment in full of all Loans hereunder, all interest thereon and all other amounts payable by the Company or OEI-Louisiana hereunder or any Loan Document: SECTION 8.01 FINANCIAL STATEMENTS. The Company shall deliver, and shall cause Ocean Canada to cause to be delivered to each of the Lenders: (a) As soon as available and in any event within 60 days after the end of each of the first three fiscal quarterly periods of each fiscal year of each of the Company and Ocean Canada, consolidated statements of income (including cost summaries of general and administrative expenses in detail satisfactory to the Administrative Agent), changes in stockholders' equity and cash flows of the Company and its Consolidated Subsidiaries and Ocean Canada and its Consolidated Subsidiaries for such period and for the period from the beginning of the respective fiscal year to the end of such period, and the related consolidated balance sheets as at the end of such period, and commencing March 31, 1999, setting forth in each case in comparative form the corresponding figures for the corresponding period in the preceding fiscal year, accompanied by the certificates of the respective senior financial officers of the Company and Ocean Canada, which certificates shall respectively state that said financial statements fairly present, in all material respects, the respective consolidated financial conditions and results of operations of the Company and Ocean Canada and their respective Consolidated Subsidiaries in accordance with generally accepted accounting principles, consistently applied, as at the end of, and for, such period (subject to the absence of footnotes and normal year-end audit adjustments). (b) As soon as available and in any event within 120 days after the end of each fiscal year of the Company and Ocean Canada, consolidated statements of income, changes in stockholders' equity and cash flows of the Company and its Consolidated Subsidiaries and Ocean Canada and its Consolidated Subsidiaries for such year and the related consolidated balance sheets as at the end of such year, and commencing December 31, 1999, setting forth in each case in comparative form the corresponding figures for the preceding fiscal year, and accompanied by the opinion thereon of independent certified public accountants of recognized national standing, which opinion shall state that said financial statements fairly present, in all material respects, the respective consolidated financial condition and results of operations of the 56 Company and Ocean Canada and their respective Consolidated Subsidiaries as at the end of, and for, such fiscal year. (c) Promptly upon their becoming available, copies of all registration statements and regular periodic reports, if any, which the Company or any of its Subsidiaries shall have filed with the SEC or any national securities exchange. (d) As soon as possible, and in any event within ten (10) days after the Company knows that any of the events or conditions specified below with respect to any Plan or Multiemployer Plan have occurred or exist, a statement signed by a senior financial officer of the Company setting forth details respecting such event or condition and the action, if any, which the Company or its ERISA Affiliate proposes to take with respect thereto (and a copy of any report or notice required to be filed with or given to PBGC by the Company or an ERISA Affiliate with respect to such event or condition): (i) any reportable event, as defined in Section 4043(b) of ERISA and the regulations issued thereunder, with respect to a Plan, as to which PBGC has not by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event (provided that a failure to meet the minimum funding standard of Section 412 of the Code or Section 302 of ERISA shall be a reportable event regardless of the issuance of any waivers in accordance with Section 412(d) of the Code); (ii) the filing under Section 4041 of ERISA of a notice of intent to terminate any Plan or the termination of any Plan; (iii) the institution by PBGC of proceedings under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by PBGC with respect to such Multiemployer Plan; (iv) the complete or partial withdrawal by the Company or any ERISA Affiliate under Section 4201 or 4204 of ERISA from a Multiemployer Plan, or the receipt by the Company or any ERISA Affiliate of notice from a Multiemployer Plan that is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to terminate or has terminated under Section 4041A of ERISA; and (v) the institution of a proceeding by a fiduciary of any Multiemployer Plan against the Company or any ERISA Affiliate to enforce Section 515 of ERISA, which proceeding is not dismissed within 30 days. (e) As soon as available and in any event within 60 days after the end of each fiscal quarterly period of each fiscal year of the Company, for such quarterly period, the detailed monthly financial reports of the Company and its Consolidated Subsidiaries, containing production, revenue and cost information reports for such quarterly period with respect to the Oil and Gas Properties owned by the Company and its Consolidated Subsidiaries, which report shall be in such form as may be accepted by the Administrative Agent and the Technical Agents from time to time. 57 (f) Promptly after the Company knows that a Default or Event of Default has occurred and is continuing, a notice of such Default or Event of Default describing the same in reasonable detail and what action, if any, the Company intends to take in response thereto. (g) Prior to the issuance of any Pari Passu Debt under Section 9.01(h), written notice of such event describing the amount of Debt to be incurred and the maturity of such Pari Passu Debt, and such other information as the Administrative Agent may reasonably request. In connection with the foregoing, the Company shall also deliver a copy of the instruments and agreements evidencing or governing such Pari Passu Debt, certified as true and complete by the Company. (h) Promptly after the Company or any of its Restricted Subsidiaries is aware of any event of force majeure or other event, circumstance or condition materially and adversely affecting the Oil and Gas Properties of any Restricted Subsidiary of the Company, notice of such event, circumstance or condition. (i) Promptly after the Company or any of its Restricted Subsidiaries is aware that any Loan Document, after delivery thereof, has for any reason, except to the extent permitted by the terms of this Agreement or thereof, ceased to be in full force and effect and valid, binding and enforceable in accordance with its terms (subject to customary exceptions therefrom), notice of such event or condition. (j) At the time the Company furnishes a Reserve Report under Section 8.05(a), a report, in form and substance satisfactory to the Administrative Agent, setting forth as of the day of such Reserve Report, a true and complete list of all Risk Management Agreements (including commodity price swap agreements, forward agreements or contracts of sale which provide for prepayment for deferred shipment or delivery of oil, gas or other commodities) of the Company and each of its Restricted Subsidiaries, the material terms thereof (including the type, term, effective date, termination date and notional amounts or volumes), the net mark to market value therefor, any new credit support agreements relating thereto not listed on Schedule 7.21, any margin required or supplied under any credit support document, and the counterparty to each such agreement. (k) At the time the Company furnishes each set of financial statements pursuant to Section 8.01(a) or (b), a report, in form and substance satisfactory to the Administrative Agent, setting forth as of the last day of such fiscal quarter or year, the amount of investments, loans and advances made to its Unrestricted Subsidiaries pursuant to Section 9.03(p). (l) From time to time such other information regarding the business, affairs or financial condition of the Company and its Restricted Subsidiaries as any Lender or the Administrative Agent may reasonably request. The Company shall furnish to each Lender, at the time it furnishes each set of financial statements pursuant to Section 8.01(a) or (b), a certificate of a senior financial officer of the Company: (i) to the effect that no Default or Event of Default has occurred and is continuing (or, if any Default or Event of Default has occurred and is continuing, describing the same in reasonable detail and what action, if any, the Company intends to take in response thereto); and 58 (ii) setting forth in reasonable detail the computations necessary to determine whether the Company is in compliance with Sections 9.01(h), 9.03(c), 9.03(p), 9.04, 9.05, 9.12 and 9.16(b) as of the end of the respective fiscal quarter or fiscal year. SECTION 8.02 LITIGATION. The Company shall, and shall cause Ocean Canada to, promptly give to the Administrative Agent notice of all legal or arbitral proceedings, and of all proceedings before any Governmental Authority, affecting the Company or any of its Restricted Subsidiaries except proceedings which could not reasonably be expected to have a Material Adverse Effect. SECTION 8.03 CORPORATE EXISTENCE, ETC. (a) Except as permitted by Section 9.08, the Company shall, and shall cause each of its Restricted Subsidiaries to: (i) preserve and maintain its corporate existence and all of its material rights, privileges and franchises; (ii) comply with the requirements of all applicable laws, rules, regulations and orders of Governmental Authorities if failure to comply with such requirements could reasonably be expected to have a Material Adverse Effect; (iii) pay and discharge all taxes, assessments and governmental charges or levies imposed on it or on its income or profits or on any of its Property prior to the date on which penalties attach thereto, except for any such tax, assessment, charge or levy the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained; (iv) permit representatives of any Lender or the Administrative Agent, during normal business hours, to examine, copy and make extracts from its books and records, inspect its Properties, and discuss its business and affairs with its officers, all to the extent reasonably requested by such Lender or the Administrative Agent (as the case may be); and (v) keep insured by financially sound and reputable insurers all Property of a character usually insured by corporations engaged in the same or similar business similarly situated against loss or damage of the kinds and in the amounts customarily insured against by such corporations and carry such other insurance as is usually carried by such corporations. (b) The Company shall, and shall cause each of its Restricted Subsidiaries to: (i) do or cause to be done all things reasonably necessary to preserve and keep in good repair, working order and efficiency (ordinary wear and tear excepted) all of the Oil and Gas Properties owned by the Company or any Restricted Subsidiary of the Company including, without limitation, all equipment, machinery and facilities, and (ii) make all the reasonably necessary repairs, renewals and replacements so that at all times the state and condition of the Oil and Gas Properties owned by the Company and its Restricted Subsidiaries will be fully preserved and maintained, except to the extent a portion of such Oil and Gas Properties is no longer capable of producing Hydrocarbons in economically reasonable amounts, as determined by the Company in its sole judgment. (c) The Company and its Restricted Subsidiaries will promptly pay and discharge or cause to be paid and discharged all delay rentals, royalties, expenses and indebtedness accruing under, and perform or cause to be performed each and every act, matter or thing required by, each and all of the assignments, deeds, leases, sub-leases, contracts and agreements affecting their interests in their Oil and Gas Properties and will do all other things necessary to keep unimpaired the Company's or any Restricted Subsidiary's rights with respect thereto and prevent 59 any forfeiture thereof or a default thereunder, except (i) to the extent a portion of such Oil and Gas Properties is no longer capable of producing Hydrocarbons in economically reasonable amounts as determined by the Company in its sole judgment, (ii) for sales or other dispositions of Oil and Gas Properties permitted by Section 9.16, and (iii) if such failure to comply could not reasonably be expected to have a Material Adverse Effect. (d) The Company and its Restricted Subsidiaries will operate their Oil and Gas Properties or cause or use commercially reasonably efforts to cause such Oil and Gas Properties to be operated in a careful and efficient manner in accordance with the practices of the industry and in compliance with all applicable contracts and agreements and in compliance in all material respects with all Governmental Requirements, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect. (e) The Company will, and will cause its Subsidiaries to, maintain accounting procedures, books and records to permit the preparation of financial statements of the Company and its Subsidiaries in accordance with GAAP. (f) The Company or any of its Restricted Subsidiaries may upon thirty (30) days' prior notice to the Administrative Agent change its principal place of business and chief executive offices from that listed on Exhibit D. SECTION 8.04 ENVIRONMENTAL MATTERS. The Company shall, and shall cause each of its Subsidiaries to, promptly notify the Administrative Agent and the Lenders in writing of any existing, pending or threatened action, investigation or inquiry by any Governmental Authority (of which the Company or any of its Subsidiaries has actual knowledge) in connection with any Environmental Laws, excluding routine testing and corrective action, which would involve a violation of any Environmental Law or remedial obligation (individually or in the aggregate) sufficient to have a Material Adverse Effect. SECTION 8.05 ENGINEERING REPORTS. (a) On or before March 15 of each year commencing March 15, 1999, the Company shall furnish to the Technical Agents and the Lenders a Reserve Report as of the preceding January 1st in form and substance reasonably satisfactory to the Technical Agents. The January 1 Reserve Report of each year shall be comprised of two reports; one being prepared by or under the supervision of certified independent petroleum engineers or other independent petroleum consultant(s) reasonably acceptable to the Technical Agents and evaluating Oil and Gas Properties comprising not less than eighty percent (80%) of the SEC Value of the Oil and Gas Properties of the Company and its Restricted Subsidiaries which Properties the Company desires to have included in the Borrowing Base, and the other being prepared by or under the supervision of the chief petroleum engineer of the Company (utilizing substantially similar procedures to those used by its independent petroleum engineers) and evaluating the Oil and Gas Properties comprising the remaining SEC Value of the Oil and Gas Properties of the Company and its Restricted Subsidiaries which Properties the Company desires to have included in the Borrowing Base. Notwithstanding the foregoing, the January 1 Reserve Report relating to any Oil and Gas Properties not located in the geographical boundaries of the United States of America and Canada and surrounding waters shall be prepared by certified independent 60 petroleum engineers or other independent petroleum consultant(s) reasonably acceptable to the Technical Agents. (b) On or before September 15 of each year commencing September 15, 1998, the Company shall furnish to the Technical Agents and the Lenders a Reserve Report prepared as of the immediately preceding July 1 by the chief engineer of the Company (who shall certify such report to have been prepared in accordance with the procedures used in the immediately preceding January 1 Reserve Report), which shall further evaluate the Oil and Gas Properties evaluated in the immediately preceding Reserve Report. For any unscheduled redetermination pursuant to Section 2.09(d), the Company shall provide such Reserve Report (which shall be prepared by its chief engineer) with an "as of" date as specified by the Required Lenders, as soon as possible, but in any event no later than 75 days following the receipt of the request by the Administrative Agent. (c) With the delivery of each Reserve Report required in Section 8.05(a) and (b), the Company shall provide to the Lenders a statement reflecting (i) any material changes in the net revenue interest of each well or lease as reflected in the Reserve Report delivered for the prior period, after giving effect to all encumbrances listed therein from the net revenue interests as reflected in such report, along with an explanation as to any material discrepancies between the two net revenue interest disclosures, and (ii) except as set forth on an exhibit thereto, on a net basis there are no gas imbalances, take or pay or other prepayments with respect to their Oil and Gas Properties evaluated in such Reserve Report which would require the Company or any of its Restricted Subsidiaries to deliver Hydrocarbons produced from such Oil and Gas Properties at some future time without then or thereafter receiving full payment therefor. (d) If the Technical Agents desire to exclude an Oil and Gas Property included in the Borrowing Base on the basis that title to such Oil and Gas Property is unsatisfactory, the Administrative Agent shall give the Company written notice thereof and the Company shall have 90 days to cure such defect. If the Company is unable to cure any such title defect requested to be cured within the 90-day period, such default shall not be a Default or an Event of Default, but instead, if the aggregate value of all such Oil and Gas Properties which have unsatisfactory title defects (and which have not previously resulted in the invocation of the remedy set forth in this Section) constitutes 5% or more of the then current amount of the Borrowing Base, the Technical Agents shall have the right, by sending written notice to the Company, to reduce the then outstanding Borrowing Base by an amount as reasonably determined by the Technical Agents to reflect the impairment to the Borrowing Base caused by such title defect. This adjustment to the Borrowing Base shall become effective immediately after receipt of such notice. SECTION 8.06 STOCK OF RESTRICTED SUBSIDIARIES. Except as provided in Section 9.08 and Exhibit D, the Company will at all times own all issued and outstanding shares of all classes of stock of its Restricted Subsidiaries as listed on Exhibit D and the Company will at all times own all issued and outstanding shares of all classes of stock of its Restricted Subsidiaries listed on Exhibit D. SECTION 8.07 FURTHER ASSURANCES. The Company shall, and shall cause its Restricted Subsidiaries to, cure promptly any defects in the creation and issuance of the Notes and the execution and delivery of the Loan Documents, including this Agreement. The Company and its 61 Restricted Subsidiaries will at their expense promptly execute and deliver to the Administrative Agent upon request all such other and further documents, agreements and instruments (a) in compliance with or accomplishment of the covenants and agreements of the Company and OEI-Louisiana in the Loan Documents, including this Agreement, (b) to further evidence and more fully describe the collateral, if any, intended as security for the Notes, (c) to correct any omissions in the Loan Documents, or more fully state the security obligations set out herein or in any of the Loan Documents, (d) to perfect, protect or preserve any Liens created pursuant to any of the Loan Documents, or (e) to make any recordings, to file any notices, or obtain any consents, all as may be necessary or appropriate in connection therewith. SECTION 8.08 PERFORMANCE OF OBLIGATIONS. The Company will pay the Notes according to the reading, tenor and effect thereof; and the Company will and will cause each Subsidiary to do and perform every act and discharge all of the obligations to be performed and discharged by them under this Agreement and the other Loan Documents, at the time or times and in the manner specified. ARTICLE IX NEGATIVE COVENANTS The Company agrees that, so long as any of the Commitments are in effect and until payment in full of all Loans hereunder, all interest thereon and all other amounts payable by the Company or OEI-Louisiana hereunder or any Loan Document: SECTION 9.01 DEBT. The Company will not and will not permit any of its Subsidiaries to incur, create, assume or suffer to exist any Debt, except the following (each of which exceptions is in addition to, and not in limitation of, the other; and the Company may elect to classify any item of Debt under any applicable exception, and such classification shall not be deemed to be a utilization of any other potentially applicable exception): (a) the Indebtedness and the Canadian Indebtedness and any guarantees thereof; (b) Debt of the Company and its Subsidiaries existing on the date of this Agreement which is reflected in the Financial Statements and any renewals, refinancings and extensions thereof; (c) Debt created under leases which, in accordance with GAAP are or should be recorded as capital leases, in an aggregate amount not to exceed $10,000,000 at any one time outstanding; provided that Ocean Canada may not incur, create, assume or suffer to exist any Debt under this Section 9.01(c) in an aggregate amount in excess of $2,000,000 at any one time outstanding; (d) Debt (i) of any Unrestricted Subsidiary that is Non-Recourse Debt, on terms approved by the Administrative Agent, the Syndication Agent and the Documentation Agent (which approval shall not be unreasonably withheld), provided that the Property of such Unrestricted Subsidiary is not included in the most recent calculation of the Borrowing Base, or (ii) of Persons who are not Subsidiaries of the Company which is Non-recourse to the Company and its Restricted Subsidiaries and any of their Property except for recourse constituting Debt permitted under Section 9.01(m); 62 (e) (i) Subordinated Debt incurred pursuant to the 95 Indenture, the 96 Indenture, the 97 Indenture and the 98 Senior Subordinated Indenture and any refinancings permitted by Section 9.19(a) of this Agreement or a consent thereunder; provided that in no event may the aggregate principal amount of all Subordinated Debt under such Indentures exceed $760,000,000 at any one time outstanding without the consent of the Required Lenders, (ii) obligations under or in connection with the Pledge of Production and Trust Agreements, and (iii) other Subordinated Debt that is issued on terms reasonably satisfactory to each of the Administrative Agent, the Syndication Agent and the Documentation Agent with respect to maturity, interest rate, covenants and subordination language and any refinancings thereof permitted by Section 9.19(a) of this Agreement or a consent thereunder, provided that in connection with the issuance of any such Subordinated Debt under this clause (iii), the Borrowing Base is redetermined; (f) Debt (i) of the Company created, incurred or assumed after the date hereof; provided that the aggregate outstanding principal amount of such Debt shall not exceed $10,000,000 minus the amount of Debt outstanding under clause (ii) at any one time outstanding and (ii) Debt of any Restricted Subsidiary created, incurred or assumed after the date hereof; provided that the aggregate outstanding principal amount of such Debt shall not exceed $1,000,000 at any one time outstanding of any Restricted Subsidiary; (g) Debt owed by the Company or any of its Restricted Subsidiaries to the Company or any of its Restricted Subsidiaries; provided such Debt is on terms (including, without limitation, subordination provisions) reasonably satisfactory to the Administrative Agent (which approval shall not be unreasonably withheld); (h) (i) the $125,000,000 7-5/8% Senior Notes due 2005 issued pursuant to the 98 Senior (7-year) Indenture; (ii) other Short-Term Pari Passu Debt, provided that prior to the issuance or incurrence of such Debt, the Company provides the Administrative Agent notice thereof as required by Section 8.01(g); (iii) the $125,000,000 8-1/4% Senior Notes due 2018 issued pursuant to the 98 Senior (20-year) Indenture; and (iv) other Long-Term Pari Passu Debt that is issued on terms reasonably satisfactory to each of the Administrative Agent, the Syndication Agent and the Documentation Agent with respect to maturity, interest rate and covenants and any refinancings thereof permitted by Section 9.19(a) of this Agreement or a consent thereunder, provided that in connection with the issuance of any other Long-Term Pari Passu Debt under this clause (iv), the Borrowing Base is redetermined; (i) Debt, on terms approved by the Administrative Agent, the Syndication Agent and the Documentation Agent (which approval shall not be unreasonably withheld), incurred by partnerships, of which the Company or any Subsidiary is a general partner and which Debt is Non-recourse to the Company or such Subsidiary for the payment thereof (including no recourse to the Company's or such Subsidiary's interest in such partnership); (j) Debt under the Havre Credit Facility; (k) Debt not to exceed $10,000,000 in the aggregate at any one time outstanding under guarantees or other similar surety obligations with respect to Debt owed by the Government of Equatorial Guinea or any Person exercising rights of a sovereign on its behalf; 63 (l) Debt of Lion not to exceed $12,000,000 in the aggregate at any one time outstanding incurred with respect to the Abidjan LPG plant and all guarantees or other surety obligations with respect to such Debt; (m) With respect to Debt described in Section 9.01(d) (the "Primary Obligation"), (i) Debt of the Company not to exceed $10,000,000 in the aggregate at any one time outstanding under guarantees of (or other surety obligations with respect to) such Primary Obligation, and (ii) Debt arising out of the grant of Liens on stock (or other equity interests) issued by the obligor on such Primary Obligation; (n) Debt associated with letters of credit, bank guarantees, bonds or surety obligations required by Governmental Requirements in connection with the usual and customary operation of the Oil and Gas Properties; (o) Debt in an aggregate amount at any one time outstanding not to exceed $250,000,000 of a Restricted Subsidiary engaged in the oil and gas business exclusively outside of North America (i) that is Non-recourse to the Company and any other Restricted Subsidiary of the Company and their respective Property (other than those guarantees or other surety obligations by the Company relating to such Debt to which the Technical Agents and the Required Lenders consent in writing), and (ii) that is on terms approved by the Technical Agents and the Required Lenders, provided that in connection with the issuance of any such Debt under this Section 9.01(o), (A) the Borrowing Base is redetermined, and (B) no further investments, loans and advances under Section 9.03 shall be made in or to such obligor without the prior consent of the Required Lenders; and (p) Endorsements of checks and other instruments in the ordinary course of business for purposes of collection. SECTION 9.02 LIENS. The Company will not and will not permit any of its Subsidiaries to create, incur, assume or permit to exist any Lien on any of its Properties (now owned or hereafter acquired), except: (a) Liens securing the payment of any Indebtedness or the Canadian Indebtedness and any guarantees thereof; (b) Excepted Liens; (c) Liens existing on the date of this Agreement which have been disclosed to the Lenders in the Financial Statements, and any renewals and extensions thereof; (d) Liens securing Debt permitted by Section 9.01(c), provided that such Liens attach only to the Property subject to such lease; (e) Liens securing Debt permitted by Section 9.01(d) and Section 9.01(e)(ii); (f) Liens securing Debt permitted by Section 9.01(i), provided that such Liens attach only to Property of the partnership incurring such Debt; 64 (g) Liens to secure the Debt permitted by Section 9.01(j) on any Property owned by Havre and on the ownership interest in Havre held by the Company and its Subsidiaries, and encumbrances under gas gathering agreements caused by the dedication by the Company or any Subsidiary to Havre of such Person's Oil and Gas Properties located adjacent to the gas gathering system owned by Havre; and (h) Liens securing Debt permitted by Sections 9.01(k), (l), (m), (n) and (o). SECTION 9.03 INVESTMENTS, LOANS AND ADVANCES. The Company will not and will not permit any of its Restricted Subsidiaries to make or permit to remain outstanding any loans or advances to or investments in any Person, except that the foregoing restriction shall not apply to: (a) investments, loans or advances reflected in the Financial Statements; (b) investments, loans or advances by the Company or by any of its Restricted Subsidiaries to or in the Company or any of its Restricted Subsidiaries, including, without limitation, purchases of outstanding equity interests in Restricted Subsidiaries held by Persons that are not Restricted Subsidiaries; (c) (i) investments by the Company or any of its Restricted Subsidiaries in additional Oil and Gas Properties and facilities related thereto, including gas gathering systems, and other investments, loans and advances made in the ordinary course of, and which are or become customary in, the oil and gas business as a means of actively exploiting, exploring for, acquiring, developing, processing, gathering, storing, marketing or transporting oil and gas; (ii) investments, loans or advances in or to any Restricted Subsidiary of the Company for the investment by such Persons in Properties of the types described in clause (c)(i) above (whether now owned or hereafter acquired or developed) located in jurisdictions (A) in North America and (B) outside of North America; provided that such investments, loans or advances under this clause (c)(ii)(B) shall not exceed $150,000,000 annually, net of cash received during such period as a return of capital or return on investment from any such investment, loan or advance previously made, in the aggregate for each nation; and (iii) investments in unrelated development activities or businesses in countries in which any of its Restricted Subsidiaries has Oil and Gas Properties; provided that the aggregate amount of such investments under this clause (iii) do not exceed $10,000,000, net of cash received during such period as a return of capital or return on investment from any such investment, loan or advance previously made, in the aggregate during any twelve month period; (d) routine advances by the Company or any of its Restricted Subsidiaries to or on behalf of the Company or any of its Restricted Subsidiaries in the ordinary course of business for general and administrative expenses; (e) routine operating expenses advanced by the Company or any of its Restricted Subsidiaries as operator in the ordinary course of business for other working interest owners under operating agreements, which do not exceed $10,000,000 in the aggregate outstanding at any one time to all Persons combined; (f) investments required to satisfy obligations under any Plans; 65 (g) accounts receivable of the Company or any of its Restricted Subsidiaries arising out of the sale of Hydrocarbons and other assets or services in the ordinary course of business; (h) direct obligations of the United States or any agency thereof, or obligations guaranteed by the United States or any agency thereof, in each case maturing within one year from the date of purchase thereof; and repurchase agreements of any Lender or any commercial bank in the United States, if the commercial paper of such bank or of the bank holding company of which such bank is a wholly owned subsidiary is rated in one of the two highest rating categories of Standard & Poors Ratings Service, Moody's Investors Service, Inc. or any other rating agency satisfactory to the Majority Lenders, that are fully secured by securities described in this Section 9.03(h); (i) commercial paper rated in one of the two highest grades by Standard & Poors Rating Service or Moody's Investors Service, Inc.; (j) demand deposits and certificates of deposit maturing within one year from the date of acquisition thereof with any Lender or any office located in the United States of any bank or trust company which is organized under the laws of the United States or any state thereof and which has capital, surplus and undivided profits aggregating at least $500,000,000 (as of the date of such bank or trust company's most recent financial reports); (k) routine advances or loans to employees of the Company or any of its Subsidiaries not to exceed $200,000 in the aggregate at any one time; (l) deposit accounts maintained in the ordinary course of business by the Company or any of its Subsidiaries maturing within one year from the date of creation thereof with any bank or trust company organized in a country in which a Restricted Subsidiary is then doing business or in which it owns Property; (m) investments, loans or advances in an aggregate amount not to exceed $10,000,000, net of cash received during such period as a return of capital or return on investment from any such investment, loan or advance previously made, to or for the benefit of the Government of Equatorial Guinea or any Governmental Authority thereof; (n) (i) investments, loans or advances (including any guarantee or other surety obligation constituting Debt under Section 9.01(m)(i) and the amount of any Letters of Credit issued on account of Lion, but excluding obligations under Section 9.01(m)(ii)) in the Abidjan LPG plant or in Lion or in any Person that directly or indirectly controls such plant in an aggregate amount not to exceed $25,000,000, net of cash received during such period as a return of capital or return on investment, loan or advance from any such investment, loan or advance previously made, and (ii) investments, loans or advances in Havre (including any guarantee or other surety obligation constituting Debt under Section 9.01(j) or (m)(i) and the amount of any Letters of Credit issued on account of Havre, but excluding obligations under Section 9.01(m)(ii)) in an aggregate amount not to exceed $21,000,000, net of cash received during such period as a return of capital or return on investment, loan or advance from any such investment, loan or advance previously made; 66 (o) investments by the Company or any of its Restricted Subsidiaries under Risk Management Agreements entered into in the ordinary course of their business for the purposes of protecting against fluctuations in interest rates, oil and gas prices or foreign currency exchange rates; (p) investments, loans and advances in or to Unrestricted Subsidiaries of the Company other than Havre and Lion; provided that the aggregate amount of investments, loans and advances (including (i) guarantee or other surety obligations by the Company or any Restricted Subsidiary constituting Debt under Section 9.01(m)(i), but excluding obligations under Section 9.01(m)(ii), (ii) Letters of Credit issued on account of obligations of such Unrestricted Subsidiary and (iii) if UMC Equatorial Guinea Corporation, a Delaware corporation, or its successor, is designated as an Unrestricted Subsidiary, the aggregate amount of investments, loans or advances made under Section 9.03(m)) in and to all Unrestricted Subsidiaries (other than Havre and Lion) by the Company and its Restricted Subsidiaries hereunder, net of cash received as a return of capital or return on any investment, loan or advance previously made, does not exceed $20,000,000; (q) deposits in money market funds investing exclusively in investments described in Section 9.03(h), 9.03(i) or 9.03(j); (r) other investments, loans or advances not to exceed $1,000,000 in the aggregate at any time; and (s) advances to operators under operating agreements entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business. SECTION 9.04 DIVIDENDS, DISTRIBUTIONS AND REDEMPTIONS. Except with prior approval of the Required Lenders, the Company will not declare or pay any dividend, purchase, redeem or otherwise acquire for value any of its stock now or hereafter outstanding, return any capital to its stockholders, or make any distribution of its assets to its stockholders as such, or permit any of its Restricted Subsidiaries to purchase or otherwise acquire for value any stock of the Company, except the Company may, so long as no Default or Event of Default has occurred and is continuing: (i) declare and deliver stock dividends; (ii) redeem or repurchase stock with the proceeds received from the issuance of new shares of any class of stock within the 12 month period prior to such redemption or repurchase; provided that the aggregate amount redeemed or repurchased under this clause (ii) during such 12 month period does not exceed $100,000,000; and (iii) (A) declare and pay cash dividends, and (B) if, but only if, the 12 month redemption/repurchase period allowed in Section 9.04(ii) is not applicable, redeem or repurchase stock, in either case in an aggregate amount not to exceed $25,000,000 plus 50% of the Consolidated Net Income generated after March 31, 1998; provided that no Borrowing Base Deficiency exists either immediately before declaration of such dividend and after payment of such dividend or immediately after any such stock redemption or repurchase. SECTION 9.05 FINANCIAL COVENANTS. (A) INTEREST COVERAGE RATIO. The Company will not permit its Interest Coverage Ratio, as of the end of any fiscal quarter of the Company, to be less than 3.0 to 1.0. 67 (B) DEBT COVERAGE RATIO. The Company will not permit its Debt Coverage Ratio, at any time to be greater than 3.5 to 1.0. (C) TANGIBLE NET WORTH. On and after the Initial Funding, the Company will not permit its Consolidated Tangible Net Worth to be less than $580,000,000 plus the amount equal to seventy-five percent (75%) of the net cash proceeds of any sale or other issuance of any equity security by the Company at any time after the Effective Date, plus the amount equal to 50% of its positive Consolidated Net Income for the period from March 31, 1998 to the date of such determination, taken as a single accounting period. SECTION 9.06 NATURE OF BUSINESS. The Company will not, and will not permit any of its Restricted Subsidiaries to, make any material change in the character of its business as carried on at the date hereof. SECTION 9.07 LIMITATION ON OPERATING LEASES AND SALE-LEASEBACK TRANSACTIONS. The Company will not, and will not permit any of its Restricted Subsidiaries to, create, incur, assume or suffer to exist any obligation for the payment of rent or hire of Property of any kind whatsoever (real or personal), under leases or lease agreements (other than (a) leases or lease agreements which constitute Debt, (b) leases of Hydrocarbon Interests, and (c) leases directly related to oil and gas field operations, including without limitation, leases for drilling, workover or other rig related activities) which would cause (i) the aggregate amount of all payments made by the Company and its Restricted Subsidiaries, other than Ocean Canada and its Restricted Subsidiaries (in each case, determined on a consolidated basis), pursuant to such leases or lease agreements to exceed $15,000,000 in any period of twelve consecutive calendar months or (ii) the aggregate amount of all payments made by Ocean Canada and its Restricted Subsidiaries (determined on a consolidated basis) pursuant to such leases or lease agreements to exceed $2,000,000 in any period of twelve consecutive calendar months. Neither the Company nor any of its Restricted Subsidiaries will enter into any arrangement, directly or indirectly, with any Person whereby the Company or any of its Restricted Subsidiaries shall sell or transfer any of their Property, whether now owned or hereafter acquired, and whereby the Company or any of its Restricted Subsidiaries shall then or thereafter rent or lease as lessee such Property or any part thereof or other Property which the Company or any of its Restricted Subsidiaries intends to use for substantially the same purpose or purposes as the Property sold or transferred. SECTION 9.08 MERGERS, ETC. The Company will not, and will not permit any of its Restricted Subsidiaries, to (a) merge into or with or consolidate with, any other Person, (b) sell, lease or otherwise dispose of (whether in one transaction or in a series of transactions), all or any substantial part of its Property or assets to any other Person, or (c) dissolve or take other similar actions; provided that if the Company gives prior written notice to the Administrative Agent, and no Default or Event of Default has occurred and is continuing or will result from the action proposed to be taken, then: any Restricted Subsidiary of the Company (other than Ocean Canada) may (i) merge or consolidate with the Company or with any other Subsidiary of the Company, including an Unrestricted Subsidiary so long as the requirements of Sections 9.16 and 9.21 are met, (ii) sell, lease or otherwise dispose of (at fair market value) all or any substantial part of its Property or assets to the Company or to any other Subsidiary of the Company, including an Unrestricted Subsidiary so long as the requirements of Sections 9.16 and 9.21 are met, or (iii) dissolve or take other similar actions. 68 SECTION 9.09 PROCEEDS OF NOTES. The Company will not permit the proceeds of the Notes to be used for any purpose other than those permitted by Section 7.07. SECTION 9.10 ERISA COMPLIANCE. The Company will not at any time permit any Plan maintained by it or any of its Subsidiaries to: (a) engage in any "prohibited transaction" as such term is defined in Section 4975 of the Code; (b) incur any "accumulated funding deficiency" as such term is defined in Section 302 of ERISA; or (c) terminate any such Plan in a manner which could result in the imposition of a Lien on the Property of the Company or any of its Subsidiaries pursuant to Section 4068 of ERISA. SECTION 9.11 SALE OR DISCOUNT OF RECEIVABLES. Except for receivables obtained by the Company out of the ordinary course of its business, the Company and its Restricted Subsidiaries will not discount or sell (with or without recourse) any of its notes receivable or accounts receivable except for settlement of joint interest billing accounts (other than with respect to Restricted Subsidiaries) in the normal course of business. SECTION 9.12 RISK MANAGEMENT AGREEMENTS. The Company will not, and will not permit any of its Restricted Subsidiaries to, incur any obligations under Risk Management Agreements, except that the Company may incur such obligations either with investment grade counterparties or as disclosed in Schedule 7.21; provided Risk Management Agreement relating to commodity prices shall not cover more than (i) 80% of the Company's and its Restricted Subsidiaries' applicable production estimates from their Oil and Gas Properties for the 24 month period measured as of the end of each fiscal quarter of the Company and its Consolidated Subsidiaries, (ii) 65% of the Company's and its Restricted Subsidiaries' applicable production estimates from their Oil and Gas Properties for the period commencing at the end of such 24-month period and ending on the date which is 36 months after the date of determination, and (iii) 50% of the Company's and its Restricted Subsidiaries' applicable production estimates from their Oil and Gas Properties for the period thereafter. SECTION 9.13 TRANSACTIONS WITH AFFILIATES. The Company and its Restricted Subsidiaries shall not enter into any transaction, including without limitation, any purchase, sale, lease or exchange of property or the rendering of any service, with any Affiliate (other than the Company, OEI-Louisiana, Ocean Canada or any other Restricted Subsidiary of the Company) unless such transactions are in the ordinary course of the Company's or its Restricted Subsidiary's business and are upon fair and reasonable terms no less favorable to the Company or such Restricted Subsidiary than could be obtained in a comparable arm's length transaction with a Person not an Affiliate. SECTION 9.14 NEGATIVE PLEDGE AGREEMENTS. Except for (a) any of the Loan Documents; (b) the Indentures or any other agreement evidencing the Subordinated Debt; (c) agreements permitted by Sections 9.02(c), (d), (e), (f), (g) or (h) but only with respect to the Property subject of the Lien permitted thereby; (d) customary provisions in leases, licenses, asset 69 sale agreements and other customary agreements not related to the borrowing of money and entered into in the ordinary course of business, (e) Liens or restrictions imposed on investments (or Property related thereto) of the type described in Section 9.03(c)(iii), but only on such investments or Property; and (f) restrictions imposed by agreements governing Excepted Liens, the Company and its Restricted Subsidiaries will not create, incur, assume or suffer to exist any contract, agreement or understanding which in any way prohibits or restricts the granting, conveying, creation or imposition of any Lien on any Property of the Company or any of its Restricted Subsidiaries or which requires the consent of or notice to other Persons in connection therewith. SECTION 9.15 SUBSIDIARIES AND PARTNERSHIPS. The Company and any of its Restricted Subsidiaries may create additional Subsidiaries or partnerships, provided that the Company shall give the Administrative Agent prompt notice thereof. SECTION 9.16 SALE OF OIL AND GAS PROPERTIES. Except for Hydrocarbons sold in the ordinary course of business as and when produced or after the production thereof, the Company will not sell, assign, transfer or convey, or permit any of its Restricted Subsidiaries to sell, assign, transfer or convey, any interest in any of the Oil and Gas Properties that constitute part of the Borrowing Base. This provision shall not apply to: (a) Routine farm-outs and other dispositions of non-proven acreage; and (b) Sales or other dispositions of Properties, provided that if the aggregate fair market value of such Properties sold or otherwise disposed of during any Redetermination Period exceeds five percent (5%) of the then current SEC Value of the Oil and Gas Properties included in the Borrowing Base (as in effect immediately prior to such sale), then simultaneously with any such disposition the Borrowing Base is reduced by an amount reasonably determined at the time by the Technical Agents to reflect the contribution to the Borrowing Base of the Properties so disposed of. SECTION 9.17 ENVIRONMENTAL MATTERS. The Company will not cause or permit, or permit any of its Subsidiaries to cause or permit, any of its Property to be in violation of, or do anything or permit anything to be done which will subject any such Property to any remedial obligations under any Environmental Laws if the effect of such violation could reasonably be expected to have a Material Adverse Effect. The Company and its Subsidiaries will establish and implement such procedures as may be necessary to promptly and properly respond in the event that: (i) solid wastes are disposed of on any of its respective Property in quantities or locations that would require remedial action under any Environmental Laws; (ii) hazardous substances are released on or to any such Property in a quantity equal to or exceeding that quantity which requires reporting pursuant to Section 103 of CERCLA; (iii) hazardous substances are released on or to any such Property so as to pose an imminent and substantial endangerment to public health or welfare or the environment; or (iv) oil is released or threatened to be released in violation of OPA. SECTION 9.18 PAYMENT RESTRICTIONS. Except for (a) any of the Loan Documents, (b) the Indentures or other agreements evidencing any of the Subordinated Debt, (c) the agreements relating to Non-recourse Debt permitted by Section 9.01, but only with respect to the Restricted 70 Subsidiary that is liable for such Non-recourse Debt, and (d) restrictions imposed relating to investments (or Property related thereto) of the type described in Section 9.03(c)(iii), but only with respect to such investments or Property, the Company and its Restricted Subsidiaries will not enter into any agreements which would restrict payments from any Restricted Subsidiary of the Company to the Company or any other Restricted Subsidiary. SECTION 9.19 SUBORDINATED AND LONG-TERM PARI PASSU DEBT. Neither the Company nor any of its Restricted Subsidiaries shall, without the prior written consent of the Majority Lenders: (a) defease, redeem, offer to purchase or purchase any of the Subordinated Debt or the Long-Term Pari Passu Debt, unless the Indebtedness shall have been paid in full and the Commitments of each Lender and Canadian Lender terminated; provided that the Company may optionally defease, redeem, offer to purchase and purchase all or any part of the Subordinated Debt and the Long-Term Pari Passu Debt (i) with the proceeds of the issuance of any equity securities or (ii) with the proceeds of any other Debt (which, in the case of Subordinated Debt, is subordinated on terms substantially identical to the Subordinated Debt or on terms more advantageous to the Lenders and the Canadian Lenders and) which has an average life and final maturity later than the average life and final maturity date, respectively, of the Subordinated Debt or Long-Term Pari Passu Debt being refinanced; provided further that the Company and OEI-Louisiana may (1) make the payments required under the Pledge of Production Trust Agreements in accordance with the terms thereof, and (2) make mandatory prepayments and repurchases of the Long-Term Pari Passu Debt to the extent required under the instruments governing such Debt; or (b) amend, supplement or modify the provisions of the Indentures or any instrument evidencing or guaranteeing the Debt incurred pursuant to the terms thereof; provided that the foregoing shall not apply to the following: (i) any amendment, supplement or modification, that, subject to the concurrence of the Administrative Agent, the Syndication Agent and the Documentation Agent, causes such Debt to have terms generally less restrictive than its terms immediately prior thereto, (ii) any amendment or supplement to the 95 Indenture, the 96 Indenture or the 97 Indenture to conform the provisions thereof to the corresponding provisions of the 98 Senior Subordinated Indenture; and (iii) the Company and OEI-Louisiana (and the trustee, if applicable) may enter into supplemental indentures to the instruments governing such Debt of the type described in Section 9.1 of each of the Indentures. SECTION 9.20 MAINTENANCE OF DEPOSITS. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, maintain deposits of funds in any bank or financial institution outside of the United States, Canada and nations that are members of the European Union, except for operating accounts in jurisdictions where the Company or any of its Restricted Subsidiaries is doing business or owns Property, which operating accounts shall contain only such minimum amounts as may be necessary for the conduct of business or the maintenance and exploitation of such Property. 71 SECTION 9.21 UNRESTRICTED SUBSIDIARIES. (a) The Company will not, and will not permit any Restricted Subsidiary to, create or otherwise designate any Subsidiary as an Unrestricted Subsidiary if (i) a Borrowing Base Deficiency exists, (ii) a Default or Event of Default exists or would result from such creation or designation, including under Section 9.03(p), (iii) such Subsidiary owes or incurs Debt other than Non- Recourse Debt, Debt under Section 9.01(j), and Debt owed to the Company and any of its Restricted Subsidiaries in connection with investments, loans or advances (including, without limitation, contingent obligations) made in compliance with Section 9.03(n) or (p), or (iv) such creation or designation shall result in the creation or imposition of any claim or Lien on any assets of the Company or any Restricted Subsidiary. Notwithstanding the foregoing, in no event may the Board of Directors of the Company designate OEI-Louisiana, OERI or Ocean Canada as an Unrestricted Subsidiary. (b) Without limitation of Section 9.21(a), the Company will not, and will not permit any Restricted Subsidiaries to, without the prior written consent of the Majority Lenders, change the characterization of a Subsidiary from a Restricted Subsidiary to an Unrestricted Subsidiary or an Unrestricted Subsidiary to a Restricted Subsidiary; provided, however, the prior written consent of the Majority Lenders shall not be required to (i) change the characterization of an Unrestricted Subsidiary to a Restricted Subsidiary if (A) no Default or Event of Default shall have occurred and be continuing at such time or would result therefrom, (B) after giving effect to such re- characterization, each of the representations and warranties made by the Company and OEI-Louisiana in the Loan Documents to which each is a party shall be true and correct in all material respects, and (C) the Company provides the Administrative Agent five (5) days advance written notice of its intent to re- characterize such Subsidiary or (ii) change the characterization of a Restricted Subsidiary to an Unrestricted Subsidiary if (A) no Default or Event of Default shall have occurred and be continuing or would result therefrom (including a violation of Section 9.03(p)), and on the date of such recharacterization, all investments made by the Company or any other Restricted Subsidiary in such Restricted Subsidiary prior to the date of such re-characterization shall be investments in an Unrestricted Subsidiary subject to Section 9.03(p), (B) if the Restricted Subsidiary owns any Oil and Gas Properties which are included in the Borrowing Base, the Borrowing Base shall be reduced by an amount reasonably determined at the time by the Technical Agents to reflect the contribution to the Borrowing Base of the Properties so owned, and (C) the Company provides the Administrative Agent five (5) days advance written notice of its intent to re- characterize such Subsidiary. SECTION 9.22 GAS IMBALANCES, TAKE-OR-PAY OR OTHER PREPAYMENTS. The Company and its Restricted Subsidiaries will not enter into any contracts or agreements which warrant production of Hydrocarbons and will not hereafter allow gas imbalances, take-or-pay or other prepayments with respect to the Oil and Gas Properties of the Company and its Restricted Subsidiaries which would require the Company or such Restricted Subsidiaries to deliver Hydrocarbons produced on Oil and Gas Properties at some future time without then or thereafter receiving full payment therefor to exceed 10,000,000 mcf of gas in the aggregate on a net basis. 72 ARTICLE X EVENTS OF DEFAULT SECTION 10.01 EVENTS OF DEFAULT. If one or more of the following events (herein called "Events of Default") shall occur and be continuing: (a) The Company shall default in the payment or mandatory prepayment when due of any principal of any Loan or of any reimbursement obligation for disbursement made under any Letter of Credit; or the Company shall default in the payment when due of any interest on any Loan, any fees payable hereunder or under any other Loan Document or other amount payable by it hereunder or thereunder and such default shall continue for a period of five (5) Business Days; or (b) The Company or any of its Restricted Subsidiaries shall default in the payment when due (after expiration of all applicable grace periods, if any) of any principal of or interest on any of its other Debt, or default in the payment of any termination or settlement payments under any futures contracts, or similar Risk Management Agreement, in any case, in an amount in excess of $15,000,000; or any event specified in any note, agreement, indenture or other document evidencing or relating to any Debt of the Company or any of its Restricted Subsidiaries in an amount in excess of $15,000,000 shall occur (including the giving of all required notices and the expiration of all applicable grace periods, if any) and be continuing if the effect of such event is to cause, or to permit the holder or holders of such Debt (or a trustee or agent on behalf of such holder or holders) to cause, such Debt in excess of $15,000,000 to become due prior to its stated maturity; or the Company shall under any circumstances become obligated to redeem, defease or offer to buy all or any of the subordinated notes issued under the 95 Indenture, the 96 Indenture, the 97 Indenture or the 98 Senior Subordinated Indenture; or (c) Ocean Canada shall default in the payment or mandatory prepayment when due of any principal of or interest on any Loan (as defined in the Canadian Credit Agreement) or of any Bankers Acceptance; or Ocean Canada shall default in the payment when due any fees or other amount payable by it under the Canadian Credit Agreement and such default shall continue for a period of five (5) Business Days; or (d) Any representation, warranty or certification made or deemed made herein or in any other Loan Document by the Company or any of its Restricted Subsidiaries or in any certificate furnished to any Lender or any Agent pursuant to the provisions hereof or any other Loan Document, shall prove to have been false or misleading as of the time made or furnished in any material respect; or (e) The Company shall default in the performance of any of its obligations under Article IX; Ocean Canada shall default in the performance of any of its obligations under Article IX of the Canadian Credit Agreement; or the Company or any of its Restricted Subsidiaries shall default in the performance of any of their respective other obligations in this Agreement or under any other Loan Document to which it is party and such default shall continue unremedied for a period of 30 days after notice thereof to the Company by the Administrative Agent or any Lender; or 73 (f) The Company or any Restricted Subsidiary shall admit in writing its inability to, or be generally unable to, pay its debts as such debts become due; or (g) The Company or any Restricted Subsidiary shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property, (ii) make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the Bankruptcy Code (as now or hereafter in effect), (iv) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or readjustment of debts, (v) fail to controvert in a timely and appropriate manner, or acquiesce in writing to, any petition filed against it in an involuntary case under the Bankruptcy Code, or (vi) take any corporate action for the purpose of effecting any of the foregoing; or (h) A proceeding or case shall be commenced, without the application or consent of the Company or any Restricted Subsidiary in any court of competent jurisdiction, seeking (i) its liquidation, reorganization, dissolution or winding-up, or the composition or readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like for such Person or of all or any substantial part of its assets, or (iii) similar relief in respect of any such Person under any law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of 60 days; or an order for relief against such Person shall be entered in an involuntary case under the Bankruptcy Code; or (i) A final judgment or judgments for the payment of money in excess of $15,000,000 in the aggregate in excess of insurance coverage shall be rendered by a court or courts against the Company or any of its Restricted Subsidiaries and either the same shall not be discharged or provision shall not be made for such discharge, or a stay of execution thereof shall not be procured, in either case, within 30 days from the date of entry thereof and the judgment debtor shall not, within said period of 30 days, or such longer period during which execution of the same shall have been stayed, appeal therefrom and cause the execution thereof to be stayed during such appeal; or (j) An event or condition specified in Section 9.10 shall occur or exist with respect to any Plan or Multiemployer Plan and, as a result of such event or condition, together with all other such events or conditions, the Company or any ERISA Affiliate shall incur or in the opinion of the Required Lenders shall be reasonably likely to incur a liability to a Plan, a Multiemployer Plan or PBGC (or any combination of the foregoing) which is in excess of $15,000,000; or (k) The Guaranty Agreement or other material Loan Document, after delivery thereof, shall for any reason, except to the extent permitted by the terms of this Agreement or thereof, cease to be in full force and effect and valid, binding and enforceable in accordance with its terms (subject to customary exceptions therefrom); or (l) Any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), excluding underwriters in the course of their 74 distribution of Voting Stock in an underwritten public offering, is or becomes the "beneficial owner" (as defined in Rule 13d-3 of the SEC under the Securities Exchange Act of 1934), directly or indirectly, of more than 50% of the total Voting Stock of the Company; or during any consecutive two-year period, individuals who at the beginning of such period constituted the Board of Directors of the Company (together with any new directors whose election by such Board of Directors or whose nomination for election by the stockholders of the Company was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Company then in office; or (m) The Company shall cease to directly or indirectly own 100% of each class of stock of OEI-Louisiana, OERI, Ocean Canada or any Restricted Subsidiary (except for (i) directors' qualifying shares and (ii) shares of Wholly Owned Restricted Subsidiaries of the type described in clause (ii) of the definition of Wholly Owned Restricted Subsidiaries). THEREUPON: (i) in the case of an Event of Default other than one referred to in clause (f), (g) or (h) of this Section 10.01 with respect to the Company, OEI- Louisiana or Ocean Canada, the Administrative Agent may and, upon request of the Majority Lenders, shall, by notice to the Company, cancel the Commitments and/or declare the principal amount of the Loans, together with accrued interest, and all other amounts payable by the Company hereunder and under the Notes to be forthwith due and payable, whereupon such amounts shall be immediately due and payable without presentment, demand, protest, notice of intent to accelerate, notice of acceleration or other formalities of any kind, all of which are hereby expressly waived by the Company; and (ii) in the case of the occurrence of an Event of Default referred to in clause (f), (g) or (h) of this Section 10.01 with respect to the Company, OEI-Louisiana or Ocean Canada, the Commitments shall be automatically canceled and the principal amount of the Loans, together with accrued interest, and all other amounts payable by the Company hereunder and under the Notes shall become automatically immediately due and payable without presentment, demand, protest, notice of intent to accelerate, notice of acceleration or other formalities of any kind, all of which are hereby expressly waived by the Company on its behalf and on behalf of OEI-Louisiana and Ocean Canada. SECTION 10.02 CASH COLLATERAL FOR LETTERS OF CREDIT. If an Event of Default exists, the Administrative Agent and the Paying Agent may, or upon the request of the Majority Lenders, shall, proceed to enforce remedies under the Loan Documents. Upon realization of any of the collateral consisting of cash, or of any cash proceeds from any disposition of the collateral, all such cash and cash proceeds shall be applied as set forth in the Intercreditor Agreement. ARTICLE XI THE AGENTS SECTION 11.01 APPOINTMENT, POWERS AND IMMUNITIES. Each Lender hereby irrevocably appoints and authorizes the Administrative Agent, the Syndication Agent, the Documentation Agent, the Technical Agents, the Competitive Bid Auction Agent and each Co-Agent to act as its agent hereunder with such powers as are specifically delegated to it by the terms of this Agreement or any Loan Document, together with such other powers as are reasonably incidental 75 thereto. (As of the Effective Date, the Co-Agents have been delegated no specific powers or responsibilities under this Agreement, except in their capacities as Lenders.) Each Agent (which term as used in this sentence and in Section 11.05 and the first sentence of Section 11.06 shall include reference to its Affiliates and its own and its Affiliates' officers, directors, employees and agents): (a) shall have no duties or responsibilities except those expressly set forth in this Agreement and the other Loan Documents and shall not by reason of this Agreement or any other Loan Document be a trustee for any other Agent or Lender; (b) shall not be responsible to any other Agent or the Lenders (i) for the accuracy of any recitals, statements, representations or warranties contained in this Agreement or any Loan Document or in any certificate or other document referred to or provided for in, or received by any of them under, this Agreement; (ii) for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement, any Note or any Loan Document or any other document referred to or provided for herein; or (iii) for any failure by the Company, OEI-Louisiana or any other Person to perform any of its obligations hereunder or thereunder; (c) shall not be required to initiate or conduct any litigation or collection proceedings hereunder except as may be expressly required under this Agreement or any other Loan Document; and (d) shall not be responsible for any action taken or omitted to be taken by it hereunder or under any other Loan Document, except for its own gross negligence or willful misconduct. The Agents may employ agents and attorneys-in-fact and shall not be responsible for the negligence or misconduct of any such agents or attorneys-in-fact selected by it in good faith. Each Agent may deem and treat the payee of any Note as the holder thereof for all purposes hereof unless and until a written notice of the assignment or transfer thereof shall have been filed with the Administrative Agent, together with the written consent of the Company to such assignment or transfer. SECTION 11.02 RELIANCE BY AGENTS. Each Agent shall be entitled to rely: (a) upon any certification, notice or other communication (including any thereof by telephone, telex, telegram or cable) believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper Person or Persons; and (b) upon advice and statements of legal counsel, independent accountants and other experts selected by any Agent in good faith. As to any matters not expressly provided for by this Agreement or any Loan Document, each Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder in accordance with instructions signed by the Majority Lenders; and such instructions of the Majority Lenders and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders. SECTION 11.03 DEFAULTS. No Agent shall be deemed to have knowledge of the occurrence of a Default (other than, in the case of the Administrative Agent, the non-payment of principal of or interest on Loans or of fees or the non- payment of reimbursement obligations of the Company in connection with Letters of Credit) unless it has received notice from either a Lender or the Company specifying such Default and stating that such notice is a "Notice of Default". In the event that any Agent receives such a notice of the occurrence of a Default, it shall promptly give notice to the Administrative Agent who shall thereafter give prompt notice thereof to the Lenders. SECTION 11.04 RIGHTS AS A LENDER. With respect to its Commitment and the Loans made by it and the Letters of Credit issued by it or in which it is participating, each Agent (and any successor acting as an Agent) in its capacity as a Lender hereunder shall have the same rights and powers hereunder as any other Lender and may exercise the same as though it were not 76 acting as an Agent, and the term "Lender" or "Lenders" shall include each Agent in its individual capacity. Each Agent (and any successor acting as an Agent) and its Affiliates may (without having to account therefor to any other Agent or Lender) accept deposits from, lend money to and generally engage in any kind of banking, trust or other business with the Company and its Subsidiaries or any of the Company's Affiliates as if it were not acting as an Agent. Each Agent and its Affiliates may accept fees and other consideration from the Company or any of its Affiliates for services in connection with this Agreement, any Loan Document or otherwise without having to account for the same to any other Agent or the Lenders. SECTION 11.05 INDEMNIFICATION. The Lenders agree to indemnify each Agent (to the extent not reimbursed under Section 12.03, but without limiting the obligations of the Company under Section 12.03), ratably in accordance with the aggregate principal amount of the Loans made by the Lenders (or, if no Loans are at the time outstanding, ratably in accordance with their respective Commitments), for any and all Indemnity Matters of any kind and nature whatsoever which may be imposed on, incurred by or asserted against such Agent in any way relating to or arising out of: (a) this Agreement or any other Loan Document or the transactions contemplated hereby and thereby (including, without limitation, the costs and expenses which the Company is obligated to pay under Section 12.03 but excluding, unless a Default has occurred and is continuing, normal administrative costs and expenses incident to the performance of its agency duties hereunder); or (b) the enforcement of any of the terms hereof or of any other Loan Document; provided that no Lender shall be liable for any Indemnity Matter to the extent it arises from the gross negligence or willful misconduct of the Person to be indemnified; and provided further that no Lender shall be liable for any Indemnity Matters arising solely by reason of claims among the Agents and their shareholders. THE FOREGOING INDEMNITIES SHALL EXTEND TO THE INDEMNIFIED PARTIES NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND OR CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT OR AN OMISSION, INCLUDING WITHOUT LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE OR MORE OF THE INDEMNIFIED PARTIES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON ANY ONE OR MORE OF THE INDEMNIFIED PARTIES. TO THE EXTENT THAT AN INDEMNIFIED PARTY IS FOUND BY A FINAL, NON-APPEALABLE JUDGMENT OF A COURT OR BY AGREEMENT TO HAVE COMMITTED AN ACT OF GROSS NEGLIGENCE OR WILFUL MISCONDUCT, THIS CONTRACTUAL OBLIGATION OF INDEMNIFICATION SHALL CONTINUE BUT SHALL ONLY EXTEND TO THE PORTION OF THE CLAIM THAT IS DEEMED TO HAVE OCCURRED BY REASON OF EVENTS OTHER THAN THE GROSS NEGLIGENCE OR WILFUL MISCONDUCT OF THE PARTY SEEKING INDEMNIFICATION. IN ADDITION, THE FOREGOING INDEMNITIES EXCLUDE ALL INDEMNITY MATTERS ARISING SOLELY BY REASON OF CLAIMS AMONG INDEMNIFIED PARTIES AND THEIR SHAREHOLDERS. SECTION 11.06 NON-RELIANCE ON AGENTS AND OTHER LENDERS. Each Lender agrees: (a) that it has, independently and without reliance on any Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own credit analysis of the Company and its Subsidiaries and decision to enter into this Agreement; and (b) that it will, independently and without reliance upon any Agent or any other Lender, and based on such 77 documents and information as it shall deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under this Agreement or any other Loan Document. No Agent shall be required to keep itself informed as to the performance or observance by the Company, OEI-Louisiana or any other Person of its obligations under this Agreement or any other Loan Document or document referred to or provided for herein or to inspect the Properties or books of the Company and its Subsidiaries. Except for notices, reports and other documents and information expressly required to be furnished to the Lenders by an Agent hereunder or under a Loan Document, no Agent shall have any duty or responsibility to provide any other Agent or Lender with any credit or other information concerning the affairs, financial condition or business of the Company and its Subsidiaries (or any of their Affiliates) which may come into the possession of such Agent or any of their Affiliates. SECTION 11.07 ACTION BY AGENTS. Except for action or other matters expressly required of an Agent hereunder, such Agent shall in all cases be fully justified in failing or refusing to act hereunder unless it shall (i) receive written instructions from the Majority Lenders specifying the action to be taken, and (ii) be indemnified to its satisfaction by the Lenders against any and all liability and expenses which may be incurred by it by reason of taking or continuing to take any such action, and such instructions of the Majority Lenders and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders. If a Default has occurred and is continuing, the Administrative Agent shall take such action with respect to such Default as shall be directed by the Majority Lenders in the written instructions (with indemnities) described in this Section 11.07, provided that, unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default as it shall deem advisable in the best interests of the Lenders. In no event, however, shall the Administrative Agent be required to take any action which exposes it to personal liability or which is contrary to this Agreement and the Loan Documents or applicable law. SECTION 11.08 RESIGNATION OR REMOVAL OF AGENTS. Subject to the appointment and acceptance of a successor Agent as provided in this Section 11.08, any Agent may resign at any time by giving notice thereof to the Lenders and the Company, and any Agent may be removed at any time, for cause, by the Required Lenders. Upon any such resignation or removal, the Required Lenders, with the consent of the Company (which consent shall not be unreasonably withheld or delayed), shall have the right to appoint a successor Agent. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after either the retiring Agent's giving of notice of resignation or the Required Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf of the Lenders, appoint its successor. Upon the acceptance of any appointment as an Agent hereunder by a successor, such successor shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent and the retiring Agent shall be discharged from its duties and obligations hereunder. After any retiring Agent's resignation or removal hereunder, the provisions of this Article XI shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as an Agent. 78 ARTICLE XII MISCELLANEOUS SECTION 12.01 WAIVER. No failure on the part of any Agent or any Lender to exercise, no delay in exercising, and no course of dealing with respect to, any right, power or privilege under this Agreement or any Loan Document shall operate as a waiver thereof; and no single or partial exercise of any right, power or privilege under this Agreement or any Loan Document shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. SECTION 12.02 NOTICES. All notices and other communications provided for herein and in the other Loan Documents (including, without limitation, any modifications of, or waivers or consents under, this Agreement or the other Loan Documents) shall be given or made by telecopy, telegraph, cable or in writing and telecopied, telegraphed, cabled, mailed or delivered to the intended recipient at the "Address for Notices" specified below its name on the signature pages hereof; or, as to any party, at such other address as shall be designated by such party in a notice to each other party. Except as otherwise provided in this Agreement, all such communications shall be deemed to have been duly given when transmitted by telecopier, delivered to the telegraph or cable office or personally delivered or, in the case of a mailed notice, upon receipt, in each case given or addressed as aforesaid. SECTION 12.03 PAYMENT OF EXPENSES, INDEMNITIES, ETC. The Company agrees to: (a) whether or not the transactions hereby contemplated are consummated, pay all reasonable expenses of the Administrative Agent in the administration (both before and after the execution hereof and including advice of counsel as to the rights and duties of the Agents and the Lenders with respect thereto) of, and in connection with the negotiation, investigation, preparation, execution and delivery of, recording or filing of, preservation of rights under, enforcement of, and refinancing, renegotiation or restructuring of, this Agreement, the Notes and the other Loan Documents and any amendment, waiver or consent relating thereto (including, without limitation, the reasonable fees and disbursements of counsel for the Administrative Agent and in the case of enforcement for any of the Lenders); and promptly reimburse each Agent or Lender for all amounts expended, advanced or incurred by such Agent or Lender to satisfy any obligation of the Company or OEI-Louisiana under this Agreement or any Loan Document; and (b) pay and hold each of the Agents and the Lenders harmless from and against any and all present and future stamp and other similar taxes with respect to the foregoing matters and save each Agent and Lender harmless from and against any and all liabilities with respect to or resulting from any delay or omission to pay such taxes; and (c) Indemnify the agents and each lender, their officers, directors, employees, representatives, agents and affiliates (collectively, the "indemnified parties") from, hold each of them harmless against, promptly upon demand pay or reimburse each of them for, and refrain from creating or asserting against any of them, any and all indemnity matters of any kind or nature whatsoever which may be 79 incurred by or asserted against or involve any of them (whether or not any of them is designated a party thereto) as a result of, arising out of or in any way related to (i) offsets, reductions, rebatements or other claims, counterclaims or defenses of any nature whatsoever (including, without limitation, claims of usury) of the company or any of its subsidiaries or any other person, whether in tort or in contract, fixed or contingent, in law or in equity, known or unknown, whether now existing or hereafter arising, in connection with other lenders whose debt may be refinanced with any proceeds of the loans (in their capacity as lenders or as agent for the lenders in connection with the loan documents executed in connection with such refinanced debt and not otherwise), the loan documents executed in connection with such refinanced debt or any actions or relationships relating to any of the foregoing, (ii) any actual or proposed use by the company or any of its subsidiaries of the proceeds of any of the loans or letters of credit or (iii) any other aspect of this agreement, the notes and the other loan documents, including, without limitation, the reasonable fees and disbursements of counsel and all other expenses incurred in connection with investigating, defending or preparing to defend any such action, suit, proceeding (including any investigations, litigation or inquiries) or claim, but excluding herefrom all indemnity matters arising solely by reason of claims among indemnified parties and their shareholders. (d) INDEMNIFY AND HOLD EACH AGENT AND LENDER, ITS OFFICERS, DIRECTORS, EMPLOYEES, REPRESENTATIVES, AGENTS AND AFFILIATES HARMLESS AGAINST, AND PROMPTLY TO PAY ON DEMAND OR REIMBURSE EACH OF THEM WITH RESPECT TO, ANY AND ALL INDEMNITY MATTERS OF ANY AND EVERY KIND OR NATURE WHATSOEVER ASSERTED AGAINST OR INCURRED BY ANY OF THEM BY REASON OF OR ARISING OUT OF OR IN ANY WAY RELATED TO (I) THE BREACH OF ANY REPRESENTATION OR WARRANTY AS SET FORTH HEREIN REGARDING ENVIRONMENTAL LAWS, OR (II) THE FAILURE OF THE COMPANY OR ANY OF ITS SUBSIDIARIES TO PERFORM ANY OBLIGATION HEREIN REQUIRED TO BE PERFORMED PURSUANT TO ENVIRONMENTAL LAWS. (e) In the case of any indemnification hereunder, the Agent or Lender seeking indemnification, as appropriate shall give notice to the Company of any such claim or demand being made against the Indemnified Party; and the Company shall have the non-exclusive right to join in the defense against any such claim or demand. (F) THE FOREGOING INDEMNITIES SHALL EXTEND TO THE INDEMNIFIED PARTIES NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND OR CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT OR AN OMISSION, INCLUDING WITHOUT LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE OR MORE OF THE INDEMNIFIED PARTIES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON ANY ONE OR MORE OF THE INDEMNIFIED PARTIES. TO THE EXTENT THAT AN INDEMNIFIED PARTY IS FOUND BY A FINAL, NON-APPEALABLE JUDGMENT OF A COURT OR BY AGREEMENT TO HAVE COMMITTED AN ACT OF GROSS NEGLIGENCE OR WILFUL MISCONDUCT, 80 THIS CONTRACTUAL OBLIGATION OF INDEMNIFICATION SHALL CONTINUE BUT SHALL ONLY EXTEND TO THE PORTION OF THE CLAIM THAT IS DEEMED TO HAVE OCCURRED BY REASON OF EVENTS OTHER THAN THE GROSS NEGLIGENCE OR WILFUL MISCONDUCT OF THE PARTY SEEKING INDEMNIFICATION. IN ADDITION, THE FOREGOING INDEMNITIES EXCLUDE ALL INDEMNITY MATTERS ARISING SOLELY BY REASON OF CLAIMS AMONG INDEMNIFIED PARTIES AND THEIR SHAREHOLDERS. (g) The Company's obligations under this Section 12.03 shall survive any termination of this Agreement and the payment of the Notes and shall continue thereafter in full force and effect. (h) The Company shall pay any amounts due under this Section 12.03 within thirty (30) days of the receipt by the Company of notice of the amount due. SECTION 12.04 AMENDMENTS, ETC. Subject to the terms of the Intercreditor Agreement, any provision of this Agreement or any other Loan Documents may be amended, modified or waived with the Majority Lenders' consent; provided that (a) the Commitment of a Lender may not be increased without the express written consent of such Lender; (b) no amendment, modification or waiver which amends, modifies or waives the definition of "Majority Lender" or "Required Lenders" or any provision of Sections 2.03, 2.09 or 12.04 shall be effective without the express written consent of all Lenders and the Canadian Lenders; (c) no amendment, modification or waiver which amends or modifies the definition of "Applicable Margin" or reduces the interest rate (other than as a result of waiving the applicability of any post-Default increases in such rates), modifies the amount of principal due on any payment date or modifies the payment dates for payments of either principal or interest on any Loan, modifies any fees payable hereunder, increases the Borrowing Base or releases or modifies the obligations of OEI-Louisiana under the Guaranty Agreement or of the Company or OEI-Louisiana under the Intercreditor Agreement shall be effective without consent of all Lenders and Canadian Lenders; and (d) no amendment, modification or waiver which modifies the rights, duties or obligations or fees of any Agent shall be effective without the consent of such Agent. SECTION 12.05 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. SECTION 12.06 ASSIGNMENTS AND PARTICIPATIONS. (a) The Company may not assign its rights or obligations hereunder, under the Notes or under any Letter of Credit Agreement without the prior consent of all of the Lenders and the Administrative Agent. (b) Each Lender may, upon the written consent of the Company and the Administrative Agent which consent shall not be unreasonably withheld or delayed (provided that if an Event of Default has occurred and is continuing, assignments may be made hereunder without the Company's consent), assign to one or more assignees all or a portion of its rights and obligations under this Agreement pursuant to an Assignment and Acceptance Agreement substantially in the form of Exhibit G (an "Assignment and Acceptance"); provided that (i) any 81 such assignment shall be in the aggregate amount of at least $5,000,000, the entire amount of a Lender's Commitment, if less, or such other lesser amount to which the Company has consented, and (ii) the assignee shall pay to the Administrative Agent a processing and recordation fee of $3,500; provided that such fee shall not be payable in conjunction with any assignments occurring within 30 days of the Effective Date. Any such assignment will become effective upon the issuance by the Administrative Agent of a letter of acknowledgment reflecting such assignment and the resultant effects thereof on the Commitments of the assignor and assignee, and the principal amount outstanding of the Conventional Loans owed to the assignor and assignee, the Administrative Agent hereby agreeing to effect such issuance no later than five (5) Business Days after its receipt of an Assignment and Acceptance executed by all parties thereto. Promptly after receipt of an Assignment and Acceptance executed by all parties thereto, the Administrative Agent shall send to the Company a copy of such executed Assignment and Acceptance. Upon receipt of such executed Assignment and Acceptance, the Company, will, at its own expense, execute and deliver new Conventional Loan Notes to the assignor and/or assignee, as appropriate, in accordance with their respective interests as they appear on the Administrative Agent's letter of acknowledgment. Upon the effectiveness of any assignment pursuant to this Section, the assignee will become a "Lender," if not already a "Lender," for all purposes of this Agreement and the other Loan Documents. Subject to the terms of Section 12.10 of this Agreement and the Sections referred to therein, the assignor shall be relieved of its obligations hereunder to the extent of such assignment (and if the assigning Lender no longer holds any rights or obligations under this Agreement, such assigning Lender shall cease to be a "Lender" hereunder). The Administrative Agent will prepare on the last Business Day of each month during which an assignment has become effective pursuant to this Section 12.06(b), a new Annex I giving effect to all such assignments effected during such month, and will promptly provide the same to the Company and each of the Lenders. If an assignment is made to a Person which had not previously been a Lender, the Company will promptly execute and deliver to such Lender a Bid Rate Note as described in Section 2.07(b). (c) Each Lender may transfer, grant or assign participations in all or any part of such Lender's interests hereunder pursuant to this subsection to any Person, provided that: (i) such Lender shall remain a "Lender" for all purposes of this Agreement and the transferee of such participation shall not constitute a "Lender" hereunder; and (ii) no participant under any such participation shall have rights to approve any amendment to or waiver of this Agreement, the Notes or any Loan Document except to the extent such amendment or waiver would (x) extend the Termination Date, (y) reduce the principal amount of any Loan outstanding , the interest rate (other than as a result of waiving the applicability of any post-default increases in interest rates) or fees applicable to any of the Commitments or Loans in which such participant is participating, or postpone the payment of any thereof, or (z) release OEI- Louisiana from its obligations under the Guaranty Agreement. In the case of any such participation, the participant shall not have any rights under this Agreement or any of the Loan Documents (the participant's rights against the granting Lender in respect of such participation to be those set forth in the agreement with such Lender creating such participation), and all amounts payable by the Company hereunder shall be determined as if such Lender had not sold such participation, provided that if such participant has made and complied with the representations contained in Section 5.08, such participant shall be entitled to receive additional amounts under Article V on the same basis as if it were a Lender other than amounts paid by reason of such participant's noncompliance with Section 5.08. In addition, each agreement creating any participation must include agreements by the participant to 82 be bound by the provisions of Section 12.14 if such participant is to receive any confidential information. (d) Notwithstanding any other provisions of this Section 12.06, no transfer or assignment of the interests or obligations of any Lender hereunder or any grant of participations therein shall be permitted if such transfer, assignment or grant would require the Company to file a registration statement with the SEC or to qualify the Loans or any interest therein under the "Blue Sky" laws of any state. (e) The Lenders may furnish any information concerning the Company in the possession of the Lenders from time to time to assignees and participants (including prospective assignees and participants); provided that, such Persons agree in writing to be bound by the provisions of Section 12.14 hereof. (f) Notwithstanding anything in this Section 12.06 to the contrary, any Lender may assign and pledge all or any of its Notes to any Federal Reserve Bank or the United States Treasury as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any operating circular issued by such Federal Reserve System and/or such Federal Reserve Bank. No such assignment and/or pledge shall release the assigning and/or pledging Lender from its obligations hereunder. SECTION 12.07 INVALIDITY. In the event that any one or more of the provisions contained in the Notes, this Agreement or in any other Loan Document shall for any reason be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of such Note, this Agreement or any other Loan Document. SECTION 12.08 ENTIRE AGREEMENT. The Notes, this Agreement, the Guaranty Agreement and the other Loan Documents embody the entire agreement and understanding between the Lenders, the Agents, the Company and its Subsidiaries party thereto and supersede all prior agreements and understandings between such parties relating to the subject matter hereof and thereof. There are no unwritten oral agreements between the parties. SECTION 12.09 REFERENCES. The words "herein," "hereof," "hereunder" and other words of similar import when used in this Agreement refer to this Agreement as a whole, and not to any particular article, section or subsection. Any reference herein to a Section shall be deemed to refer to the applicable Section of this Agreement unless otherwise stated herein. Any reference herein to an exhibit or schedule shall be deemed to refer to the applicable exhibit or schedule attached hereto unless otherwise stated herein. SECTION 12.10 SURVIVAL. The obligations of the Company, each Agent and the Lenders under Sections 5.01, 5.05, 5.06, 12.03 and 12.14 shall survive the repayment of the Loans, the expiration of the Letters of Credit and the termination of the Commitments and any assignment by a Lender of all its Loans or Commitments pursuant to Section 12.06(b). SECTION 12.11 CAPTIONS. Captions and section headings appearing herein or any Loan Document are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Agreement or such Loan Document. 83 SECTION 12.12 COUNTERPARTS. This Agreement and each Loan Document (other than the Notes) may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Agreement or any such Loan Document by signing any such counterpart. SECTION 12.13 GOVERNING LAW; SUBMISSION TO JURISDICTION. (a) THIS AGREEMENT AND THE NOTES (INCLUDING, BUT NOT LIMITED TO, THE VALIDITY AND ENFORCEABILITY HEREOF AND THEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS. (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS TO WHICH THE COMPANY IS A PARTY MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF TEXAS, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE COMPANY HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS. THIS SUBMISSION TO JURISDICTION IS NONEXCLUSIVE AND DOES NOT PRECLUDE THE ADMINISTRATIVE AGENT OR ANY LENDER FROM OBTAINING JURISDICTION OVER THE COMPANY IN ANY COURT OTHERWISE HAVING JURISDICTION. (c) The Company irrevocably consents to the service of process of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to it, as the case may be, at its said address, such service to become effective 30 days after such mailing. (d) Nothing herein shall affect the right of any Agent or any Lender or any holder of a Note to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against the Company in any other jurisdiction. (e) THE COMPANY, EACH AGENT AND EACH LENDER HEREBY (I) IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN; (II) IRREVOCABLY WAIVE, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (III) CERTIFY THAT NO PARTY HERETO NOR ANY 84 REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (IV) ACKNOWLEDGE THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 12.13. SECTION 12.14 CONFIDENTIALITY. Each Lender and each Agent agree that they will use their best efforts not to disclose without the prior written consent of the Company (other than to their employees, auditors or counsel or to another Lender if the Lender or such Lender's holding or parent company or the Administrative Agent in its sole discretion determines that any such party should have access to such information) any information with respect to the Company or any of its Subsidiaries which is furnished pursuant to this Agreement and which is designated by the Company to the Lenders and the Administrative Agent in writing as confidential, provided that any Lender and the Administrative Agent may disclose any such information (a) as has become generally available to the public, (b) as may be required or appropriate in any report, statement or testimony submitted to any municipal, state or Federal regulatory body having or claiming to have jurisdiction over such Lender or the Administrative Agent or to the Federal Reserve Board, the Federal Deposit Insurance Company, National Association of Insurance Commissioners or similar organizations (whether in the United States or elsewhere) or their successors, (c) as may be required or appropriate in response to any summons or subpoena or in connection with any litigation, (d) in order to comply with any law, order, regulation or ruling applicable to such Lender or the Administrative Agent, and (e) to the prospective transferee in connection with any contemplated transfer of any of the Notes or any interest therein by such Lender or to any Affiliate of a Lender, provided that such prospective transferee, participant or Affiliate executes an agreement with the Company containing provisions substantially identical to those contained in this Section. SECTION 12.15 INTEREST. It is the intention of the parties hereto that each Agent and Lender shall conform strictly to usury laws applicable to it. Accordingly, if the transactions contemplated hereby would be usurious as to any Agent or Lender under laws applicable to it (including the laws of the United States of America and the State of Texas or any other jurisdiction whose laws may be mandatorily applicable to such Agent or Lender notwithstanding the other provisions of this Agreement), then, in that event, notwithstanding anything to the contrary in the Notes, this Agreement or any other Loan Document, it is agreed as follows: (a) the aggregate of all consideration which constitutes interest under law applicable to any Agent or Lender that is contracted for, taken, reserved, charged or received by such Agent or Lender under the Notes, this Agreement or under any of the other aforesaid Loan Documents or agreements or otherwise in connection with the Notes shall under no circumstances exceed the maximum amount allowed by such applicable law, and any excess shall be canceled automatically and if theretofore paid shall be credited by such Agent or Lender on the principal amount of the Indebtedness (or, to the extent that the principal amount of the Indebtedness shall have been or would thereby be paid in full, refunded by such Agent or Lender to the Company); and (b) in the event that the maturity of the Notes is accelerated by reason of an election of the holder thereof resulting from any Event of Default under this Agreement or otherwise, or in the event of any required or permitted prepayment, then such consideration that constitutes interest 85 under law applicable to any Agent or Lender may never include more than the maximum amount allowed by such applicable law, and excess interest, if any, provided for in this Agreement or otherwise shall be canceled automatically by such Agent or Lender as of the date of such acceleration or prepayment and, if theretofore paid, shall be credited by such Agent or Lender on the principal amount of the Indebtedness (or, to the extent that the principal amount of the Indebtedness shall have been or would thereby be paid in full, refunded by such Agent or Lender to the Company). All sums paid or agreed to be paid to any Agent or Lender for the use, forbearance or detention of sums due hereunder shall, to the extent permitted by law applicable to such Agent or Lender, be amortized, prorated, allocated and spread throughout the term of the Loans evidenced by the Notes until payment in full so that the rate or amount of interest on account of any Loans or other amounts hereunder does not exceed the maximum amount allowed by such applicable law. If at any time and from time to time (i) the amount of interest payable to any Agent or Lender on any date shall be computed at the Highest Lawful Rate applicable to such Agent or Lender pursuant to this Section 12.15 and (ii) in respect of any subsequent interest computation period the amount of interest otherwise payable to such Agent or Lender would be less than the amount of interest payable to such Agent or Lender computed at the Highest Lawful Rate applicable to such Agent or Lender, then the amount of interest payable to such Agent or Lender in respect of such subsequent interest computation period shall continue to be computed at the Highest Lawful Rate applicable to such Agent or Lender until the total amount of interest payable to such Agent or Lender shall equal the total amount of interest which would have been payable to such Agent or Lender if the total amount of interest had been computed without giving effect to this Section 12.15. To the extent that the Texas Credit Title is relevant to any Agent or Lender for the purpose of determining the Highest Lawful Rate, each such Agent and Lender hereby elects to determine the applicable rate ceiling under the Texas Credit Title by the weekly rate ceiling from time to time in effect. SECTION 12.16 EFFECTIVENESS. This Agreement and the Loan Documents shall not be effective until the date (the "Effective Date") that (a) each of them is delivered to the Administrative Agent in the State of Texas, (b) each of them is accepted by the Administrative Agent in such State, and (c) the conditions set forth in Section 6.01 have been satisfied or waived. SECTION 12.17 SURVIVAL OF OBLIGATIONS. To the extent that any payments on the Indebtedness or proceeds of any collateral are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, debtor in possession, receiver or other Person under any bankruptcy law, common law or equitable cause, then to such extent, the Indebtedness so satisfied shall be revived and continue as if such payment or proceeds had not been received and the Paying Agent's (held for the benefit of the Agents and the Lenders) Liens (if any), rights, powers and remedies under this Agreement and each Loan Document shall continue in full force and effect. In such event, each Loan Document shall be automatically reinstated and the Company shall, and shall cause each of its Restricted Subsidiaries to, take such action as may be reasonably requested by the Administrative Agent and the Lenders to effect such reinstatement. 86 SECTION 12.18 DEBT CHARACTERIZATION FOR INDENTURE PURPOSES; SPECIFIED OR DESIGNATED SENIOR INDEBTEDNESS. (a) If so designated by the Company in its internal records (which designation may be made in its sole and absolute discretion), any Debt incurred hereunder and under the Canadian Credit Agreement and all guarantees thereof shall constitute "Indebtedness" other than "Permitted Indebtedness" or "Permitted Subsidiary Indebtedness" (as such terms are defined in the 95 Indenture, the 96 Indenture, the 97 Indenture and the 98 Senior Subordinated Indenture) for purposes of any Indenture. (b) The Company hereby acknowledges and declares that: (i) this Agreement, the Notes, the Loan Documents and the obligations of the Company and OEI-Louisiana hereunder and thereunder are "Senior Indebtedness" and "Specified Senior Indebtedness" and "Guarantor Senior Indebtedness" and "Specified Guarantor Senior Indebtedness", respectively, under and for purposes of the 95 Indenture; and (ii) this Agreement, the Notes, the Loan Documents and the obligations of the Company and OEI-Louisiana hereunder and thereunder are "Senior Indebtedness" and "Designated Senior Indebtedness" and "Guarantor Senior Indebtedness" and "Designated Guarantor Senior Indebtedness", respectively, under and for purposes of the 96 Indenture, the 97 Indenture and the 98 Senior Subordinated Indenture; and that as such, the Lender Group is entitled to the rights and privileges afforded holders of Senior Indebtedness, Specified Senior Indebtedness or Designated Senior Indebtedness, Senior Guarantor Indebtedness, Specified Guarantor Senior Indebtedness or Designated Guarantor Senior Indebtedness under each of said Indentures. SECTION 12.19 EXCULPATION PROVISIONS. EACH OF THE PARTIES HERETO SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT "CONSPICUOUS." 87 The parties hereto have caused this Agreement to be duly executed as of the day and year first above written. OCEAN ENERGY, INC., a Delaware corporation By: ___________________________________________________ Jonathan M. Clarkson Executive Vice President Chief Financial Officer 1201 Louisiana, Suite 1400 Houston, Texas 77002 Telecopier No.: (713) 654-5124 Telephone No.: (713) 654-9110 Attention: Frank Willoughby with copy to: 1201 Louisiana, Suite 1400 Houston, Texas 77002 Telecopier No.: (713) 653-1920 Telephone No.: (713) 654-9110 Attention: Robert K. Reeves [Signature Page 1] AGENTS: CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, as Administrative Agent By:____________________________________________________ Russell Johnson Vice President Address for Notices to Chase as Administrative Agent: Chase Bank of Texas, National Association 1111 Fannin Houston, Texas 77002 Telecopier No.: (713) 750-3810 Telephone No.: (713) 750-2784 Attention: Loan Syndication Services with copy to: Chase Securities Inc. 600 Travis, 20th Floor Houston, Texas 77002 Telecopier No.: (713) 216-4295 Telephone No.: (713) 216-4147 Attention: Robert Mertensotto [Signature Page 2] MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Syndication Agent By: _________________________________________________ Name: _________________________________________________ Title:_________________________________________________ Address for Notices for Morgan as Syndication Agent: Morgan Guaranty Trust Company of New York C/O J.P. Morgan Services, Inc. 500 Stanton Christiana Road Newark, Delaware 19713-2107 Telecopier No.: (302) 634-1094 Telephone No.: (302) 634-4671 Attention: Allison Hollis [Signature Page 3] BARCLAYS BANK PLC, as Documentation Agent By: _________________________________________________ Name: _________________________________________________ Title:_________________________________________________ Address for Notices to Barclays as Documentation Agent: 222 Broadway New York, New York 10038 Telecopier No.: (212) 412-7585 Telephone No.: (212) 412-1306 Attention: Darryl Neider [Signature Page 4] ABN AMRO BANK, N.V., as Co-Agent By:____________________________________________________ Charles W. Randall Senior Vice President By:____________________________________________________ Cheryl Lipshutz Senior Vice President Address for Notices for ABN AMRO as Co-Agent: Three Riverway, Suite 1700 Houston, Texas 77056 Telecopier No.: (713) 621-5801 Telephone No.: (713) 964-3348 Attention: Chuck Randall with copy to: Credit Administration 135 South LaSalle Street, Suite 2805 Chicago, Illinois 60603 Telecopier No.: (312) 904-8840 Telephone No.: (312) 904-1133 [Signature Page 5] BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Co-Agent By: _________________________________________________ Name: _________________________________________________ Title:_________________________________________________ Address for Notices for Bank of America as Co-Agent: 231 S. LaSalle Street Chicago, Illinois 60697 Telecopy No: (312) 974-9626 Telephone No: (312) 828-5239 Attn: Ida Rubens [Signature Page 6] PARIBAS, as Co-Agent By: _________________________________________________ Name: _________________________________________________ Title:_________________________________________________ By: _________________________________________________ Name: _________________________________________________ Title:_________________________________________________ Address for Notices for Paribas as Co-Agent: 1200 Smith Street, Suite 3100 Houston, Texas 77002 Attn: Leah Evans Hughes or Kimberly Miller Telecopy No: (713) 659-5305 Telephone No: (713) 659-4811 with copy to: Paribas Houston Agency 1200 Smith Street, Suite 3100 Houston, Texas 77002 Telecopy: (713) 659-6915 Telephone: (713) 659-4811 Attn: Doug Liftman [Signature Page 7] NATIONSBANK, N.A., as Co-Agent By:____________________________________________________ Paul Squires Senior Vice President Address for Notices for NationsBank as Co-Agent: 901 Main Street Dallas, Texas 75201 Attn: Karen Dumond Telecopy No: (214) 508-1285 Telephone No: (214) 508-2513 with copy to: NationsBank, N.A. 700 Louisiana, 8th Floor Houston, Texas 77002 Telecopy: (713) 247-6568 Telephone: (713) 247-6952 Attn: Paul Squires Senior Vice President [Signature Page 8] SOCIETE GENERALE, SOUTHWEST AGENCY, as Co-Agent By:____________________________________________________ Richard Erbert Vice President Address for Notices for Societe Generale as Co-Agent: 2001 Ross Avenue, Suite 4800 Dallas, Texas 75201 Attention: Loan Administration Telecopy No: (214) 754-0171 Telephone No: (214) 979-2792 with copy to: Societe Generale 1111 Bagby, Suite 2020 Houston, Texas 77002 Telecopy: (713) 650-0824 Telephone: (713) 759-6318 Attention: Richard Erbert Vice President WELLS FARGO BANK (TEXAS), N.A., as Co-Agent By:____________________________________________________ J. Alan Alexander Vice President Address for Notices for Wells Fargo Bank as Co-Agent: 201 Third Street, 8th Floor San Francisco, California 94103 Telecopy: (415) 979-0675 Telephone: (415) 477-5425 Attention: Oscar Enriquez with copy to: Wells Fargo Bank (Texas), NA Energy Department 1000 Louisiana, Third Floor Telecopy No: (713) 250-7912 Telephone No: (713) 250-1651 Attention: J. Alan Alexander [Signature Page 10] LENDER: CHASE BANK OF TEXAS, NATIONAL ASSOCIATION By:____________________________________________________ Russell Johnson Vice President Lending Office for all Loans: Chase Bank of Texas, National Association 1111 Fannin Houston, Texas 77002 Telecopier No.: (713) 750-3810 Telephone No.: (713) 750-2784 Attention: Loan Syndication Services with copy to: Chase Securities Inc. 600 Travis, 20th Floor Houston, Texas 77002 Telecopier No.: (713) 216-4295 Telephone No.: (713) 216-4147 Attention: Robert Mertensotto [Signature Page 11] MORGAN GUARANTY TRUST COMPANY OF NEW YORK By: _________________________________________________ Name: _________________________________________________ Title:_________________________________________________ Lending Office for all Loans: Morgan Guaranty Trust Company of New York 60 Wall Street New York, New York 10260 Address for Notices: Morgan Guaranty Trust Company of New York C/O J.P. Morgan Services, Inc. 500 Stanton Christiana Road Newark, Delaware 19713-2107 Telecopier No.: (302) 634-1094 Telephone No.: (302) 634-4671 Attention: Allison Hollis with a copy to: Morgan Guaranty Trust Company of New York 60 Wall Street New York, New York 10260 Telex No.: 177615MGTUT Telecopier No.: (212) 648-5348 Telephone No.: (212) 648-7612 Attention: John Kowalczuk [Signature Page 12] BARCLAYS BANK PLC By: _________________________________________________ Name: _________________________________________________ Title:_________________________________________________ Lending Office for all Loans: Barclays Bank PLC - New York Branch ABA #020-002574 CLAD Control Account #050-019104 Credit: Ocean Energy Address for Notices: 222 Broadway New York, New York 10038 Telecopier No.: (212) 412-7585 Telephone No.: (212) 412-1306 Attention: Darryl Neider [Signature Page 13] ABN AMRO BANK, N.V. By:____________________________________________________ Charles W. Randall Senior Vice President By:____________________________________________________ Cheryl Lipshutz Senior Vice President Lending Office for all Loans: 135 South LaSalle Street, Suite 2805 Chicago, Illinois 60603 Attention: Credit Administration Address for Notices: 135 South LaSalle Street, Suite 2805 Chicago, Illinois 60603 Telecopier No.: (312) 904-8840 Telephone No.: (312) 904-1133 Attention: Credit Administration with copy to: ABN AMRO North America, Inc. Three Riverway, Suite 1700 Houston, Texas 77056 Telecopier No.: (713) 621-5801 Telephone No.: (713) 964-3348 Attention: Chuck Randall [Signature Page 14] BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By: _________________________________________________ Name: _________________________________________________ Title:_________________________________________________ Lending Office for all Loans: Bank of America NT & SA 231 S. LaSalle Street Chicago, IL 60697 Address for Notice: 231 S. LaSalle Street Chicago, Illinois 60697 Telecopy No: (312) 974-9626 Telephone No: (312) 828-5239 Attention: Ida Rubens with copy to: 333 Clay Street, Suite 4550 Houston, Texas 77002 Telecopy No: (713) 651-4841 Telephone No: (713) 651-4881 Attention: Ronald E. McKaig [Signature Page 15] PARIBAS By:____________________________________________________ Doug Liftman Vice President By:____________________________________________________ Barton D. Schouest Managing Director Lending Office for all Loans: 1200 Smith Street, Suite 3100 Houston, Texas 77002 Address for Notice: 1200 Smith Street, Suite 3100 Houston, Texas 77002 Attn: Leah Evans-Hughes or Kimberly Miller Telecopy No: (713) 659-5305 Telephone No: (713) 659-4811 with copy to: Paribas Houston Agency 1200 Smith Street, Suite 3100 Houston, Texas 77002 Telecopy: (713) 659-6915 Telephone: (713) 659-4811 Attn: Doug Liftman Vice President [Signature Page 16] NATIONSBANK, N.A. By:____________________________________________________ Paul Squires Senior Vice President Lending Office for all Loans: 901 Main Street Dallas, Texas 75201 Address for Notice: 901 Main Street Dallas, Texas 75201 Attn: Karen Dumond Telecopy No: (214) 508-1285 Telephone No: (214) 508-2513 with copy to: NationsBank, N.A. 700 Louisiana, 8th Floor Houston, Texas 77002 Telecopy: (713) 247-6568 Telephone: (713) 247-6952 Attn: Paul Squires Senior Vice President [Signature Page 17] SOCIETE GENERALE, SOUTHWEST AGENCY By:____________________________________________________ Richard Erbert Vice President Lending Office for all Loans: 2001 Ross Avenue, Suite 4800 Dallas, Texas 75201 Address for Notice: 2001 Ross Avenue, Suite 4800 Dallas, Texas 75201 Telecopy No: (214) 754-0171 Telephone No: (214) 979-2792 Attention: Loan Administration with copy to: Societe Generale 1111 Bagby, Suite 2020 Houston, Texas 77002 Telecopy: (713) 650-0824 Telephone: (713) 759-6318 Attention: Richard Erbert Vice President [Signature Page 18] WELLS FARGO BANK (TEXAS), N.A. By:__________________________________________________ J. Alan Alexander Vice President Lending Office for all Loans: 201 Third Street, 8th Floor San Francisco, California 94103 Address for Notice: 201 Third Street, 8th Floor San Francisco, California 94103 Telecopy: (415) 979-0675 Telephone: (415) 477-5425 Attention: Oscar Enriquez with copy to: Wells Fargo Bank (Texas), NA Energy Department 1000 Louisiana, Third Floor Telecopy No: (713) 250-7912 Telephone No: (713) 250-1651 Attention: J. Alan Alexander [Signature Page 19] HIBERNIA NATIONAL BANK By:___________________________________________________ Colleen McEvoy Vice President Lending Office for all Loans: 313 Carondelet Street New Orleans, LA 70130 Address for Notices: 313 Carondelet Street, Suite 1300 New Orleans, LA 70130 Telecopier No.: (504) 533-5434 Telephone No.: (504) 533-5395 Attention: Energy/Maritime Department [Signature Page 20] TORONTO DOMINION (TEXAS) INC. By: _________________________________________ Name:________________________________________ Title:_______________________________________ Lending Office for all Loans: 909 Fannin, Suite 1700 Houston, Texas 77002 Address for Notices: 909 Fannin, Suite 1700 Houston, Texas 77002 Telecopier No.: (713) 652-2647 Telephone No.: (713) 653-8201 Attention: Mark Green [Signature Page 21] U.S. BANK NATIONAL ASSOCIATION By:_______________________________________________ Name:_____________________________________________ Title:____________________________________________ Lending Office for all Loans: 918 17th Street, Suite 300 Denver, Colorado 80202 Address for Notice: 918 17th Street, Suite 300 Denver, Colorado 80202 Telecopy No: (303) 585-4362 Telephone No: (303) 585-4209 Attention: Charles S. Searle [Signature Page 22] BANK ONE, TEXAS, N.A. By:_______________________________________________ Name:_____________________________________________ Title:____________________________________________ Lending Office for all Loans: 910 Travis, 6th Floor Houston, Texas 77002 Address for Notices: Bank One, Texas, N.A. 910 Travis, 6th Floor Houston, Texas 77002 Telecopier No.: (713) 751-3544 Telephone No.: (713) 751-3564 Attention: John Lane [Signature Page 23] CREDIT SUISSE FIRST BOSTON By:____________________________________________ Name:__________________________________________ Title:_________________________________________ By:____________________________________________ Name:__________________________________________ Title:_________________________________________ Lending Office for all Loans: 11 Madison Avenue, 20th Floor New York, New York 10010 Address for Notices: 11 Madison Avenue, 20th Floor New York, New York 10010 Telecopier No.: (212) 325-8314 Telephone No.: (212) 325-9069 Attention: Charlie Thompson James Moran with copy to: 600 Travis, 30th Floor Houston, Texas 77002 Telecopier No.: (713) 237-0325 Telephone No.: (713) 220-6774 Attention: Scott Brown [Signature Page 24] FIRST NATIONAL BANK OF COMMERCE By:________________________________________________ David R. Reid Senior Vice President Lending Office for all Loans: 210 Baronne Street New Orleans, Louisiana 70112 Address for Notices: First National Bank of Commerce 210 Baronne Street New Orleans, Louisiana Telecopier No.: (504) 561-1316 Telephone No.: (504) 561-2085 Attention: Shelia Mason with copy to: 600 Jefferson Street, 3rd Floor Lafayette, Louisiana 70501 Telecopier No: (318) 265-3228 Telephone No: (318) 265-3455 Attention: David R. Reid Senior Vice President [Signature Page 25] BANK OF NEW YORK By:_____________________________________________ Name:___________________________________________ Title:__________________________________________ Lending Office for all Loans: One Wall Street, 19th Floor New York, New York 10286 Address for Notices: One Wall Street, 19th Floor New York, New York 10286 Telecopier No.: (212) 635-7923 Telephone No.: (212) 635-7861 Attention: Felicia La Forgia [Signature Page 26] SOUTHWEST BANK OF TEXAS, N.A. By:______________________________________________ A. Stephen Kennedy Vice President/Manager Energy Lending Lending Office for all Loans: 5 Post Oak Park 4400 Post Oak Parkway Houston, Texas 77027 Address for Notices: 5 Post Oak Park 4400 Post Oak Parkway Houston, Texas 77027 Telecopier No.: (713) 621-2031 Telephone No.: (713) 235-8881 x1707 Attention: A. Stephen Kennedy [Signature Page 27] AGENT: THE CHASE MANHATTAN BANK, as Competitive Bid Auction Agent By:__________________________________________________ Name:________________________________________________ Title:_______________________________________________ Address for Notices to Chase as Competitive Bid Auction Agent: The Chase Manhattan Bank Loan and Agency Services One Chase Manhattan Plaza, 8th Floor New York, New York 10081 Telecopier No.: (212) 552-5627 Telephone No.: (212) 552-7259 Attention: Chris Consomer [Signature Page 28] ANNEX I LIST OF COMMITMENTS AND CANADIAN COMMITMENTS -------------------------------------------- as of July 8, 1998 U.S. Lenders and U.S. Commitments Canadian Lenders and Canadian Subcommitments
U.S. Commitment Global Name of Lender Percentage Commitment Commitment Percentage - --------------------------------- ---------------- ----------- ---------------------- Chase Bank of Texas, 7.76451% $35,000,000 8.75000% National Association Morgan Guaranty Trust Company 8.19112% $32,000,000 8.00000% of New York Barclays Bank PLC 8.19112% $32,000,000 8.00000% NationsBank, N.A. 8.19112% $32,000,000 8.00000% ABN Amro Bank, N.V. 7.67918% $30,000,000 7.50000% Bank of America NT & SA 7.67918% $30,000,000 7.50000% Bank One, Texas, N.A. 7.67918% $30,000,000 7.50000% Paribas 7.67918% $30,000,000 7.50000% Societe Generale, Southwest 7.67918% $30,000,000 7.50000% Agency Wells Fargo Bank (Texas), N.A. 7.67918% $30,000,000 7.50000% Hibernia National Bank 4.60751% $18,000,000 4.50000% Toronto Dominion (Texas) Inc. 3.41297% $18,000,000 4.50000% U.S. Bank National Association 4.60751% $18,000,000 4.50000% Credit Suisse First Boston 3.83960% $15,000,000 3.75000% Bank of New York 2.55973% $10,000,000 2.50000% Southwest Bank of Texas, N.A. 2.55973% $10,000,000 2.50000%
Annex-I-1 Canadian Lenders and Canadian Subcommitments
Name of Lender Subcommitment Percentage Commitment - ------------------------------------- ------------------------- --------------- The Chase Manhattan Bank of Canada 50% CDN $12,500,000 Toronto Dominion Bank 50% CDN $12,500,000
Affiliated Canadian Lenders Lender Canadian Affiliate ------ ------------------ Chase Bank of Texas, The Chase Manhattan Bank of Canada National Association Toronto Dominion (Texas) Inc. Toronto Dominion Bank Annex-I-2 EXHIBIT A-1 [FORM OF] PROMISSORY NOTE (CONVENTIONAL LOANS) $______________ _______________, 199_/200_ FOR VALUE RECEIVED, Ocean Energy, Inc., a Delaware corporation (the "Company"), hereby promises to pay to the order of _____________________ (the "Lender"), for the account of its respective Applicable Lending Offices provided for by the Credit Agreement as hereinafter defined, at the principal office of Chase Bank of Texas, National Association, 707 Travis, Houston, Texas 77002, the principal sum of _____________ Dollars (or such lesser amount as shall equal the aggregate unpaid principal amount of the Conventional Loans made by the Lender to the Company under the Credit Agreement), in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the Credit Agreement, and to pay interest on the unpaid principal amount of each such Loan, at such office, in like money and funds, for the period commencing on the date of such Loan until such Loan shall be paid in full, at the rates per annum and on the dates provided in the Credit Agreement. The date, amount, Type, interest rate and maturity date of each Loan made by the Lender to the Company, and each payment made on account of the principal thereof, shall be recorded by the Lender on its books and, prior to any transfer of this Note, endorsed by the Lender on the schedule attached hereto or any continuation thereof. This Note is one of the Conventional Loan Notes referred to in the Amended and Restated Global Credit Agreement (such Global Credit Agreement together with all amendments and supplements thereto being the "Credit Agreement") dated as of July 8, 1998 among the Company, the Lenders named therein (including the Lender), Chase Bank of Texas, National Association, as Administrative Agent, Morgan Guaranty Trust Company of New York, as Syndication Agent, Barclays Bank PLC, as Documentation Agent, and ABN Amro Bank, N.V., Bank of America National Trust & Savings Association, Paribas, NationsBank, N.A., Societe Generale, Southwest Agency and Wells Fargo Bank (Texas), N.A., as Co-Agents, and evidences the Conventional Loans made by the Lender thereunder. Capitalized terms used in this Note have the respective meanings assigned to them in the Credit Agreement. This Note is issued pursuant to the Credit Agreement and is entitled to the benefits provided for in the Credit Agreement and the Loan Documents. The Credit Agreement provides for the acceleration of the maturity of this Note upon the occurrence of certain events and for prepayments of Conventional Loans upon the terms and conditions specified therein and other pertinent terms. A-I-1 THIS NOTE (INCLUDING, BUT NOT LIMITED TO, THE VALIDITY AND ENFORCEABILITY HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS. This Note is "Senior Indebtedness" and "Specified Senior Indebtedness" under and for purposes of the 95 Indenture; and "Senior Indebtedness" and "Designated Senior Indebtedness" under and for purposes of the 96 Indenture, the 97 Indenture and the 98 Senior Subordinated Indenture. It is the intent of the Company and the Lender to conform strictly to the usury laws applicable to the Lender. Accordingly, reference is made to Section 12.15 of the Credit Agreement which is incorporated herein by reference for all purposes. OCEAN ENERGY, INC., a Delaware corporation By:_______________________________________ Name:_____________________________________ Title:____________________________________ A-I-2 EXHIBIT A-2 [FORM OF] PROMISSORY NOTE (BID RATE LOANS) __________, 199_/200_ FOR VALUE RECEIVED, Ocean Energy, Inc., a Delaware corporation (the "Company"), hereby promises to pay to the order of _________________ (the "Lender"), for the account of its respective Applicable Lending Offices provided for by the Credit Agreement as hereinafter defined, at the principal office of Chase Bank of Texas, National Association, at 707 Travis, Houston, Texas 77002, the aggregate unpaid principal amount of the Bid Rate Loans made by the Lender to the Company under the Credit Agreement, in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the Credit Agreement, and to pay interest on the unpaid principal amount of each such Bid Rate Loan, at such office, in like money and funds, for the period commencing on the date of each such Bid Rate Loan until such Bid Rate Loan shall be paid in full, at the rates per annum and on the dates provided in the Bid Loan Quote provided by such Lender in connection with such Loan and accepted by the Company. The date, amount, Type, interest rate and maturity date of each Bid Rate Loan made by the Lender to the Company, and each payment made on account of the principal thereof, shall be recorded by the Lender on its books and, prior to any transfer of this Note, endorsed by the Lender on the schedule attached hereto or any continuation thereof. This Note is one of the Bid Rate Notes referred to in the Amended and Restated Global Credit Agreement (such Global Credit Agreement together with all amendments and supplements thereto being the "Credit Agreement") dated as of July 8, 1998 among the Company, the Lenders named therein (including the Lender), Chase Bank of Texas, National Association, as Administrative Agent, Morgan Guaranty Trust Company of New York, as Syndication Agent, Barclays Bank PLC, as Documentation Agent, and ABN Amro Bank, N.V., Bank of America National Trust & Savings Association, Paribas, NationsBank, N.A., Societe Generale, Southwest Agency and Wells Fargo Bank (Texas), N.A., as Co-Agents, and evidences Bid Rate Loans made by the Lender thereunder. Capitalized terms used in this Note have the respective meanings assigned to them in the Credit Agreement. This Note is issued pursuant to the Credit Agreement and is entitled to the benefits provided for in the Credit Agreement and the Loan Documents. The Credit Agreement provides for the acceleration of the maturity of this Note upon the occurrence of certain events. A-2-1 THIS NOTE (INCLUDING, BUT NOT LIMITED TO, THE VALIDITY AND ENFORCEABILITY HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS. This Note is "Senior Indebtedness" and "Specified Senior Indebtedness" under and for purposes of the 95 Indenture; and "Senior Indebtedness" and "Designated Senior Indebtedness" under and for purposes of the 96 Indenture, the 97 Indenture and the 98 Senior Subordinated Indenture. It is the intent of the Company and the Lender to conform strictly to the usury laws applicable to the Lender. Accordingly, reference is made to Section 12.15 of the Credit Agreement which is incorporated herein by reference for all purposes. OCEAN ENERGY, INC., a Delaware corporation By:_______________________________________ Name:_____________________________________ Title:____________________________________ A-2-2 EXHIBIT B-1 [FORM OF LEGAL OPINION] B-1-1 EXHIBIT B-2 [FORM OF LOUISIANA LEGAL OPINION] B-2-1 EXHIBIT C-1 [FORM OF] BORROWING, CONTINUATION AND CONVERSION REQUEST ---------------------------------------------- _______________, 199__/200_ Ocean Energy, Inc., a Delaware corporation (the "Company"), pursuant to that certain Amended and Restated Global Credit Agreement dated as of July 8, 1998 among the Company, Chase Bank of Texas, National Association, as Administrative Agent, Morgan Guaranty Trust Company of New York, as Syndication Agent, Barclays Bank PLC, as Documentation Agent, and ABN Amro Bank, N.V., Bank of America National Trust & Savings Association, Paribas, NationsBank, N.A., Societe Generale, Southwest Agency and Wells Fargo Bank (Texas), N.A., as Co- Agents, and the lenders parties thereto (such Global Credit Agreement together with all amendments and supplements thereto being the "Credit Agreement"), hereby makes the requests indicated below (unless otherwise defined herein, capitalized terms are defined in the Credit Agreement): 1. Conventional Loans: (a) Aggregate amount of new Conventional Loans to be $________________; (b) Requested funding date is _________________, 199__/200_; (c) $_____________________ of such borrowings are to be Eurodollar Loans; $_____________________ of such borrowings are to be Base Rate Loans; and (d) Length of Interest Period for Eurodollar Loans is: ____________________. 2. Eurodollar Loan Continuation for Eurodollar Loans maturing on _____________: (a) Aggregate amount to be continued as Eurodollar Loans is $_______________; (b) Aggregate amount to be converted to Base Rate Loans is $_______________; (c) Length of Interest Period for continued Eurodollar Loans is _________________. 3. Conversion of Outstanding Base Rate Loans to Eurodollar Loans: Convert $__________________ of the outstanding Base Rate Loans to Eurodollar Loans on _________________________ with an Interest Period of ______________________. C-1-1 4. Letter of Credit (a) Account Party: _________________________ (b) Issuance Date: _________________________ (c) Beneficiary:_________________________ (d) Expiration Date: _________________________ (e) Delivery Instructions:____________________ ___________________________________________ The undersigned certifies that he[she] is the _____________________ of the Company, and that as such he[she] is authorized to execute this certificate on behalf of the Company. The undersigned further certifies, represents and warrants on behalf of the Company that the Company is entitled to receive the requested borrowing, continuation or conversion under the terms and conditions of the Credit Agreement, including the condition set forth in Section 6.02(c). In connection with the foregoing, attached hereto are (with calculations demonstrating such ratio) [(i)] the Percentage Usage for the Company, after giving effect to the requested borrowing or issuance [to the extent necessary] [and (ii) the Fixed Charge Coverage Ratio (as defined in the Indentures) for the Company after giving effect to the requested borrowing or issuance]. OCEAN ENERGY, INC., a Delaware corporation By:________________________________________ Name:______________________________________ Title:_____________________________________ C-1-2 EXHIBIT C-2 [Form of Competitive Bid Request] [Date] TO: The Chase Manhattan Bank, As Competitive Bid Auction Administrator One Chase Manhattan Plaza, 8th Floor New York, New York 10081 FROM: Ocean Energy, Inc., a Louisiana corporation RE: Competitive Bid Request Pursuant to Section 2.02(g) of that certain Amended and Restated Global Credit Agreement (as the same may be amended, modified or supplemented from time to time, the "Credit Agreement") dated as of July 8, 1998 among Ocean Energy, Inc., a Delaware corporation (the "Company"), the Lenders parties thereto, Chase Bank of Texas, National Association, as Administrative Agent, Morgan Guaranty Trust Company of New York, as Syndication Agent, Barclays Bank PLC, as Documentation Agent, and ABN Amro Bank, N.V., Bank of America National Trust & Savings Association, Paribas, NationsBank, N.A., Societe Generale, Southwest Agency and Wells Fargo Bank (Texas), N.A., as Co-Agents, we hereby give notice that we request quotes for the following proposed Bid Rate Loan(s): Borrowing Quotation Interest Date Date/1/ Amount/2/ Type Duration/3/ Payment Dates -------------- ------------ --------- ---- ----------- ------------- Terms used herein have the meanings assigned to them in the Credit Agreement. [insert other terms, if any] OCEAN ENERGY, INC., a Delaware corporation By:_______________________________________ Title:____________________________________ - ------------------- /1/ For use if an Absolute Rate is requested to be submitted before the borrowing date. /2/ Each amount must be at least $5,000,000. /3/ 1, 2, 3 or 6 months, or 9 or 12 months, if available, in the case of a Eurodollar Loan or, in the case of an Absolute Rate Loan, a period of not less than 7 days and not more than 360 days after the making of such Absolute Rate Loan and ending on a Business Day. C-2-1 EXHIBIT C-3 [Form of Bid Loan Quote] The Chase Manhattan Bank, as Competitive Bid Auction Administrator Attention: Re: Bid Rate Loan Quote to Ocean Energy, Inc., a Delaware corporation (the "Company") This Bid Rate Loan quote is given in accordance with Section 2.02(g) of that certain Amended and Restated Global Credit Agreement (as the same may be amended, modified or supplemented from time to time, the "Credit Agreement") dated as of July 8, 1998 among the Company, the Lenders parties thereto (including the Lender), Chase Bank of Texas, National Association, as Administrative Agent, Morgan Guaranty Trust Company of New York, as Syndication Agent, Barclays Bank PLC, as Documentation Agent, and ABN Amro Bank, N.V., Bank of America National Trust & Savings Association, Paribas, NationsBank, N.A., Societe Generale, Southwest Agency and Wells Fargo Bank (Texas), N.A., as Co- Agents. Terms defined in the Credit Agreement are used herein as defined therein. In response to the Company's invitation dated _______________, 19___/200_, we hereby make the following Bid Loan Quote(s) on the following terms: 1. Quoting Lender: 2. Person to contact at Quoting Lender: 3. We hereby offer to make Bid Rate Loan(s) in the following principal amounts, for the following Interest Periods and at the following rates: Borrowing Quotation Interest Date Date Amount(s)/s/ Type Duration/5/ Payment Dates Rate/6/ - --------- --------- ------------ ---- ----------- ------------- -------- - ----------------- /4/ The principal amount bid for each Interest Period may not exceed the principal amount requested. Bids must be made for at least $5,000,000. /5/ 1, 2, 3 or 6 months, or 9 or 12 months, if available, in the case of a Eurodollar Loan or, in the case of an Absolute Rate Loan, a period of up to 360 days after the making of such Absolute Rate Loan and ending on a Business Day, as specified in the related Competitive Bid Request. /6/ For a Eurodollar Loan, specify margin over or under the Eurodollar Rate determined for the applicable Interest Period. Specify percentage (rounded to the nearest 1/100 of 1%) and specify whether "PLUS" or "MINUS". For an Absolute Rate Loan, specify rate of interest per annum (rounded to the nearest 1/100 of 1%). C-3-1 We understand and agree that the offer(s) set forth above, subject to the satisfaction of the applicable conditions set forth in the Credit Agreement, irrevocably obligate(s) us to make the Bid Rate Loan(s) for which any offer(s) [is] [are] accepted, in whole or in part. This offer expires ___________ [a.m.] [p.m.] Houston time on ___________________, 199___/200_. Very truly yours, [Name of Lender] Dated: By:_________________________________ Authorized Officer C-3-2 EXHIBIT D SUBSIDIARIES Unless otherwise indicated in this Exhibit D, 100% of the capital stock of each of the Subsidiaries listed below is legally and beneficially owned by OEI- Louisiana. Unless otherwise indicated in this Exhibit D, the principal place of business and chief executive office of each of the Subsidiaries listed below is located at 1201 Louisiana, Suite 1400, Houston, Texas 77002. Unless otherwise indicated in this Exhibit D, each of the Subsidiaries listed below is a Delaware corporation. Unless otherwise indicated in this Exhibit D, each of the Subsidiaries listed below is a Restricted Subsidiary for purposes of the Global Credit Agreement. UMC Pipeline Corporation United Meridian International Corporation UMIC Cote d'Ivoire Corporation UMC Cayman Islands Corporation (a Cayman Islands corporation) Ocean Energy Resources, Inc. Ocean Energy Resources Canada, Ltd. (a British Columbia company). 100% of the capital stock of this corporation is legally and beneficially owned by Ocean Energy Resources, Inc. The principal place of business and chief executive office of Ocean Energy Resources Canada, Ltd. is located at First Canada Centre, Suite 1000, 350 Fifth Avenue S.W., Calgary, Alberta T2P 3N9. UMC Equatorial Guinea Corporation Silver Eagle Resources (an Alberta company) UMC Bangladesh (________________) Havre Pipeline Company, LLC (Unrestricted Subsidiary) Lion GPL, S.A. (Unrestricted Subsidiary) F&R International (________________) D-1 EXHIBIT E PARTNERSHIPS ------------ [List Partnerships] E-1 EXHIBIT F LIST OF LOAN DOCUMENTS ---------------------- 1. The Notes 2. Guaranty Agreement. 3. Canadian Credit Agreement. 4. Promissory Notes issued by Ocean Canada under the Canadian Credit Agreement. 5. Ocean Canada Guaranty Agreement executed by OEI-Louisiana. 6. Ocean Canada Guaranty Agreement executed by the Company. 7. Fee Letter. 8. Intercreditor Agreement. F-1 EXHIBIT G [FORM OF] ASSIGNMENT AND ACCEPTANCE ------------------------- Dated: __________, 199__/200_ Reference is made to that certain Amended and Restated Global Credit Agreement dated as of July 8, 1998 among Ocean Energy, Inc., a Delaware corporation (the "Company"), Chase Bank of Texas, National Association, as Administrative Agent, Morgan Guaranty Trust Company of New York, as Syndication Agent, Barclays Bank PLC, as Documentation Agent, and ABN Amro Bank, N.V., Bank of America National Trust & Savings Association, Paribas, NationsBank, N.A., Societe Generale, Southwest Agency and Wells Fargo Bank (Texas), N.A., as Co- Agents, and the lenders parties thereto (such Credit Agreement together with all amendments and supplements thereto being the "Credit Agreement"). Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Credit Agreement. This Assignment and Acceptance, between the Assignor (as defined and set forth on Schedule I hereto and made a part hereof) and the Assignee (as defined and set forth on Schedule I hereto and made a part hereof) is dated as of the Effective Date (as set forth on Schedule I hereto and made a part hereof). 1. The Assignor hereby irrevocably sells and assigns to the Assignee without recourse to the Assignor, and the Assignee hereby irrevocably purchases and assumes from the Assignor without recourse to the Assignor, as of the Effective Date, an undivided interest (the "Assigned Interest") in and to all the Assignor's rights and obligations under the Credit Agreement respecting those, and only those, Commitments and Loans contained in the Credit Agreement as are set forth on Schedule I, in a principal amount as set forth on Schedule I. 2. The Assignor (i) represents and warrants that it owns the Assigned Interest free and clear from any Lien or adverse claim; (ii) other than the representation and warranty set forth in clause (i) above, makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or any other instrument, document or agreement delivered in connection therewith, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement, or any other instrument or document furnished pursuant thereto, other than that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (iii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Company or any of its Subsidiaries or the performance or observance by the Company and its Subsidiaries of any of their respective obligations under the Credit Agreement or any Loan Document to which it is a party; and (iv) attaches the Notes held by it evidencing the Assigned Interest and requests that the Company exchange such Notes for new Notes payable to the Assignor (if the Assignor has retained any interest in the Assigned Interest) and new Notes payable to the Assignee in the respective G-1 amounts which reflect the assignment being made hereby (and after giving effect to any other assignments which have become effective on or before the Effective Date). 3. The Assignee (i) represents and warrants that it is legally authorized to enter into this Assignment and Acceptance; (ii) confirms that it has received a copy of the Credit Agreement, together with copies of the Financial Statements, or if later, the most recent financial statements delivered pursuant to Section 8.01 thereof, and such other documents and information as it has deemed appropriate to make its own credit analysis; (iii) agrees that it will, independently and without reliance upon either the Administrative Agent, any other Agent, any other Lender or the Assignor and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iv) agrees that it will be bound by the provisions of the Credit Agreement and will perform in accordance with its terms all the obligations which by the terms of the Credit Agreement are required to be performed by it; and (v) if the Assignee is organized under the laws of a jurisdiction outside the United States, attaches the forms prescribed by the Internal Revenue Service of the United States certifying as to the Assignee's exemption from United States withholding taxes with respect to all payments to be made to the Assignee under the Credit Agreement or such other documents as are necessary to indicate that all such payments are subject to such tax at a rate reduced by an applicable tax treaty. 4. Following the execution of this Assignment and Acceptance, it will be delivered to the Company effective as of the Effective Date (which Effective Date shall, unless otherwise agreed, be at least five (5) Business Days after the execution of this Assignment and Acceptance). 5. Upon receipt by the Company, all payments under the Credit Agreement in respect of the Assigned Interest (including without limitation, all payments of principal, interest and fees with respect thereto) for the period up to, but not including, the Effective Date, shall be made to the Assignor, and for the period from and after the Effective Date shall be made to the Assignee. Assignor and Assignee hereby agree that if Assignor receives any of the payments referred to in the preceding sentence which should have been made to Assignee, or if Assignee receives any of the payments referred to in the previous sentence which should have been made to Assignor, such payments shall promptly be paid by Assignor to Assignee, or by Assignee to Assignor, as the case may be, in full. 6. From and after the Effective Date, (i) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance and Section 12.06 of the Credit Agreement, shall have the rights and obligations thereunder, including without limitation, rights under the Intercreditor Agreement, to which Assignee hereby agrees to be bound, and (ii) the Assignor shall, to the extent provided in this Assignment and Acceptance and Section 12.06 of the Credit Agreement, relinquish its rights and be released from its obligations under the Credit Agreement. 7. THIS ASSIGNMENT AND ACCEPTANCE (INCLUDING, BUT NOT LIMITED TO, THE VALIDITY AND ENFORCEABILITY HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS. G-2 IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Acceptance to be executed by their respective duly authorized officers on Schedule I hereto. --------------------------------------------- as Assignor By:__________________________________________ Name:________________________________________ Title:_______________________________________ --------------------------------------------- as Assignor By:__________________________________________ Name:________________________________________ Title:_______________________________________ G-3 APPROVED: Ocean Energy, Inc., a Delaware corporation By:__________________________________________ Name:________________________________________ Title:_______________________________________ Chase Bank of Texas, National Association, as Administrative Agent By:__________________________________________ Name:________________________________________ Title:_______________________________________ G-4 SCHEDULE I TO ASSIGNMENT AND ACCEPTANCE Assignor: _____________________ Commitment of Assignor Prior to Effective Date: $______________ Commitment of Assignor After Effective Date: $______________ Assignee: _____________________ Commitment of Assignee Prior to Effective Date: $______________ Commitment of Assignee After Effective Date: $______________ Effective Date of Assignment: _____________, 199__/200_ Amount of Commitment Hereby Assigned: $___________ Outstanding Commitment Principal Amount Assigned Assigned -------------- ---------------- $______________ $______________ SCHEDULE 1-1 Assignee's Base Rate Lending Office: _____________________________ _____________________________ _____________________________ Assignee's Eurodollar Lending Office: _______________________________ _______________________________ _______________________________ Address for Notice: ____________________________ ____________________________ ____________________________ Attn:_______________________ Telex No:___________________ Telecopy No:__________________ Telephone No:_________________ SCHEDULE 1-2 EX-10.4 3 AMENDED RESTATED GUAR. AGR. - CHASE MAN. OF CANADA Exhibit 10.4 AMENDED AND RESTATED GUARANTY AGREEMENT Dated as of July 8, 1998 by Ocean Energy, Inc., a Delaware corporation, in favor of The Chase Manhattan Bank of Canada, as Administrative Agent, and The Lenders Now or Hereafter Parties To The Credit Agreement TABLE OF CONTENTS Page ---- Article I Definitions and Accounting Matters Section 1.01 Terms Defined In Recitals.............................................. 1 Section 1.02 Certain Definitions.................................................... 1 Section 1.03 Credit Agreement Definitions........................................... 2 Article II The Guaranty Section 2.01 Obligations Guaranteed................................................. 2 Section 2.02 Nature of Guaranty..................................................... 2 Section 2.03 Lenders' Rights........................................................ 2 Section 2.04 Guarantor's Waivers.................................................... 3 Section 2.05 Maturity of Obligations; Payment....................................... 3 Section 2.06 Lenders' Expenses...................................................... 3 Section 2.07 Obligation............................................................. 3 Section 2.08 Events and Circumstances Not Reducing or Discharging the Guarantor's Obligations.......................................................... 3 Section 2.09 Subrogation............................................................ 5 Article III Representations and Warranties Section 3.01 By the Guarantor....................................................... 5 Article IV Subordination of Indebtedness Section 4.01 Subordination of All Guarantor Claims.................................. 6 Section 4.02 Claims in Bankruptcy................................................... 6 Section 4.03 Payments Held in Trust................................................. 6 Section 4.04 Liens Subordinate...................................................... 7 Section 4.05 Notation of Records.................................................... 7 Article V Miscellaneous Section 5.01 Successors and Assigns................................................. 7 Section 5.02 Notices................................................................ 7 Section 5.03 Authority of Administrative Agent...................................... 7 Section 5.04 CONSTRUCTION........................................................... 8 Section 5.05 Waivers................................................................ 8 Section 5.06 Judgment Currency...................................................... 8 Section 5.07 Amendment and Restatement.............................................. 9 Section 5.08 Survival of Obligations................................................ 9 Section 5.09 Subject to the Intercreditor Agreement................................. 9 Section 5.10 Status as Specified or Designated Senior Indebtedness.................. 9
i AMENDED AND RESTATED GUARANTY AGREEMENT This Amended and Restated Guaranty Agreement dated as of July 8, 1998, is by Ocean Energy, Inc., a corporation duly organized and validly existing under the laws of the state of Delaware ("Guarantor"), in favor of each of the following: each of the financial institutions that is now or hereafter a party to the Credit Agreement (as defined below) (individually, a "Lender" and, collectively, the "Lenders"); and The Chase Manhattan Bank of Canada, as administrative agent for the Lenders (in such capacity, the "Administrative Agent"). Recitals A. Ocean Energy Resources Canada, Ltd., a company continued under the laws of the Province of British Columbia (the "Company"), the Administrative Agent and the Lenders have executed that certain Amended and Restated Credit Agreement of even date herewith (such credit agreement, as amended, the "Credit Agreement"). B. One of the terms and conditions stated in the Credit Agreement for the making of the loans and extensions of credit described in the Credit Agreement is the execution and delivery to the Administrative Agent and the Lenders of this Guaranty Agreement. C. NOW, THEREFORE, (i) in order to comply with the terms and conditions of the Credit Agreement, (ii) to induce the Lenders to enter into the Credit Agreement, and (iii) for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Guarantor hereby agrees as follows: Article I DEFINITIONS AND ACCOUNTING MATTERS SECTION 1.01 TERMS DEFINED IN RECITALS. As used in this Guaranty Agreement, the terms defined in the Recitals shall have the meanings indicated in the Recitals. SECTION 1.02 CERTAIN DEFINITIONS. As used in this Guaranty Agreement, including the Recitals, the following terms shall have the following meanings, unless the context otherwise requires: "Guarantor Claims" shall have the meaning indicated in Section 4.01. "Guaranty Agreement" shall mean this Amended and Restated Guaranty Agreement, as the same may from time to time be amended or supplemented. "Obligations" shall mean (a) the payment and performance of all present and future indebtedness, obligations and liabilities of the Company and/or the Guarantor to the Administrative Agent and the Lenders under the Credit Agreement, including but not limited to, (i) the full and punctual payment of the Notes issued thereunder, and any and all promissory notes given in substitution for such Notes or in modification, renewal, extension or rearrangement thereof in whole or in part, and (ii) the Acceptance Exposure under all Bankers Acceptances now outstanding or hereafter issued under the Credit Agreement; (b) all obligations of the Guarantor under this Guaranty Agreement; and (c) all -1- interest (whether pre- or post petition), charges, expenses, reasonable attorneys' or other fees and any other sums payable to the Administrative Agent and the Lenders in connection with the execution, administration or enforcement of any of their rights and remedies hereunder or any other Loan Document. SECTION 1.03 CREDIT AGREEMENT DEFINITIONS. Unless otherwise defined herein, all terms beginning with a capital letter which are not defined herein shall have the meaning ascribed such terms in the Credit Agreement and in the Amended and Restated Global Credit Agreement dated of even date herewith among Guarantor, each of the financial institutions that is now or hereafter a party thereto (collectively, the "U.S. Lenders"); Chase Bank of Texas, National Association, as administrative agent for the U.S. Lenders, Morgan Guaranty Trust Company of New York, as syndication agent for the U.S. Lenders, Barclays Bank PLC, as documentation agent for the U.S. Lenders, and ABN Amro Bank, N.V., Bank of America National Trust & Savings Association, Paribas, NationsBank, N.A., Societe Generale, Southwest Agency and Wells Fargo Bank (Texas), N.A., , as co- agents for the U.S. Lenders. ARTICLE II THE GUARANTY SECTION 2.01 OBLIGATIONS GUARANTEED. The Guarantor hereby irrevocably and unconditionally guarantees the prompt payment at maturity of the Obligations. SECTION 2.02 NATURE OF GUARANTY. This guaranty is an absolute, irrevocable, completed and continuing guaranty of payment and not a guaranty of collection, and no notice of the Obligations or any extension of credit already or hereafter contracted by or extended to the Company need be given to the Guarantor. The guaranty evidenced hereby is joint and several with all other guarantees of the Obligations. This guaranty may not be revoked by the Guarantor and shall continue to be effective with respect to debt under the Obligations arising or created after any attempted revocation by the Guarantor and shall remain in full force and effect until the Obligations are paid in full and the Aggregate Commitments are terminated, notwithstanding that from time to time prior thereto no Obligations may be outstanding. The Company, the Administrative Agent and the Lenders may modify, alter, rearrange, extend for any period and/or renew from time to time, the Obligations and the Administrative Agent and the Lenders may waive any Defaults or Events of Default without notice to the Guarantor and in such event the Guarantor will remain fully bound hereunder on the Obligations. Subject to the terms of the Credit Agreement, this Guaranty Agreement may be enforced by the Administrative Agent and/or the Lenders and any subsequent holder of the Obligations and shall not be discharged by the assignment or negotiation of all or part of the Obligations. The Guarantor hereby expressly waives presentment, demand, notice of non- payment, protest and notice of protest and dishonor, notice of Event of Default, notice of intent to accelerate the maturity and notice of acceleration of the maturity and any other notice in connection with the Obligations, and also notice of acceptance of this Guaranty Agreement, acceptance on the part of the Administrative Agent and the Lenders being conclusively presumed by their request for this Guaranty Agreement and delivery of the same to the Administrative Agent. SECTION 2.03 LENDERS' RIGHTS. Subject to the terms of the Credit Agreement, the Guarantor authorizes the Lenders (or the Administrative Agent on behalf of the Lenders), without notice or demand and without affecting the Guarantor's obligation hereunder, to take and hold agreed-upon security for the payment of the Obligations, and exchange, enforce, waive and release any such security; and to -2- apply such security and direct the order or manner of sale thereof as the Administrative Agent and the Lenders in their discretion may determine; and to obtain a guaranty of the Obligations from any one or more Persons and at any time or times to enforce, waive, rearrange, modify, limit or release any of such other Persons from their obligations under such guaranties. SECTION 2.04 GUARANTOR'S WAIVERS. The Guarantor waives any right to require the Administrative Agent and the Lenders to (a) proceed against the Company or any other Person liable on the Obligations, (b) enforce their rights against any other guarantor of the Obligations, (c) proceed or enforce their rights against or exhaust any security given to secure the Obligations, (d) have the Company joined with the Guarantor in any suit arising out of this Guaranty Agreement and/or the Obligations, or (e) pursue any other remedy whatsoever. Neither the Administrative Agent nor the Lenders shall be required to mitigate damages or take any action to reduce, collect or enforce the Obligations. The Guarantor waives any defense arising by reason of any disability, lack of corporate authority or power, or other defense of the Company or any other guarantor of the Obligations, and shall remain liable hereon regardless of whether the Company or any other guarantor be found not liable thereon for any reason. SECTION 2.05 MATURITY OF OBLIGATIONS; PAYMENT. The Guarantor agrees that if the maturity of the Obligations is accelerated by bankruptcy or otherwise, such maturity shall also be deemed accelerated for the purpose of this Guaranty Agreement without demand or notice to the Guarantor. The Guarantor will, forthwith upon notice from the Administrative Agent of the Company's failure to pay the Obligations at maturity, pay to the Administrative Agent for the benefit of the Administrative Agent and the Lenders at the Administrative Agent's Principal Office, the amount due and unpaid by the Company and guaranteed hereby. The failure of the Administrative Agent to give this notice shall not in any way release the Guarantor hereunder. SECTION 2.06 LENDERS' EXPENSES. If the Guarantor fails to pay the Obligations after notice from the Administrative Agent of the Company's failure to pay any Obligations at maturity (whether by acceleration or otherwise), and if the Administrative Agent or the Lenders obtain the services of an attorney for collection of amounts owing by the Guarantor hereunder, or obtain advice of counsel in respect of any of their rights under this Guaranty Agreement, or if suit is filed to enforce this Guaranty Agreement, or if proceedings are had in any bankruptcy, receivership or other judicial proceedings for the establishment or collection of any amount owing by the Guarantor hereunder, or if any amount owing by the Guarantor hereunder is collected through such proceedings, the Guarantor agrees to pay to the Administrative Agent at its Principal Office the reasonable attorneys' fees of the Administrative Agent and the Lenders. SECTION 2.07 OBLIGATION. It is expressly agreed that the obligation of the Guarantor for the payment of the Obligations guaranteed hereby shall be primary and not secondary. SECTION 2.08 EVENTS AND CIRCUMSTANCES NOT REDUCING OR DISCHARGING THE GUARANTOR'S OBLIGATIONS. The Guarantor hereby consents and agrees to each of the following to the fullest extent permitted by law, agrees that its obligations under this Guaranty Agreement shall not be released, diminished, impaired, reduced or adversely affected by any of the following, and waives any rights (including without limitation rights to notice) which it might otherwise have as a result of or in connection with any of the following: -3- (a) Modifications, etc. Any renewal, extension, modification, or increase in the amount of the Aggregate Commitments as in effect on the Effective Date, decrease, alteration or rearrangement of all or any part of the Obligations, any Loan Document or any instrument executed in connection therewith, or any contract or understanding between the Company, any Agent and/or the Lenders, or any other Person, pertaining to the Obligations; (b) Adjustment, etc. Any adjustment, indulgence, forbearance or compromise that might be granted or given by the Administrative Agent or the Lenders to the Company or the Guarantor or any Person liable on the Obligations; (c) Condition of the Company or the Guarantor. The insolvency, bankruptcy, arrangement, reorganization, adjustment, composition, liquidation, disability, dissolution or lack of power of the Company or the Guarantor or any other Person at any time liable for the payment of all or part of the Obligations; or any sale, lease or transfer of any or all of the assets of the Company or the Guarantor, or any changes in the shareholders of the Company or the Guarantor; (d) Invalidity of Obligations. The invalidity, illegality or unenforceability of all or any part of the Obligations or any Loan Document, including the Notes, for any reason whatsoever, including without limitation the fact that the Obligations, or any part thereof, exceed the amount permitted by law, the act of creating the Obligations or any part thereof is ultra vires, the officers or representatives executing any Loan Document or otherwise creating the Obligations acted in excess of their authority, the Obligations violate applicable usury laws, the Company has valid defenses, claims or offsets (whether at law, in equity or by agreement) which render the Obligations wholly or partially uncollectible from the Company, the creation, performance or repayment of the Obligations (or the execution, delivery and performance of any Loan Document) is illegal, uncollectible, legally impossible or unenforceable, or the Credit Agreement, the Notes or other Loan Documents have been forged or otherwise are irregular or not genuine or authentic; (e) Release of Obligors. Any full or partial release of the obligation of the Company on the Obligations or any part thereof, of any co-guarantors, or any other Person now or hereafter liable, whether directly or indirectly, jointly, severally, or jointly and severally, to pay, perform, guarantee or assure the payment of the Obligations or any part thereof, it being recognized, acknowledged and agreed by the Guarantor that the Guarantor may be required to pay the Obligations in full without assistance or support of any other Person, and the Guarantor has not been induced to enter into this Guaranty Agreement on the basis of a contemplation, belief, understanding or agreement that other parties other than the Company will be liable to perform the Obligations, or that the Administrative Agent and the Lenders will look to other parties to perform the Obligations; (f) Security. The taking or accepting of any security, collateral or guaranty, or other assurance of payment, for all or any part of the Obligations; (g) Release of Collateral, etc. Any release, surrender, exchange, subordination, deterioration, waste, loss or impairment (including without limitation negligent, willful, unreasonable or unjustifiable impairment) of any collateral, Property or security, at any time existing in connection with, or assuring or securing payment of, all or any part of the Obligations; -4- (h) Care and Diligence. The failure of any Agent or any Lender or any other Person to exercise diligence or reasonable care in the preservation, protection, enforcement, sale or other handling or treatment of all or any part of such collateral, Property or security; (i) Status of Liens. The fact that any collateral, security or Lien contemplated or intended to be given, created or granted as security for the repayment of the Obligations shall not be properly perfected or created, or shall prove to be unenforceable or subordinate to any other Lien, it being recognized and agreed by the Guarantor that the Guarantor is not entering into this Guaranty Agreement in reliance on, or in contemplation of the benefits of, the validity, enforceability, collectability or value of any of the collateral for the Obligations; (j) Payments Rescinded. Any payment by the Company to any Agent or Lender is held to constitute a preference under the bankruptcy laws, or for any reason an Agent or Lender is required to refund such payment or pay such amount to the Company or someone else; or (k) Other Actions Taken or Omitted. Any other action taken or omitted to be taken with respect to the Credit Agreement or the other Loan Documents, the Obligations, or the security and collateral therefor, whether or not such action or omission prejudices the Guarantor or increases the likelihood that the Guarantor will be required to pay the Obligations pursuant to the terms hereof; it being the unambiguous and unequivocal intention of the Guarantor that the Guarantor shall be obligated to pay the Obligations when due, notwithstanding any occurrence, circumstance, event, action, or omission whatsoever, whether contemplated or uncontemplated, and whether or not otherwise or particularly described herein, except for the full and final payment and satisfaction of the Obligations. SECTION 2.09 SUBROGATION. Until the Obligations have been paid in full and the Aggregate Commitments terminated, the Guarantor hereby waives any claim, right or remedy which the Guarantor may now have or hereafter acquire against the Company which arises out of this Guaranty Agreement or from the performance by the Guarantor hereunder, including without limitation, any claim, remedy or right of subrogation, reimbursement, exoneration, indemnification, or participation in any such claim, right or remedy of any other Person against the Company. The Guarantor further waives any benefit of any right to participate in any security now or hereafter held by the Administrative Agent and/or the Lenders. Article III REPRESENTATIONS AND WARRANTIES SECTION 3.01 BY THE GUARANTOR. In order to induce the Administrative Agent and the Lenders to accept this Guaranty Agreement, the Guarantor represents and warrants to the Lender Group (which representations and warranties will survive the creation of the Obligations and any extension of credit thereunder) that: (a) Benefit to the Guarantor. The Company is a wholly-owned Subsidiary of the Guarantor; and the Guarantor's guaranty pursuant to this Guaranty Agreement reasonably may be expected to benefit, directly or indirectly, the Guarantor; and the Guarantor has determined that this Guaranty Agreement is necessary and convenient to the conduct, promotion and attainment of the business of the Guarantor and the Company. -5- (b) Solvency. It (i) is not insolvent as of the date hereof and will not be rendered insolvent as a result of this Guaranty Agreement or the transactions contemplated by the Credit Agreement or the making of the Loans or issuance of Bankers Acceptances thereunder, (ii) is not engaged in a business or a transaction, or about to engage in a business or a transaction, for which any Property or assets remaining with the Guarantor constitute unreasonably small capital, and (iii) does not intend to incur, or believe it will incur, debts that will be beyond its ability to pay as such debts mature. (c) No Representation by Administrative Agent or Lenders. Neither any Agent, Lender nor any other Person has made any representation, warranty or statement to the Guarantor in order to induce the Guarantor to execute this Guaranty Agreement. Article IV SUBORDINATION OF INDEBTEDNESS SECTION 4.01 SUBORDINATION OF ALL GUARANTOR CLAIMS. As used herein, the term "Guarantor Claims" shall mean all debts and obligations of the Company to the Guarantor, whether such debts and obligations now exist or are hereafter incurred or arise, or whether the obligation be direct, contingent, primary, secondary, several, joint and several, or otherwise, and irrespective of whether such debts or obligations be evidenced by note, contract, open account, or otherwise, and irrespective of the Person or Persons in whose favor such debts or obligations may, at their inception, have been, or may hereafter be created, or the manner in which they have been or may hereafter be acquired by the Guarantor. Except for payments permitted by the Credit Agreement, until the Obligations shall be paid and satisfied in full, the Aggregate Commitments are terminated and the Guarantor shall have performed all of its obligations hereunder and the Loan Documents to which it is a party, the Guarantor shall not receive or collect, directly or indirectly, from the Company any amount upon the Guarantor Claims. SECTION 4.02 CLAIMS IN BANKRUPTCY. In the event of receivership, bankruptcy, reorganization, arrangement, debtor's relief, or other insolvency proceedings involving the Company, the Administrative Agent on behalf of the Administrative Agent and the Lenders shall have the right to prove their claim in any proceeding, so as to establish their rights hereunder and receive directly from the receiver, trustee or other court custodian, dividends and payments which would otherwise be payable upon Guarantor Claims. The Guarantor hereby assigns such dividends and payments to the Administrative Agent for the benefit of the Administrative Agent and the Lenders. Should any Agent or Lender receive, for application upon the Obligations, any such dividend or payment which is otherwise payable to the Guarantor, and which, as between the Company and the Guarantor, shall constitute a credit upon the Guarantor Claims, then upon payment in full of the Obligations, the Guarantor shall become subrogated to the rights of the Administrative Agent and the Lenders to the extent that such payments to the Administrative Agent and the Lenders on the Guarantor Claims have contributed toward the liquidation of the Obligations, and such subrogation shall be with respect to that proportion of the Obligations which would have been unpaid if the Administrative Agent and the Lenders had not received dividends or payments upon the Guarantor Claims. SECTION 4.03 PAYMENTS HELD IN TRUST. In the event that notwithstanding Sections 4.01 and 4.02, the Guarantor should receive any funds, payments, claims or distributions which is prohibited by such Sections, the Guarantor agrees (a) to hold in trust for the Administrative Agent and the Lenders an amount equal to the amount of all funds, payments, claims or distributions so received, and (b) that it shall have absolutely no dominion over the amount of such funds, payments, claims or distributions -6- except to pay them promptly to the Administrative Agent, for the benefit of the Administrative Agent and the Lenders; and the Guarantor covenants promptly to pay the same to the Administrative Agent. SECTION 4.04 LIENS SUBORDINATE. The Guarantor agrees that, until the Obligations are paid in full and the Aggregate Commitments terminated, any Liens upon the Company's assets securing payment of the Guarantor Claims shall be and remain inferior and subordinate to any Liens upon the Company's assets securing payment of the Obligations, regardless of whether such encumbrances in favor of the Guarantor, any Agent or Lender presently exist or are hereafter created or attach. Without the prior written consent of the Administrative Agent, the Guarantor, during the period in which any of the Obligations are outstanding or the Aggregate Commitments are in effect, shall not (a) exercise or enforce any creditor's right it may have against the Company, or (b) foreclose, repossess, sequester or otherwise take steps or institute any action or proceeding (judicial or otherwise, including without limitation the commencement of or joinder in any liquidation, bankruptcy, rearrangement, debtor's relief or insolvency proceeding) to enforce any Lien, mortgages, deeds of trust, security interest, collateral rights, judgments or other encumbrances on assets of the Company held by the Guarantor. SECTION 4.05 NOTATION OF RECORDS. All promissory notes and, upon the request of the Administrative Agent, all accounts receivable ledgers or other evidence of the Guarantor Claims accepted by or held by the Guarantor shall contain a specific written notice thereon that the indebtedness evidenced thereby is subordinated under the terms of this Guaranty Agreement. Article V MISCELLANEOUS SECTION 5.01 SUCCESSORS AND ASSIGNS. This Guaranty Agreement is and shall be in every particular available to the successors and assigns of the Administrative Agent and the Lenders and is and shall always be fully binding upon the legal representatives, successors and assigns of the Guarantor, notwithstanding that some or all of the monies, the repayment of which this Guaranty Agreement applies, may be actually advanced after any bankruptcy, receivership, reorganization or other event affecting either the Company or the Guarantor. SECTION 5.02 NOTICES. Any notice or demand to the Guarantor under or in connection with this Guaranty Agreement may be given and shall conclusively be deemed and considered to have been given and received in the manner and to the address of the Guarantor as provided for in the Credit Agreement. SECTION 5.03 AUTHORITY OF ADMINISTRATIVE AGENT. The Guarantor acknowledges that the rights and responsibilities of the Administrative Agent under this Guaranty Agreement with respect to any action taken by the Administrative Agent or the exercise or non-exercise by the Administrative Agent of any option, right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Guaranty Agreement shall, as between the Administrative Agent and the Lenders, be governed by the Credit Agreement and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Administrative Agent and the Guarantor, the Administrative Agent shall be conclusively presumed to be acting as agent for the Lenders with full and valid authority so to act or refrain from acting; and the Guarantor shall not be under any obligation, or entitlement, to make any inquiry respecting such authority. -7- SECTION 5.04 CONSTRUCTION. THIS GUARANTY AGREEMENT (INCLUDING, BUT NOT LIMITED TO, THE VALIDITY AND ENFORCEABILITY HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE PROVINCE OF ALBERTA, CANADA. SECTION 5.05 WAIVERS. THE GUARANTOR AND EACH LENDER AND THE ADMINISTRATIVE AGENT BY ITS ACCEPTANCE HEREOF HEREBY (I) IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTY AGREEMENT OR ANY LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN; (II) IRREVOCABLY WAIVE, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (III) CERTIFY THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (IV) ACKNOWLEDGE THAT IT HAS BEEN INDUCED TO ENTER INTO THIS GUARANTY AGREEMENT, THE LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 5.05. SECTION 5.06 JUDGMENT CURRENCY. This is an international loan transaction in which the specification of Canadian Dollars or U.S. Dollars is of the essence, and the stipulated currency shall in each instance be the Currency of account and payment in all instances. A payment obligation in one Currency hereunder (the "Original Currency") shall not be discharged by an amount paid in another currency (the "Other Currency"), whether pursuant to any judgment expressed in or converted into any Other Currency or in another place except to the extent that such tender or recovery results in the effective receipt by the payee of the full amount of the Original Currency payable to it under this Guaranty Agreement. If for the purpose of obtaining judgment in any court it is necessary to convert a sum due hereunder in the Original Currency into the Other Currency, the rate of exchange that shall be applied shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase Original Currency at the Principal Office with the Other Currency on the Business Day next preceding the day on which such judgment is rendered. The obligation of the Guarantor in respect of any such sum due from it to the Administrative Agent or any Lender hereunder or under any other Loan Document (in this Section 5.06 called an "Entitled Person") shall, notwithstanding the rate of exchange actually applied in rendering such judgment, be discharged only to the extent that on the Business Day following receipt by such Entitled Person of any sum adjudged to be due hereunder in the Other Currency such Entitled Person may in accordance with normal banking procedures purchase and transfer the Original Currency to Toronto with the amount of the judgment currency so adjudged to be due; and the Guarantor hereby, as a separate obligation and notwithstanding any such judgment, agrees jointly and severally to indemnify such Entitled Person against, and to pay such Entitled Person on demand, in the Original Currency, the amount (if any) by which the sum originally due to such Entitled Person in the Original Currency hereunder exceeds the amount of the Original Currency so purchased and transferred. -8- SECTION 5.07 AMENDMENT AND RESTATEMENT. This Amended and Restated Guaranty Agreement amends, restates, supersedes and replaces that certain Guaranty Agreement dated as of March 27, 1998, by and among the parties hereto, and such Guaranty Agreement shall be void and have no further effect. SECTION 5.08 SURVIVAL OF OBLIGATIONS. To the extent that any payments on the Obligations or proceeds of any collateral are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, debtor in possession, receiver or other Person under any bankruptcy law, common law or equitable cause, then to such extent, the Obligations so satisfied shall be revived and continue as if such payment or proceeds had not been received and the Administrative Agent's and the Lenders' Liens, rights, powers and remedies under this Guaranty Agreement and each Loan Document shall continue in full force and effect. In such event, each Loan Document shall be automatically reinstated and the Guarantor shall take such action as may be reasonably requested by the Administrative Agent and the Lenders to effect such reinstatement. SECTION 5.09 SUBJECT TO THE INTERCREDITOR AGREEMENT. This Guaranty Agreement is subject to the terms of the Intercreditor Agreement which (a) subjects the ability of the Lender Group to pursue remedies hereunder to the prior consent of the U.S. Lenders and (b) sets forth a priority for the application of proceeds upon any disposition of amounts received hereunder. SECTION 5.10 STATUS AS SPECIFIED OR DESIGNATED SENIOR INDEBTEDNESS. The Guarantor hereby acknowledges and confirms that: (a) this Guaranty Agreement and the obligations of the Guarantor hereunder are "Senior Indebtedness" and "Specified Senior Indebtedness" under and for purposes of the 95 Indenture; and (b) this Guaranty Agreement and the obligations of the Guarantor hereunder are "Senior Indebtedness" and "Designated Senior Indebtedness" under and for purposes of the 96 Indenture, the 97 Indenture and the 98 Senior Subordinated Indenture; and that as such, the Lender Group is entitled to the rights and privileges afforded holders of Senior Indebtedness, Specified Senior Indebtedness or Designated Senior Indebtedness, as applicable, under each of such Indentures. WITNESS THE EXECUTION HEREOF, effective as of the date first written above. OCEAN ENERGY, INC., a Delaware corporation By: Jonathan M. Clarkson Executive Vice President Chief Financial Officer -9- EX-10.5 4 AMENDED & RESTATED INTERCREDITOR AGREEMENT Exhibit 10.5 AMENDED AND RESTATED INTERCREDITOR AGREEMENT among Ocean Energy, Inc., a Delaware corporation, Ocean Energy, Inc., a Louisiana corporation, Ocean Energy Resources Canada, Ltd., Chase Bank of Texas, National Association, as Administrative Agent and Paying Agent, Morgan Guaranty Trust Company of New York, as Syndication Agent, Barclays Bank PLC, as Documentation Agent, ABN Amro Bank, N.V., Bank Of America National Trust & Savings Association, Paribas, NationsBank, N.A., Societe Generale, Southwest Agency, and Wells Fargo Bank (Texas), N.A., as Co-Agents, The Chase Manhattan Bank Of Canada, as Canadian Agent, and The Lenders Now Or Hereafter Parties Hereto July 8, 1998 TABLE OF CONTENTS ARTICLE I DEFINITIONS.............................................. 2 Section 1.01 Definitions........................................ 2 Section 1.02 Incorporation of U.S. Credit Agreement Definitions. 3 ARTICLE II APPLICATION OF PROCEEDS................................. 3 Section 2.01 Election to Pursue Remedies........................ 3 Section 2.02 Duty of the Paying Agent........................... 4 Section 2.03 Application of Proceeds............................ 5 Section 2.04 Payments by Paying Agent........................... 5 Section 2.05 Notices under Related Documents.................... 5 Section 2.06 Amendments......................................... 6 Section 2.07 Pro Rata Treatment................................. 6 Section 2.08 Voting Procedure................................... 6 Section 2.09 Triggering Event................................... 6 Section 2.10 Bankruptcy Preferences............................. 7 Section 2.11 Property of Obligors............................... 7 Section 2.12 Marshalling........................................ 7 Section 2.13 Lender Dealings; Good Faith........................ 7 ARTICLE III CALCULATION OF INDEBTEDNESS............................ 8 Section 3.01 Notice of Amount of Indebtedness................... 8 Section 3.02 Escrow Account..................................... 8 Section 3.03 Handling of Escrow Account......................... 8 Section 3.04 Currency Conversion................................ 9 ARTICLE IV THE PAYING AGENT........................................ 9 Section 4.01 Appointment of Paying Agent........................ 9 Section 4.02 Nature of Duties of Paying Agent................... 9 Section 4.03 Lack of Reliance on the Paying Agent............... 10 Section 4.04 Certain Rights of the Paying Agent................. 10 Section 4.05 Reliance by Paying Agent........................... 11 Section 4.06 PAYING AGENT'S REIMBURSEMENTS AND INDEMNIFICATION.. 11 Section 4.07 The Paying Agent in its Individual Capacity........ 11 Section 4.08 Creditors as Owners................................ 11 Section 4.09 Successor Paying Agent............................. 12 Section 4.10 Employment of Paying Agent and Counsel............. 12 Section 4.11 Independent Action................................. 12 ARTICLE V MISCELLANEOUS............................................ 13 Section 5.01 Authority.......................................... 13 Section 5.02 Termination........................................ 13 Section 5.03 Notices, etc....................................... 13 Section 5.04 PAYMENT OF EXPENSES, INDEMNITIES, ETC.............. 13 i Section 5.05 Applicable Law..................................... 13 Section 5.06 Entire Agreement................................... 13 Section 5.07 Execution in Counterparts.......................... 14 Section 5.08 Amendment of Defined Instruments................... 14 Section 5.09 References and Titles.............................. 14 Section 5.10 Severability....................................... 14 Section 5.11 Conflict with Loan Documents....................... 14 Section 5.12 Limitation by Law.................................. 14 Section 5.13 Benefit of Agreement; Limitation on Assignment..... 14 ii AMENDED AND RESTATED INTERCREDITOR AGREEMENT THIS AMENDED AND RESTATED INTERCREDITOR AGREEMENT dated as of July 8, 1998 (this "Intercreditor Agreement"), is among: OCEAN ENERGY, INC., a corporation duly organized and validly existing under the laws of the state of Delaware (the "Company"); OCEAN ENERGY, INC., a corporation duly organized and validly existing under the laws of the state of Louisiana ("OEI-Louisiana"); OCEAN ENERGY RESOURCES CANADA, LTD., a company continued under the laws of the Province of British Columbia ("Ocean Canada"); each of the other Persons now or hereafter parties hereto as an Obligor; each of the financial institutions that is now or hereafter a party hereto (individually, a "U.S. Lender" and, collectively, the "U.S. Lenders"); CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, AS ADMINISTRATIVE AGENT for the U.S. Lenders (in such capacity, the "Administrative Agent") and as Paying Agent for the Lender Group, MORGAN GUARANTY TRUST COMPANY OF NEW YORK, AS SYNDICATION AGENT for the U.S. Lenders (in such capacity, the "Syndication Agent"), BARCLAYS BANK PLC, AS DOCUMENTATION AGENT for the Lenders (in such capacity, the "Documentation Agent"), and ABN AMRO BANK, N.V., BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION, PARIBAS, NATIONSBANK, N.A., SOCIETE GENERALE, SOUTHWEST AGENCY AND WELLS FARGO BANK (TEXAS), N.A., AS CO- AGENTS for the Lenders (in such capacity, the "Co-Agents"), THE CHASE MANHATTAN BANK OF CANADA ("Chase Canada"), as administrative agent for the Canadian Lenders (in such capacity, the "Canadian Agent"), each of the lenders now or hereafter parties to the Canadian Credit Agreement (collectively, the "Canadian Lenders"). Recitals A. On the date of this Intercreditor Agreement, the Company, the Administrative Agent, the Syndication Agent, the Documentation Agent, the Co- Agents (the Administrative Agent, the Documentation Agent and the Co-Agents collectively being the "U.S. Agents"), and the U.S. Lenders are entering into that certain Amended and Restated Global Credit Agreement (as the same is from time to time supplemented, amended, restated, extended, or increased herein called the "U.S. Credit Agreement"). B. On the date of this Intercreditor Agreement, Ocean Canada, the Canadian Agent, and the Canadian Lenders are entering into that certain Amended and Restated Credit Agreement (as the same is from time to time supplemented, amended, restated, extended, or increased herein called the "Canadian Credit Agreement"). C. To support, inter alia, the U.S. Indebtedness of the Company under the U.S. Credit Agreement and the Canadian Indebtedness of Ocean Canada under the Canadian Credit Agreement (collectively, the "Credit Agreements") and the other obligations of the Obligors under the Loan Documents, the Obligors will execute and deliver the Loan Documents. D. The U.S. Lenders and the Canadian Lenders (collectively, the "Lenders") and the U.S. Agents and the Canadian Agent (collectively, the "Agents"; and the Paying Agent, the Lenders and the Agents collectively being the "Lender Group") are entering into this Intercreditor Agreement to establish their relative rights with respect to payment of their respective Indebtedness owed by the Obligors, to agree as to the exercise of certain remedies and to appoint Chase Bank of Texas, National Association as Paying Agent for the purposes of dealing with the Loan Documents and apportioning payments among the Lenders and for other purposes as set forth herein. E. The execution and delivery of this Intercreditor Agreement is a condition to the performance by each Lender of its obligations under the Credit Agreement to which it is a party. F. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and to induce the U.S. Agents and the U.S. Lenders to enter into the U.S. Credit Agreement and the Canadian Agent and the Canadian Lenders to enter into the Canadian Credit Agreement, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS Section 1.01 Definitions. The terms defined in the recitals shall have the meanings assigned to those terms in such recitals, and the following terms shall have the meanings assigned as follows: "Acceptance Exposure" means, at any time, the aggregate face amount of all Bankers Acceptances outstanding at such time for which Ocean Canada has not yet reimbursed the Canadian Lenders which have accepted such Bankers Acceptance pursuant to the terms of the Canadian Credit Agreement. "Balance" shall have the meaning assigned such term in Section 3.03. "Business Day" shall mean any day excluding Saturday, Sunday and any other day on which banks are required or authorized to close in Houston, Texas or Toronto. "Canadian Indebtedness" shall mean the Indebtedness (as defined in the Canadian Credit Agreement) and shall include the aggregate Acceptance Exposure. "Canadian Lender Notes" shall mean the Notes issued to the Canadian Lenders under the Canadian Credit Agreement. "Commitments" shall mean the sum of the Aggregate Commitments of the U.S. Lenders under the U.S. Credit Agreement and the Aggregate Commitments of the Canadian Lenders under the Canadian Credit Agreement. "Contingent Indebtedness" shall have the meaning assigned such term in Section 3.03. "Conversion Ratio" shall have the meaning assigned such term in Section 3.04. "Escrow Account" shall have the meaning assigned such term in Section 3.02. 2 "Group" shall mean the U.S. Lenders, as a group of Lenders, or the Canadian Lenders, as a group of Lenders, as the case may be. "Indebtedness" shall mean all U.S. Indebtedness and Canadian Indebtedness, including, but not limited to, all other sums of money which may be hereafter paid or advanced by the Agents or the Lenders under the terms and provisions of this Intercreditor Agreement or the other Loan Documents as such sums of money relate either to the administration, protection and exercise of remedies in connection with this Intercreditor Agreement or the Loan Documents, or to any reimbursement and indemnity provisions contained in this Intercreditor Agreement and the Loan Documents. "Issuing Bank" shall mean, for each of the Letters of Credit, the issuer of such Letter of Credit. "Notes" shall mean the U.S. Lender Notes and the Canadian Lender Notes. "Obligors" shall mean the Company, OEI-Louisiana and Ocean Canada. "Paying Agent" shall mean Chase Bank of Texas, National Association in such capacity, together with all successors in such capacity under the terms of this Intercreditor Agreement. "Pro Rata Share" shall mean as to each holder of any of the Indebtedness the percentage that the Indebtedness held by such holder represents of all Indebtedness. "Proceeds" shall mean all cash proceeds and other Property received by the Paying Agent or any of the Lenders from or for the account of any Obligor, from whatever source. "Triggering Event" shall have the meaning assigned such term in Section 2.09. "U.S. $ Amount" shall have the meaning assigned such term in Section 3.04. "U.S. Indebtedness" shall mean the Indebtedness, including but not limited to, the amount of the LC Exposure which is not at such time a part of the fixed Indebtedness. "U.S. Lender Notes" shall mean the Notes issued to the U.S. Lenders under the U.S. Credit Agreement. Section 1.02 Incorporation of U.S. Credit Agreement Definitions. Capitalized terms not defined herein shall have the meaning assigned such terms in the U.S. Credit Agreement. ARTICLE II APPLICATION OF PROCEEDS Section 2.01 Election to Pursue Remedies. (a) Upon the occurrence and during the continuance of any Triggering Event, the Paying Agent shall, subject to Section 2.02 and Article IV, take or, as appropriate, direct the appropriate trustee or agent to take any and all actions provided for in the Loan Documents 3 relating to the pursuit of remedies, including the foreclosure or disposition of collateral, if any, only if such actions are authorized as provided in this Section 2.01. (b) Upon the occurrence and during the continuance of any Triggering Event, the Lenders shall vote on whether or not to pursue any remedy or remedies available to them at law or otherwise, including whether or not to foreclose on or dispose of collateral, if any. If the Required Lenders at such time vote to pursue any particular remedy or remedies, including foreclosure or disposition of collateral, instructions specifying the particular action to be taken from the Required Lenders shall be delivered to the Paying Agent. Upon receipt by the Paying Agent of such instructions from the Required Lenders, with indemnities appropriate for such instructions as provided in Section 4.04, the Paying Agent shall immediately commence to take or direct the instructed actions (and continue to take such actions) relating such remedies. (c) Without regard to the occurrence of a Triggering Event, upon the written instruction of the Required Lenders, with indemnities appropriate for such instructions as provided in Section 4.04, the Paying Agent shall (i) take or direct any action provided for in the Loan Documents (other than foreclosure or disposition of the collateral) or proceed to enforce, or direct the enforcement of, consistent with the Loan Documents and applicable law (other than foreclosure or disposition of the collateral), the rights or powers provided in the Loan Documents and under applicable law for the benefit of the Lender Group and shall give such notice or direction or shall take such action or exercise such right or power hereunder or under any of the Loan Documents incidental thereto as shall be reasonably specified in such instructions and consistent with the terms of the Loan Documents and this Intercreditor Agreement; and/or (ii) execute such instruments or agreements or take such other action in connection with the Loan Documents as may be deemed reasonably necessary or appropriate by the Required Lenders and consistent with the terms of the Loan Documents and this Intercreditor Agreement. Such action may include, but is not limited to (x) the giving of any notice, approval, consent or waiver which may be called for under the Loan Documents, (y) the requiring of the execution and delivery of additional Loan Documents, or (z) employing agents or directing trustees in order to accomplish the actions requested. (d) Nothing in this Section 2.01 shall impair the right of a Lender to exercise its rights of set-off existing at law or under the Credit Agreements, but in any event, subject to the terms thereof. Section 2.02 Duty of the Paying Agent. (a) The Paying Agent shall not be obligated to follow any instructions of any one or more of the Lenders if: (i) such instructions conflict with the provisions of this Intercreditor Agreement or any other Loan Document or any applicable law or (ii) the Paying Agent has not been adequately indemnified to its satisfaction. Nothing in this Article II shall impair the right of the Paying Agent in its discretion to take any action, to the extent that the consent of any of the Lenders is not required or to the extent such action is not prohibited by the terms hereof, which it deems proper and consistent with the instructions given by the Lenders as provided for herein. In the absence of written instructions, containing the appropriate indemnities, from the Lenders or Required Lenders as appropriate for any particular matter, the Paying Agent shall have no 4 duty to take or refrain from taking any action unless such action or inaction is explicitly required by the terms of this Intercreditor Agreement. (b) Beyond its duties expressly provided herein or in any Loan Document and its duties to account to the Lender Group and/or the Obligors for monies and other Property received by it hereunder or under any Loan Document, the Paying Agent shall not have any implied duty to the Lender Group or any Obligor as to any Property belonging to an Obligor (whether or not the same constitutes collateral) in its possession or control or in the possession or control of any of its agents or nominees, or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto. Section 2.03 Application of Proceeds. (a) Upon the occurrence and during the continuance of a Triggering Event, all Proceeds shall be applied as follows and in accordance with Section 3.03: (i) First, to the pro rata payment of costs and expenses reasonably incurred by the Paying Agent, the Agents or any other Lender in connection with any action taken or proceeding brought, including reasonable legal expenses and attorneys' fees, and of all Taxes (other than Excluded Taxes) or assessments. (ii) Second, any Balance remaining shall be applied to repay the Indebtedness or held in escrow as specified in Section 3.03. (iii) Finally, the payment of surplus proceeds, if any, to any Person that may be lawfully entitled to receive the same, including without limitation, an Obligor, and in the order of priority specified for by any Governmental Requirement. (b) At any time other than after the occurrence and during continuance of a Triggering Event, payments made to the Lenders may be applied as provided in the Credit Agreements. Section 2.04 Payments by Paying Agent. All payments by the Paying Agent hereunder shall be delivered to the administrative agents under the Credit Agreements for distribution in the manner set forth therein. Section 2.05 Notices under Related Documents. The Paying Agent shall deliver to each Lender promptly upon receipt thereof, duplicates or copies of all material notices, requests and other instruments received by the Paying Agent under or pursuant to this Intercreditor Agreement or any Loan Document, to the extent that the same shall not have been previously furnished to such Lender pursuant hereto or thereto. Promptly upon obtaining such knowledge, each Lender agrees: (a) to deliver to the Paying Agent, at the same time it makes delivery to the Obligors, a copy of any notice of default, notice of intent to accelerate or notice of acceleration with respect to the Indebtedness subject to this Intercreditor Agreement; (b) to deliver to the Paying Agent, at the same time it makes delivery to any other Person, a copy of any notice of the commencement of any judicial proceeding and a copy of any other notice with respect to the exercise of remedies with respect to the Indebtedness subject to this Intercreditor Agreement. 5 The Paying Agent agrees to deliver to each Lender any notice or other communication received by it from any Lender pursuant to clause (a) or (b) of this Section 2.05. Section 2.06 Amendments. Amendments, modifications, supplements, waivers, consents and approvals of or in connection with this Intercreditor Agreement or any other Loan Document (other than the Credit Agreements) may be effectuated only upon the written consent of the Required Lenders (and, if the rights or duties of the Paying Agent and the Agents or any Obligors are affected thereby, by the Paying Agent and the Agents or the applicable Obligor, as the case may be). Amendments, modifications, supplements, waivers, consents and approvals of or in connection with the Credit Agreements shall be effectuated only in accordance with the terms contained therein. Section 2.07 Pro Rata Treatment. The Lenders hereby agree among themselves that (a) prior to the occurrence and continuance of a Triggering Event, each Lender shall be entitled to receive and retain for its own account scheduled payments or voluntary prepayments of principal, interest, fees and premium, if any, all in compliance with the Credit Agreements, and (b) after the occurrence and during the continuance of a Triggering Event, all Proceeds shall be applied by the Paying Agent and shared by Lenders in accordance with the respective Pro Rata Share held by each of them and in accordance with Section 2.03(a). In the event that any Lender shall obtain payment after the occurrence and during the continuance of a Triggering Event, whether in whole or in part, from any source in respect of its portion of the Indebtedness, including without limitation payments by reason of the exercise of its right of offset, banker's lien, general lien or counterclaim, such Lender shall promptly pay to the Paying Agent such amount for application in accordance with Section 2.03(a). Section 2.08 Voting Procedure. Notwithstanding anything to the contrary herein, in the Credit Agreements or in any other Loan Document, the Lenders agree that for purposes of any provision hereof or thereof that requires a vote of the Required Lenders, each Lender shall have the right to vote independently of the other Lenders in its Group. When this Intercreditor Agreement requires a vote of the Required Lenders, the Paying Agent shall poll the Lenders in order to determine the vote of the Required Lenders (and such vote shall be binding upon the Lenders who are not among the Required Lenders). The Obligors and the Lender Group may rely on the Paying Agent with regard to any such vote without any duty of further inquiry. Section 2.09 Triggering Event. The occurrence of any of the following shall constitute a "Triggering Event": (a) The occurrence and continuance of an Event of Default specified in Sections 10.01(f), (g), and (h) of the U.S. Credit Agreement as it relates to the Company or any Restricted Subsidiary, or (b) The Paying Agent shall have received from either the Administrative Agent, the Canadian Agent or the Required Lenders, as appropriate, written advice, which advice shall reference this Section 2.09, (i) that an Event of Default has occurred and is continuing and (ii) that the unpaid principal amount of the Notes and all interest accrued and unpaid thereon have been declared to be then due and payable. 6 Section 2.10 Bankruptcy Preferences. If any payment actually received by any member of the Lender Group is subsequently invalidated, declared to be fraudulent or preferential or set aside and is required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state, provincial or Federal law, common law, or equitable cause, then the Paying Agent shall distribute to such Person from the Balance, exclusive of any amount in the Escrow Account in accordance with Section 3.03, an amount equal to such payment. If, due to previous disbursements to the Lender Group pursuant to Section 2.03(a), the Balance then held by the Paying Agent is insufficient for such purpose, then each other member of the Lender Group shall pay to such Person upon demand an amount equal to a ratable portion of such payment according to the aggregate amounts distributed to each member of the Lender Group by the Paying Agent. Section 2.11 Property of Obligors. The Lenders agree that all the provisions of this Intercreditor Agreement shall apply to any and all Properties and rights of the Obligors or any other Obligor in which the Paying Agent (in its capacity as such), any Agent or any Lender at anytime acquires a right of set-off or Lien, whether pursuant to the Loan Documents, the Credit Agreements or a judgment, including, without limitation, real property or rights in, on or over real property, notwithstanding any provision to the contrary in any mortgage, leasehold mortgage or other document purporting to grant or perfect any Lien in favor of any Lender, any Agent, or the Paying Agent. Section 2.12 Marshalling. The Paying Agent shall not be required to marshal any present or future security for (including without limitation any collateral described in any of the Loan Documents), or guaranties of the Indebtedness or any part or portion thereof, or to resort to such security or guaranties in any particular order; and all rights in respect of such securities and guaranties shall be cumulative and in addition to all other rights, however existing or arising. To the extent that they lawfully may, each Obligor, Agent and Lender hereby agrees that it will not invoke any law relating to the marshaling of collateral which might cause delay or impede the enforcement of the Lender Group's rights under the Loan Documents or under any other instrument evidencing any of the Indebtedness or under which any of the Indebtedness is outstanding or by which any of the Indebtedness is secured or guaranteed. Section 2.13 Lender Dealings; Good Faith. Nothing contained in this Intercreditor Agreement shall prevent either Group of Lenders from dealing directly or negotiating with the other Group for any purpose, including, but not limited to, the purpose of attempting to reach agreement as to any vote or proposed vote relating to the Paying Agent's actions hereunder, whether or not any Triggering Event or other Default or Event of Default has occurred. Each U.S. Agent and U.S. Lender covenants and agrees with and for the benefit of the Canadian Agent and each Canadian Lender, and the Canadian Agent and each Canadian Lender covenants and agrees with and for the benefit of each U.S. Agent and U.S. Lender, that it will, in taking any action under this Intercreditor Agreement or directing the Paying Agent to exercise any remedy hereunder or under any other Loan Document, take such action or make such direction in good faith and in a commercially reasonable manner and not for the purpose of hindering, delaying, obstructing or preventing the exercise by the other of its rights under the Loan Documents. 7 ARTICLE III CALCULATION OF INDEBTEDNESS Section 3.01 Notice of Amount of Indebtedness. Upon receipt of any Proceeds to be distributed pursuant to Section 2.03(a)(ii), the Paying Agent shall give the Lenders notice thereof, and each Lender shall within five (5) Business Days notify the Paying Agent of the amount of Indebtedness owing to such Lender. Such notification shall state the amount of its Indebtedness, how much is then due and owing, and how much is Contingent Indebtedness. Each Lender with Contingent Indebtedness shall describe the status of such Indebtedness. If requested by the Paying Agent, each Lender shall demonstrate that the amounts set forth in its notice are actually owing to such Lender to the satisfaction of the Paying Agent. Section 3.02 Escrow Account. Prior to taking any action to enforce any Lien or remedy under any Loan Document, or requesting cash collateral for the Letters of Credit or Bankers Acceptances, the Paying Agent shall open an escrow account (the "Escrow Account") at its banking quarters in Houston, Texas (or such other city where any successor may maintain banking quarters) designated the "OEI Collateral Account." Section 3.03 Handling of Escrow Account. Upon each receipt by the Paying Agent of Proceeds and after payment therefrom of all items referred to in Section 2.03(a)(i), remaining Proceeds ("Balance") shall be applied as provided in this Section 3.03. If at such time, there exists any Indebtedness which is contingent in amount, including, without limitation, contingent amounts of LC Exposure, but not including the Acceptance Exposure (such Indebtedness being "Contingent Indebtedness"), the Paying Agent shall (with the information provided under Section 3.01) determine the amount of all Indebtedness then outstanding, including, without limitation, Contingent Indebtedness. The Balance shall be applied as follows: (a) If no Contingent Indebtedness is outstanding, then all such Balance shall be applied to repay or prepay the amount of the Indebtedness then outstanding until the Indebtedness shall have been paid in full. (b) If there exists Contingent Indebtedness, the Paying Agent shall (i) deposit in the Escrow Account a portion of such Balance equal to the Contingent Indebtedness divided by total Indebtedness (until such time as the amount on deposit in the Escrow Account equals the maximum amount of the Contingent Indebtedness), and (ii) apply the remaining Balance to repay or prepay the amount of the Indebtedness then outstanding until the Indebtedness shall have been paid in full. Thereafter, any further remaining Balance shall be returned or applied as provided in Section 2.03(a)(iii). (c) If at any time Contingent Indebtedness or any part thereof becomes Indebtedness which is no longer contingent, any funds held in the Escrow Account up to the amount (or pro rata amount based upon the total amount of remaining Contingent Indebtedness if the Escrow Amount is less than the amount of the remaining Contingent Indebtedness) of such Indebtedness which has become fixed (or pro rata amount based upon the total amount of remaining Contingent Indebtedness) shall be distributed pro rata to the holders of such previously Contingent Indebtedness. If all of the fixed Indebtedness has been paid in full and the Paying Agent determines that the amount of monies held in the Escrow Account exceeds the sum of the 8 Contingent Indebtedness outstanding at such time, such excess shall be returned or applied as provided in Section 2.03(a)(iii). Section 3.04 Currency Conversion. To the extent that calculations under this Intercreditor Agreement involve U.S. and Canadian currency (or any other currency), the Paying Agent shall, at the time of such calculation, determine all amounts based on U.S. dollars, using a conversion ratio (the "Conversion Ratio") determined by it in good faith (the "U.S. $ Amount"). The amount of distributions of a Lender's Pro Rata Share shall be based upon the U.S. $ Amount, but in the case of a Canadian Lender shall be distributed in and converted to a Canadian dollar amount calculated by using the Conversion Ratio. ARTICLE IV THE PAYING AGENT Section 4.01 Appointment of Paying Agent. Each Lender hereby designates Chase Bank of Texas, National Association to act as the Paying Agent for the Lenders with respect to any collateral pledge under any of the Loan Documents, the enforcement of any Liens granted thereunder and the collection of Proceeds following the disposition of any such collateral. Each Lender hereby authorizes the Paying Agent to designate The Chase Manhattan Bank of Canada to act as the agent for the Paying Agent on behalf of the Lenders with respect to the Canadian assets under the Loan Documents. Each Lender hereby authorizes the Paying Agent to take such action on its behalf under the provisions of this Intercreditor Agreement and the Loan Documents and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to either Chase Bank of Texas, National Association, as Administrative Agent, or The Chase Manhattan Bank of Canada, as Canadian Agent, or required of the Paying Agent by the terms hereof and such other powers as are reasonably incidental thereto. The Paying Agent may perform any of its duties hereunder by or through its agents or employees. The Paying Agent agrees to act as Paying Agent upon the express terms and conditions contained in this Article IV. Section 4.02 Nature of Duties of Paying Agent. The Paying Agent shall have no duties or responsibilities, except those expressly set forth in this Intercreditor Agreement or any Loan Document. The Paying Agent shall have and may exercise such powers hereunder and under the Loan Documents as are specifically delegated to the Paying Agent by the terms hereof or to either Chase Bank of Texas, National Association, as Administrative Agent, or The Chase Manhattan Bank of Canada, as Canadian Agent thereunder, together with such powers as are reasonably incidental thereto. Neither the Paying Agent nor any of its directors, officers, employees or agents shall be liable to the Lenders for any action taken or omitted by it as such hereunder or under the Loan Documents, unless caused solely by its or their gross negligence or willful misconduct. The duties of the Paying Agent shall be mechanical and administrative in nature; and the Paying Agent shall not have by reason of this Intercreditor Agreement a fiduciary relationship in respect of any Lender. Nothing in this Intercreditor Agreement, expressed or implied, is intended to or shall be so construed as to impose upon the Paying Agent any Indebtedness in respect of this Intercreditor Agreement and the other Loan Documents except as expressly set forth herein. 9 Section 4.03 Lack of Reliance on the Paying Agent. (a) Independently and without reliance upon the Paying Agent or any other Lender, each Lender, to the extent it deems appropriate, has made (i) its own independent investigation of the financial condition and affairs of the Obligors based on such documents and information as it has deemed appropriate in connection with the taking or not taking of any action in connection herewith, and (ii) its own appraisal of the credit worthiness of the Obligors. Each Lender also acknowledges that it will, independently and without reliance upon the Paying Agent or any other Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Intercreditor Agreement, the Indebtedness or the Loan Documents. Except as expressly provided in this Intercreditor Agreement and the other Loan Documents, the Paying Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information concerning the affairs, financial condition or business of the Obligors or any of the Company's Subsidiaries which may come into the possession of the Paying Agent or any of its Affiliates whether now in its possession or in its possession at any time or times hereafter; and the Paying Agent shall not be required to keep itself informed as to the performance or observance by any Obligor of this Intercreditor Agreement, any Loan Document or any other document referred to or provided for herein or to inspect the Properties or books of any Obligor. (b) The Paying Agent shall not (i) be responsible to any Lender for any recitals, statements, information, representations or warranties herein, in any Loan Document, or in any document, certificate or other writing delivered in connection herewith or therewith or for the execution, effectiveness, genuineness, validity, enforceability, collectability, priority or sufficiency of this Intercreditor Agreement, the Indebtedness or the Loan Documents or the financial condition of the Obligors; or (ii) be required to make any inquiry concerning the performance or observance of any of the terms, provisions or conditions of this Intercreditor Agreement, the Indebtedness or the Loan Documents, the financial condition of the Obligors, or the existence or possible existence of any Default or Event of Default. Section 4.04 Certain Rights of the Paying Agent. If the Paying Agent shall request instructions from the Lenders with respect to any act or action (including the failure to act) in connection with this Intercreditor Agreement, the Indebtedness and the Loan Documents, the Paying Agent shall be entitled to refrain from such act or taking such action unless and until the Paying Agent shall have received instructions from the Required Lenders pursuant to the terms hereof; and the Paying Agent shall not incur liability to any Person by reason of so refraining. Without limiting the foregoing, no Lender shall have any right of action whatsoever against the Paying Agent as a result of the Paying Agent acting or refraining from acting under this Intercreditor Agreement or the Loan Documents in accordance with the written instructions given in accordance with this Intercreditor Agreement and such instructions and any action taken or failure to act pursuant thereto shall be binding on all the Lenders. Except for action expressly required of the Paying Agent pursuant to the terms hereof, the Paying Agent shall be fully justified in failing or refusing to take any action hereunder or under the Loan Documents unless it shall first be indemnified to its satisfaction by the Obligors or the Lenders against any and all liability and expense which may be incurred by the Paying Agent by reason of taking or continuing to take any such action. Notwithstanding any other provision of this Article IV or 10 any indemnity or instructions provided by any or all of the Lenders, the Paying Agent shall not be required to take any action which exposes the Paying Agent to personal liability or which is contrary to this Intercreditor Agreement, the Loan Documents or applicable law. Section 4.05 Reliance by Paying Agent. The Paying Agent shall be entitled to rely, and shall be fully protected in relying, upon any Note or other instrument evidencing the Indebtedness, writing, resolution, notice, statement, certificate, telex, teletype or telecopier message, cablegram, radiogram, order or other documentary, teletransmission or telephone message believed by it to be genuine and correct and to have been signed, sent or made by the proper Person. The Paying Agent may consult with independent legal counsel (which shall not be counsel for the Obligors), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts. Section 4.06 PAYING AGENT'S REIMBURSEMENTS AND INDEMNIFICATION. TO THE EXTENT THE PAYING AGENT IS NOT REIMBURSED BY THE COMPANY OR OCEAN CANADA, EACH LENDER WILL (WITHOUT DUPLICATION IN THE CASE OF A U.S. LENDER AND ITS AFFILIATED CANADIAN LENDER) REIMBURSE AND INDEMNIFY THE PAYING AGENT, IN PROPORTION TO ITS GLOBAL COMMITMENT PERCENTAGE, FOR AND AGAINST ANY AND ALL INDEMNITY MATTERS WHICH MAY BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST THE PAYING AGENT IN PERFORMING ITS DUTIES HEREUNDER OR UNDER ANY LOAN DOCUMENT OR OTHERWISE IN CONNECTION HEREWITH OR THEREWITH, INCLUDING LOSSES OCCURRING FROM THE ORDINARY AND/OR COMPARATIVE NEGLIGENCE OF THE PAYING AGENT, IN ANY WAY RELATING TO OR ARISING OUT OF THIS INTERCREDITOR AGREEMENT; PROVIDED THAT NO LENDER SHALL BE LIABLE FOR ANY PORTION OF SUCH LIABILITIES, INDEBTEDNESS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS RESULTING SOLELY FROM THE PAYING AGENT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. Section 4.07 The Paying Agent in its Individual Capacity. With respect to its Indebtedness under the Credit Agreements and its Indebtedness, the Paying Agent shall have the same rights and powers hereunder as any other Lender and may exercise the same as though it were not performing the duties specified herein; and the terms "Lenders", "Required Lenders", or any similar terms shall, unless the context clearly otherwise indicates, include Chase Bank of Texas, National Association (or any successor Paying Agent), in its individual capacity as and to the extent it is a holder of any Note or is an Issuing Bank and not in its capacity as an Agent or as the Paying Agent. The Paying Agent may accept deposits from, lend money to, and generally engage in any kind of banking, trust, financial advisory or other business with the Obligors or any Affiliate of the Obligors as if it were not performing the duties specified herein, and may accept fees and other consideration from the Obligors for services in connection with this Intercreditor Agreement and otherwise without having to account for the same to the Lenders. Section 4.08 Creditors as Owners. The Paying Agent may deem and treat each Lender as the owner of such Lender's Indebtedness for all purposes hereof unless and until the Paying 11 Agent is notified of a change in Lenders pursuant to the terms of Section 12.06 of the U.S. Credit Agreement or Section 12.03 of the Canadian Credit Agreement, as applicable. Section 4.09 Successor Paying Agent. (a) The Paying Agent may resign at any time by giving sixty (60) days prior written notice thereof to the Lender Group, the Company and Ocean Canada and may be removed at any time with cause by the Required Lenders, which resignation or removal shall be effective upon the appointment of a successor to the Paying Agent. Upon any such resignation or removal, the Required Lenders shall have the right to appoint a successor Paying Agent. If within thirty (30) days after the retiring Paying Agent's giving of notice of resignation or the Required Lenders' removal of the retiring Paying Agent, no successor Paying Agent shall have been so appointed by the Required Lenders and accepted such appointment, then, the retiring Paying Agent may, on behalf of the Lenders, appoint a successor Paying Agent, which shall be a bank which maintains an office in the United States of America, or a commercial bank organized under the laws of the United States of America or of any State thereof, or any Affiliate of such bank, having a combined capital and surplus of at least $200,000,000 as of the date of its most recent financial statements. (b) Upon the acceptance of any appointment as Paying Agent hereunder by a successor Paying Agent, such successor Paying Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Paying Agent, and the retiring Paying Agent shall be discharged from its duties and Indebtedness under this Intercreditor Agreement. After any retiring Paying Agent's resignation or removal hereunder as Paying Agent, the provisions of this Intercreditor Agreement shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Paying Agent under this Intercreditor Agreement. Section 4.10 Employment of Paying Agent and Counsel. The Paying Agent may execute any of its duties as Paying Agent hereunder or under the Loan Documents by or through employees, agents, and attorneys-in-fact and shall not be answerable to the Lenders for the default or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care, provided that the Paying Agent shall always be obligated to account for moneys or securities received by it or its authorized agents. The Paying Agent shall be entitled to advice of independent counsel concerning all matters pertaining to the agency hereby created and its duties hereunder or under the Loan Documents. Section 4.11 Independent Action. Each Lender agrees that no Lender or Agent other than the Paying Agent shall have any right individually to realize upon any Liens granted by the Loan Documents or to otherwise enforce or exercise any remedy in respect of the Loan Documents (other than the right of set-off at law or specified in the Credit Agreements, but in any event, subject to the terms thereof), it being understood and agreed that such remedies may be exercised only by the Paying Agent for the ratable benefit of the Lender Group. Each Agent and Lender further agrees that it shall not individually institute any judicial action pertaining to the Loan Documents or exercise any other remedy (other than the right of set-off at law or specified in the Credit Agreements, but in any event, subject to the terms thereof), pertaining to the Loan Documents, except with the consent of the Required Lenders. 12 ARTICLE V MISCELLANEOUS Section 5.01 Authority. The parties hereto represent and warrant that they have all requisite power to, and have been duly authorized to, enter into this Intercreditor Agreement. Section 5.02 Termination. This Intercreditor Agreement shall terminate upon receipt by the Paying Agent of evidence satisfactory to it of (a) the payment (or prepayment) in full of the principal of and the premium, if any, and interest on all Indebtedness, (b) the termination of the Commitments in the Credit Agreements, and (c) the termination of the Loan Documents pursuant to the terms of the Credit Agreements. Section 5.03 Notices, etc. All notices and other communications hereunder shall be given in writing and shall be given to such Person at its address or telecopy number as set forth on the signature pages of the Credit Agreements or such other address or telecopy number such Person may hereafter specify by notice to the Paying Agent (who shall promptly notify the Obligors and the other Lenders). Each notice or other communication shall be effective (a) if given by mail, upon receipt, (b) if given by telecopier during regular business hours, once such telecopy is transmitted to the telecopy number provided in writing to the Paying Agent by each Lender and by each Obligor, respectively, or (c) if given by any other means, upon receipt; provided that notices to the Paying Agent are not effective until received. Section 5.04 PAYMENT OF EXPENSES, INDEMNITIES, ETC. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE OBLIGORS SHALL INDEMNIFY THE AGENTS AND THE LENDERS IN ACCORDANCE WITH THE TERMS OF THE CREDIT AGREEMENTS AND THE OBLIGORS HEREBY AGREE THAT ALL INDEMNITIES SET FORTH IN THE CREDIT AGREEMENTS SHALL ALSO RUN IN FAVOR OF THE PAYING AGENT. IF AND TO THE EXTENT THAT THE INDEBTEDNESS OF THE OBLIGORS UNDER THIS SECTION 5.04 OR UNDER THE RESPECTIVE INDEMNITY PROVISIONS OF THE CREDIT AGREEMENTS ARE UNENFORCEABLE FOR ANY REASON, THE OBLIGORS HEREBY AGREE TO MAKE THE MAXIMUM CONTRIBUTION TO THE PAYMENT AND SATISFACTION OF SUCH INDEBTEDNESS WHICH IS PERMISSIBLE UNDER APPLICABLE LAW. THE OBLIGORS' INDEBTEDNESS UNDER THIS SECTION SHALL SURVIVE ANY TERMINATION OF THIS INTERCREDITOR AGREEMENT AND THE PAYMENT OF THE INDEBTEDNESS, BUT SHALL TERMINATE UPON THE TERMINATION OF THE INDEMNITIES CONTAINED IN THE CREDIT AGREEMENTS. Section 5.05 Applicable Law. THIS INTERCREDITOR AGREEMENT (INCLUDING, BUT NOT LIMITED TO, THE VALIDITY AND ENFORCEABILITY HEREOF AND THEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS. Section 5.06 Entire Agreement. The Notes, this Intercreditor Agreement and the other Loan Documents embody the entire agreement and understanding between the Lenders, the Agents and the Obligors and supersede all prior agreements and understandings between such 13 parties relating to the subject matter hereof and thereof. There are no unwritten oral agreements between the parties. Section 5.07 Execution in Counterparts. This Intercreditor Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Any signature page of a counterpart may be detached therefrom without impairing the legal effect of the signatures thereon and attached to another counterpart identical in form thereto but having attached to it one or more additional signature pages signed by other parties. Section 5.08 Amendment of Defined Instruments. Unless the context otherwise requires or unless otherwise provided herein, the terms defined in this Intercreditor Agreement which refer to a particular agreement, instrument or document also refer to and include all renewals, extensions, increases, modifications, supplements, amendments, and restatements of such agreement, instrument or document; provided that nothing contained in this section shall be construed to authorize any such renewal, extension, increases, modification, supplement, amendment or restatement. Section 5.09 References and Titles. All references in this Intercreditor Agreement to Schedules, articles, sections, subsections and other subdivisions refer to the Schedules, articles, sections, subsections and other subdivisions of this Intercreditor Agreement unless expressly provided otherwise. Titles appearing at the beginning of any subdivisions are for convenience only and do not constitute any part of such subdivisions and shall be disregarded in construing the language contained in such subdivisions. Section 5.10 Severability. If any term or provision of this Intercreditor Agreement shall be determined to be illegal or unenforceable, all other terms and provisions of this Intercreditor Agreement shall nevertheless remain effective and shall be enforced to the fullest extent permitted by applicable law. Section 5.11 Conflict with Loan Documents. If there is a conflict between the terms and provisions contained in the Credit Agreements, the Notes, any instrument evidencing the Indebtedness or any Loan Document with the terms and provisions contained herein, the terms and provisions contained in this Intercreditor Agreement shall control. Section 5.12 Limitation by Law. All rights, remedies and powers provided herein may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law; and all the provisions hereof are intended (a) to be subject to all applicable mandatory provisions of law which may be controlling and (b) to be limited to the extent necessary so that they will not render this Intercreditor Agreement or any Loan Document invalid under the provisions of any applicable law. Section 5.13 Benefit of Agreement; Limitation on Assignment. The terms and provisions of this Intercreditor Agreement shall be binding upon and inure to the benefit of the Agents and each Lender and their respective successors and assigns. Except as stated in the last sentence of Section 2.08 hereof, the terms and provisions of this Intercreditor Agreement shall not inure to the benefit of, nor be relied upon by, the Obligors or their successors or assigns. No 14 Lender shall assign, transfer or sell any part of its portion of the Indebtedness, unless in connection with such assignment, transfer or sale, such assignee, transferee or purchaser shall first become a party to this Intercreditor Agreement. 15 IN WITNESS WHEREOF, the parties have caused their duly authorized representatives to execute this Intercreditor Agreement as of the date first above written. LENDERS AND AGENTS: Chase Bank of Texas, National Association, individually and as Administrative Agent By:____________________________________________________ Name:__________________________________________________ Title:_________________________________________________ Morgan Guaranty Trust Company of New York, individually and as Syndication Agent By:____________________________________________________ Name:__________________________________________________ Title:_________________________________________________ Barclays Bank PLC, individually and as Documentation Agent By:____________________________________________________ Name:__________________________________________________ Title:_________________________________________________ 16 ABN AMRO BANK, N.V., individually and as Co-Agent By:____________________________________________________ Charles W. Randall Senior Vice President By:____________________________________________________ Cheryl Lipshutz Senior Vice President BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, individually and as Co-Agent By:____________________________________________________ Name:__________________________________________________ Title:_________________________________________________ Paribas, individually and as Co-Agent By:____________________________________________________ Doug Liftman Vice President By:____________________________________________________ Barton D. Schouest Managing Director NATIONSBANK, N.A., individually and as Co-Agent By:____________________________________________________ Paul Squires Senior Vice President 17 SOCIETE GENERALE, SOUTHWEST AGENCY, individually and as Co-Agent By:____________________________________________________ Richard Erbert Vice President WELLS FARGO BANK (TEXAS), N.A., individually and as Co- Agent By:____________________________________________________ Alan Alexander Vice President - Energy Department THE CHASE MANHATTAN BANK OF CANADA, individually and as Canadian Agent By:____________________________________________________ Name:__________________________________________________ Title:_________________________________________________ Toronto Dominion Bank By:____________________________________________________ Name:__________________________________________________ Title:_________________________________________________ 18 Chase Bank of Texas, National Association, as Paying Agent By:____________________________________________________ Name:__________________________________________________ Title:_________________________________________________ Hibernia National Bank By:____________________________________________________ Colleen McEvoy Vice President TORONTO DOMINION (TEXAS) INC. By:____________________________________________________ Name:__________________________________________________ Title:_________________________________________________ U.S. Bank National Association By:____________________________________________________ Name:__________________________________________________ Title:_________________________________________________ Bank One, Texas, N.A. By:____________________________________________________ Name:__________________________________________________ Title:_________________________________________________ 19 Credit Suisse First Boston By:____________________________________________________ Name:__________________________________________________ Title:_________________________________________________ By:____________________________________________________ Name:__________________________________________________ Title:_________________________________________________ First National Bank of Commerce By:____________________________________________________ David R. Reid Senior Vice President BANK OF NEW YORK By:____________________________________________________ Name:__________________________________________________ Title:_________________________________________________ Southwest Bank of Texas, N.A. By:____________________________________________________ A. Stephen Kennedy Vice President/Manager Energy Lending 20 The Obligors hereby execute this Intercreditor Agreement to evidence their agreement that: 1. The Obligors shall be bound by all of the terms and provisions of this Intercreditor Agreement. 2. The Obligors acknowledge and agree that the terms of this Intercreditor Agreement shall control over the terms of the Credit Agreements, the Notes, the instruments evidencing the Indebtedness and the Loan Documents to the extent of any conflict relating to the relative rights of the Agents and the Lenders. 3. THE INDEMNITY AND REIMBURSEMENT PROVISIONS CONTAINED IN SECTION 5.04 SHALL APPLY TO ALL MATTERS UNDER THIS INTERCREDITOR AGREEMENT AND THE OBLIGORS AGREE TO INDEMNIFY AND REIMBURSE THE PAYING AGENT IN ACCORDANCE WITH THE TERMS THEREOF. 4. Except as stated in the last sentence of Section 2.08 hereof, the terms and provisions of this Intercreditor Agreement shall inure solely to the benefit of the Agents, each Lender and their respective successors and assigns and the terms and provisions of this Intercreditor Agreement shall not inure to the benefit of nor be enforceable by the Obligors or their successors or assigns. This Intercreditor Agreement may be amended as provided herein without the necessity of the Obligors joining in any such amendment, provided, that the Obligors shall not be bound by any amendment which would have the effect of increasing their Indebtedness and indemnities hereunder or materially affecting their rights or duties under the Loan Documents unless they shall have consented to such amendment. 5. Each Obligor at its expense will execute, acknowledge and deliver all such agreements and instruments and take all such action as the Paying Agent or the Required Lenders from time to time may reasonably request in order further to effectuate the purposes of this Intercreditor Agreement and to carry out the terms hereof. OBLIGORS: OCEAN ENERGY, INC., a Delaware corporation By:____________________________________________________ Jonathan M. Clarkson Executive Vice President Chief Financial Officer 21 OCEAN ENERGY RESOURCES CANADA, LTD. By:____________________________________________________ Jonathan M. Clarkson Executive Vice President Chief Financial Officer OCEAN ENERGY, INC., a Louisiana corporation By:____________________________________________________ Jonathan M. Clarkson Executive Vice President Chief Financial Officer 22 EX-10.6 5 AMENDED RESTATED AGREEMENT - RESOURCES CANADA EXHIBIT 10.6 AMENDED AND RESTATED CREDIT AGREEMENT Dated as of July 8, 1998 Among OCEAN ENERGY RESOURCES CANADA, LTD., as the Company, THE CHASE MANHATTAN BANK OF CANADA, as Administrative Agent, and THE LENDERS PARTIES HERETO TABLE OF CONTENTS
Page Article I: Definitions and Accounting Matters................................................ 1 Section 1.01 Terms Defined Recitals....................................................... 1 Section 1.02 Certain Defined Terms........................................................ 1 Section 1.03 Other Defined Terms.......................................................... 5 Section 1.04 Accounting Terms and Determinations.......................................... 5 Article II: Commitments...................................................................... 5 Section 2.01 Loans and Bankers' Acceptances............................................... 5 Section 2.02 Borrowings, Renewals, Conversions, and Issuances............................. 7 Section 2.03 Changes of Commitments....................................................... 8 Section 2.04 Commitment Fee and Other Fees................................................ 9 Section 2.05 Lending Offices.............................................................. 9 Section 2.06 Several Obligations.......................................................... 9 Section 2.07 Notes........................................................................ 9 Section 2.08 Prepayments.................................................................. 9 Section 2.09 Available Canadian Subcommitment............................................. 10 Section 2.10 Acceptance Date Procedure.................................................... 11 Section 2.11 Purchase of Bankers' Acceptances............................................. 11 Section 2.12 Payment of Bankers' Acceptances.............................................. 11 Article III: Payments of Principal and Interest.............................................. 12 Section 3.01 Repayment of Loans........................................................... 12 Section 3.02 Interest..................................................................... 12 Article IV: Payments; Pro Rata Treatment; Computations; Etc.................................. 12 Section 4.01 Payments..................................................................... 12 Section 4.02 Pro Rata Treatment........................................................... 13 Section 4.03 Computations................................................................. 13 Section 4.04 Non-receipt of Funds by the Administrative Agent............................. 13 Section 4.05 Sharing of Payments, Etc..................................................... 14 Section 4.06 Interest Act (Canada)........................................................ 15 Article V: Yield Protection and Illegality................................................... 15 Section 5.01 Additional Costs............................................................. 15 Section 5.02 Illegality................................................................... 16 Section 5.03 Additional Cost in Respect of Tax............................................ 16 Section 5.04 Base Rate Loans pursuant to Sections 5.01 and 5.02........................... 17 Section 5.05 Compensation................................................................. 17 Section 5.06 Avoidance of Taxes and Additional Costs...................................... 18 Section 5.07 Limitation on Right to Compensation.......................................... 18 Section 5.08 Compensation Procedure....................................................... 18
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Page Article VI: Conditions Precedent............................................................. 19 Section 6.01 Effectiveness................................................................ 19 Section 6.02 Subsequent Borrowings........................................................ 20 Article VII: Representations and Warranties.................................................. 21 Section 7.01 Incorporation By Reference................................................... 21 Article VIII: Affirmative Covenants.......................................................... 21 Section 8.01 Incorporation By Reference................................................... 21 Article IX: Negative Covenants............................................................... 22 Section 9.01 Affirmation of Certain Covenants in Article IX of the U. S. Credit Agreement. 22 Article X: Events of Default................................................................. 22 Section 10.01 Events of Default............................................................ 22 Article XI: The Administrative Agent......................................................... 23 Section 11.01 Incorporation by Reference................................................... 23 Article XII: Miscellaneous................................................................... 23 Section 12.01 Incorporation by Reference................................................... 23 Section 12.02 Amendments, Etc.............................................................. 23 Section 12.03 Assignments and Participations............................................... 23 Section 12.04 Survival..................................................................... 25 Section 12.05 GOVERNING LAW; SUBMISSION TO JURISDICTION.................................... 25 Section 12.06 Effectiveness................................................................ 26 Section 12.07 Interpretation of Loan Documents............................................. 26
Exhibit A - Form of Note Exhibit B - Form of Bankers' Acceptances Exhibit C - Form of Assignment and Acceptance Exhibit D - Form of Borrowing Request ii This AMENDED AND RESTATED CREDIT AGREEMENT dated as of July 8, 1998 is among: OCEAN ENERGY RESOURCES CANADA, LTD., a company continued under the laws of the Province of British Columbia (the "Company"); each of the lenders that is a party hereto (individually, a "Lender" and, collectively, the "Lenders"); and THE CHASE MANHATTAN BANK OF CANADA, as administrative agent for the Lenders (in such capacity, together with its successors in such capacity, the "Administrative Agent"). RECITALS A. The Company, the Administrative Agent and the lenders parties thereto entered into that certain Credit Agreement dated as of March 27, 1998 (such credit agreement, as amended, the "Prior Credit Agreement"). B. The Company has requested that the Administrative Agent and the Lenders amend and restate the Prior Credit Agreement and make credit available to and on behalf of the Company on the terms and conditions stated herein. C. The Administrative Agent and the Lenders, subject to the terms and conditions stated herein, are willing to make such credit facilities available. D. Subject to the terms and conditions set forth herein, the Administrative Agent and the Lenders have agreed to make certain credit available to the Company; and accordingly, the parties hereto agree as follows: ARTICLE I: DEFINITIONS AND ACCOUNTING MATTERS SECTION 1.01 TERMS DEFINED RECITALS. As used in this Agreement, the terms defined in the Recitals shall have the meanings indicated in the Recitals. SECTION 1.02 CERTAIN DEFINED TERMS. As used herein including the Recitals, the following terms shall have the following meanings (all terms defined in this Article I or in other provisions of this Agreement in the singular to have the same meanings when used in the plural and vice versa): "Acceptance Date" shall mean any Business Day on which a Bankers' Acceptance is issued and accepted by the Accepting Lender. "Acceptance Exposure" means, at any time, the aggregate face amount of all Bankers' Acceptances outstanding at such time for which the Company has not yet reimbursed the Accepting Lenders. "Accepting Lender" shall mean, as to any Bankers' Acceptance, the Administrative Agent or any other Lender which has accepted such Bankers' Acceptance pursuant to the terms of this Agreement. "Additional Costs" shall have the meaning assigned to that term in Section 5.01. "Aggregate Commitments" at any time shall equal the sum of the Commitments of all of the Lenders. "Affected Loans" shall have the meaning assigned to that term in Section 5.04. "Agreement" shall mean this Amended and Restated Credit Agreement, as amended, supplemented or modified from time to time. "Allocated Canadian Borrowing Base" shall mean the amount designated as such by OEI-Delaware under Section 2.09 of the U. S. Credit Agreement. "Applicable Lending Office" shall mean, for each Lender, the lending office of such Lender (or an Affiliate of such Lender) located in Canada designated on the signature pages hereof or such other offices of such Lender (or of an Affiliate of such Lender) located in Canada as such Lender may from time to time specify to the Administrative Agent and the Company as the office at which its Loans are to be made and maintained and Bankers' Acceptances are to be accepted. "Applicable Margin" shall mean: (a) with respect to Base Rate Loans: the Applicable Margin for Base Rate Loans that are Conventional Loans under the U. S. Credit Agreement plus the then applicable Facility Fee Rate; provided, that if at any time, the Applicable Margin for Base Rate Loans plus the Base Rate is less than the Applicable Margin for Bankers' Acceptances plus the Discount Rate for Bankers' Acceptances having an Interest Period of 30 days, the Applicable Margin for Base Rate Loans shall be increased so that the Applicable Margin for Base Rate Loans plus the Base Rate will be not less than the Applicable Margin for Bankers' Acceptances plus the Discount Rate for Bankers' Acceptances having an Interest Period of 30 days; and (b) with respect to Bankers' Acceptances: the Applicable Margin for Eurodollar Loans that are Conventional Loans under the U. S. Credit Agreement plus the then applicable Facility Fee Rate. "Assignment and Acceptance" shall have the meaning assigned such term in Section 12.03(b). "Available Proceeds" shall mean the face amount of the Bankers' Acceptance less the applicable Discount Amount and the Stamping Fee. "Bankers' Acceptance" shall mean a bill of exchange drawn by the Company in Canadian Dollars, duly completed and accepted by a Lender, in a form customarily used by the Administrative Agent in creating bankers' acceptances and which otherwise meets any requirements of the Administrative Agent. "Base Rate" shall mean, with respect to any Base Rate Loan, for any day, the rate equal to the Prime Rate for such day. Each change in any interest rate provided for herein based upon the Base Rate resulting from a change in the Base Rate shall take effect at the time of such change in the Base Rate. 2 "Base Rate Loans" shall mean loans which bear interest at the Base Rate. "Borrowing" shall mean a utilization of the Commitments by way of Loans or by the issuance, acceptance and purchase of Bankers' Acceptances. "Business Day" shall mean any day on which commercial banks are not authorized or required to close in Toronto, Canada or Calgary, Canada. "Chase" shall mean The Chase Manhattan Bank of Canada. "Commitment" shall mean, as to each Lender, the obligation of such Lender to make Loans to the Company or accept Bankers' Acceptances from the Company in an aggregate amount at any one time outstanding equal to the amount set forth opposite such Lender's name on Annex I to the U. S. Credit Agreement under the caption "Canadian Subcommitment" (as the same may be reduced from time to time pursuant to Section 2.03 or modified pursuant to Assignment and Acceptances pursuant to Section 12.03(b)). "Commitment Percentage" shall mean, as to any Lender, the percentage of the Commitments to be provided by such Lender under this Agreement as indicated on Annex I to the U. S. Credit Agreement as the Canadian Commitment Percentage, as modified from time to time to reflect any assignments permitted by Section 12.03(b), such percentage being the quotient of such Lender's Commitment divided by the aggregate Commitments for all Lenders. "Discount Amount" shall mean, with respect to any Bankers' Acceptance, an amount equal to the face amount thereof multiplied by the Discount Rate. "Discount Rate" shall mean at any time, with respect to any Bankers' Acceptance, the then current bid rate in effect quoted by the Administrative Agent on such day, which shall be a Business Day, for purchase by the Administrative Agent of bankers' acceptances of the same face amount and having maturities on the same date as the maturity date of such Bankers' Acceptance. "Dollars" and "$" shall mean Canadian Dollars. "Effective Date" shall have the meaning assigned such term in Section 12.06. "Guarantors" shall mean OEI-Delaware and OEI-Louisiana. "Guaranty Agreements" shall mean an agreement executed by each of the Guarantors in form and substance satisfactory to the Administrative Agent guarantying payment of the Indebtedness. "Indebtedness" shall mean any and all amounts owing or to be owing by the Company or the Guarantors to the Administrative Agent, and/or the Lenders in connection with the Notes, any Bankers' Acceptance or any other Loan Document, including this Agreement and all renewals, extensions and/or rearrangements thereof. 3 "Insolvency Event" shall mean any of the Events of Default described in Section 10.01(f), (g) or (h) of the U. S. Credit Agreement. "Interest Period" shall mean, with respect to any Bankers' Acceptances, the period (which shall be 30 days, 60 days, 90 days, and subject to availability, 180 days, or such other period longer than 90 days requested by the Company and agreed to by all the Lenders) commencing on the date such Bankers' Acceptance is issued, accepted and purchased. Notwithstanding the foregoing (unless otherwise agreed to by the Company and all of the Lenders) each Interest Period which would otherwise end on a day which is not a Business Day shall end on the next succeeding Business Day. "Loan Documents" shall mean this Agreement, the Notes, the Bankers' Acceptances, the Guaranty Agreements, and all instruments, documents and agreements which are "Loan Documents" under the U. S. Credit Agreement, and any and all other agreements or instruments now or hereafter executed and delivered by OEI-Delaware or any of its Subsidiaries, including the Company, or any other Person (other than participation or similar agreements between any Lender and any other lender or creditor with respect to any Indebtedness pursuant to this Agreement) in connection with, or as security for the payment or performance of, the Notes or this Agreement, as such agreements may be amended or supplemented from time to time. "Loans" shall have the meaning assigned to that term in Section 2.01. "Note" shall mean a promissory note issued by the Company described in Section 2.07(a) payable to the order of any Lender and being substantially in the form of Exhibit A evidencing the aggregate Loans to the Company by such Lender. "OEI-Delaware" shall mean Ocean Energy, Inc., a Delaware corporation, as successor by merger to United Meridian Corporation. "OEI-Louisiana" shall mean Ocean Energy, Inc., a Louisiana corporation, as successor by merger to UMC Petroleum Corporation. "Prime Rate" shall mean the rate of interest from time to time announced by the Administrative Agent at the Principal Office as its prime commercial lending rate for loans in Canadian Dollars made in Canada. Such rate is set by the Administrative Agent as a general reference rate of interest, taking into account such factors as the Administrative Agent may deem appropriate, it being understood that many of the Administrative Agent's commercial or other loans are priced in relation to such rate, that it is not necessarily the lowest or best rate actually charged to any customer and that the Administrative Agent may make various commercial or other loans at rates of interest having no relationship to such rate. "Principal Office" shall mean the principal office of the Administrative Agent and Chase in Canada, presently located in Toronto, Ontario, Canada. "Regulatory Change" shall mean, with respect to any Lender, any change after the date of this Agreement in United States Federal, Canadian, state, provincial, or foreign law or regulations or the adoption or making after such date of any interpretations, directives or requests 4 applying to a class of lenders or insurance companies (including such Lender or its Applicable Lending Office) of or under any United States Federal, Canadian, state, provincial or foreign law or regulations (whether or not having the force of law) by any court or governmental or monetary authority charged with the interpretation or administration thereof. "Required Payment" shall have the meaning assigned to that term in Section 4.04. "Stamping Fee" shall mean, with respect to any Bankers' Acceptance, an amount equal to the face amount thereof multiplied by the Applicable Margin for Bankers' Acceptances. "U.S. Administrative Agent" shall mean Chase Bank of Texas, National Association as Administrative Agent for the U.S. Lenders, together with its successors in such capacity. "U.S. Commitments" shall mean the "Commitments" as defined in the U. S. Credit Agreement. "U.S. Indebtedness" shall mean all Indebtedness as defined in the U. S. Credit Agreement. "U.S. Lenders" shall mean the "Lenders" as defined in the U. S. Credit Agreement. "U.S. Credit Agreement" shall mean that certain Amended and Restated Global Credit Agreement of even date herewith, among OEI-Delaware, as borrower, Chase Bank of Texas, National Association, as Administrative Agent, Morgan Guaranty Trust Company of New York, as Syndication Agent, Barclays Bank PLC, as Documentation Agent, and ABN Amro Bank, N.V., Bank of America National Trust & Savings Association, Paribas, NationsBank, N.A., Societe Generale, Southwest Agency and Wells Fargo Bank (Texas), N.A., as Co-Agents, and the lenders parties thereto, as amended, restated, supplemented or modified from time to time. SECTION 1.03 OTHER DEFINED TERMS. All other capitalized terms not defined herein shall have the meanings assigned such terms in the U. S. Credit Agreement. SECTION 1.04 ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all determinations with respect to accounting matters hereunder shall be made, and all financial statements and certificates and reports as to financial matters required to be furnished to the Administrative Agent or the Lenders hereunder shall be prepared, in accordance with Canadian generally accepted accounting principles as in effect, applied on a basis consistent with the audited consolidated financial statements of the Company and the consolidated Subsidiaries referred to in Section 7.02 (except for changes concurred with by the Company's independent public accountants). ARTICLE II: COMMITMENTS SECTION 2.01 LOANS AND BANKERS' ACCEPTANCES. (a) LOANS. Each Lender severally agrees, on the terms and conditions of this Agreement, to make to the Company during the period from and including the Effective Date to and including the Termination Date, revolving credit loans (the "Loans") in an aggregate 5 principal amount at any one time out-standing up to, but not exceeding, the amount of such Lender's Commitment as then in effect; provided, that the aggregate principal amount of (i) all Loans made by each Lender shall not exceed (1) such Lender's Commitment Percentage of the Available Canadian Subcommitment minus (2) such Lender's Acceptance Exposure and (ii) all Loans made by all Lenders hereunder at any one time outstanding shall not exceed the Available Canadian Subcommitment, as then in effect, minus the aggregate amount of Acceptance Exposure for all Lenders. Subject to the terms of this Agreement, during the period from the Effective Date to and including the Termination Date, the Company may borrow, repay and reborrow the amount of the Commitments, as then in effect. (b) BANKERS' ACCEPTANCES. Each Lender severally agrees, on the terms and conditions of this Agreement, to accept and, immediately thereafter, purchase Bankers' Acceptances from the Company from and after the Effective Date with a maturity or Interest Period not beyond the Termination Date in an aggregate amount at any one time outstanding up to, but not exceeding, the amount of such Lenders' Commitment as then in effect; provided, that the Acceptance Exposure at any one time (i) for each Lender shall not exceed (1) such Lender's Commitment Percentage of the Available Canadian Subcommitment minus (2) such Lender's outstanding Loans and (ii) for all Lenders shall not exceed the Available Canadian Subcommitment, as then in effect, minus the aggregate amount of all outstanding Loans. (c) DELIVERY OF BANKERS' ACCEPTANCES. Upon execution of this Agreement, the Company shall deliver to each Lender bills of exchange, in the form for Bankers' Acceptances of such Lender, executed in blank in sufficient quantity and thereafter shall, from time to time upon request of the Administrative Agent, deliver to the Lenders further quantities of such bills of exchange (on the Administrative Agent's forms) so executed, and the Lenders shall hold such bills of exchange in safekeeping. The present form of Bankers' Acceptances of each Lender is set out in Exhibit B. (d) SAFEKEEPING OF BANKERS' ACCEPTANCES. The bills of exchange so executed in blank and delivered to each Lender shall be held in safekeeping in the vault of one of each such Lender's branches. The standard of care that each Lender shall maintain in its safekeeping of such bills of exchange shall be at least as high as that maintained by such Lender in the safekeeping of its own securities. Each Lender shall indemnify and hold and save harmless the Company from loss or damage resulting from the failure of such Lender to maintain such standard of care. (e) LOANS UNDER PRIOR CREDIT AGREEMENT. On the Effective Date: (i) the Company shall pay all accrued and unpaid commitment fees outstanding under the Prior Credit Agreement for the account of each "Lender" under the Prior Credit Agreement; (ii) each "Base Rate Loan" and each "Bankers' Acceptance" under the Prior Credit Agreement shall be deemed to be repaid with the proceeds of a new Base Rate Loan under this Agreement; and 6 (iii) the Prior Credit Agreement and the commitments thereunder shall be superseded by this Agreement and shall be amended and restated as set forth herein. SECTION 2.02 BORROWINGS, RENEWALS, CONVERSIONS, AND ISSUANCES. (a) BORROWINGS. The Company shall give the Administrative Agent (which shall promptly notify the Lenders) advance notice as hereinafter provided of each Borrowing, renewal, and conversion, which shall specify the aggregate amount of such Borrowing, and the date (which shall be a Business Day) of the Borrowing to be borrowed, renewed or converted, all of which must be reasonably acceptable to the Administrative Agent, and in the case of Bankers' Acceptances, all details of the proposed issue, specifying the aggregate amount of Bankers' Acceptances to be accepted and purchased by the Lenders and the duration of the Interest Period therefor. Promptly following such notice the Administrative Agent will notify the Company and the Lenders of the Discount Rate for the specified Acceptance Date. (b) MINIMUM AMOUNTS. All Base Rate Loans (as part of the same Borrowing) shall be in aggregate amounts among all Lenders of at least $1,000,000 (or whole multiples thereof) or the remaining unused portion of the Commitments. All Bankers' Acceptances (as part of the same Borrowing) shall be in aggregate amounts among all Lenders of not less than $1,000,000 and in whole multiples of $100,000. (c) NOTICES, ETC. FOR LOANS. All Borrowings, renewals and conversions shall require advance written notice from the Company to the Administrative Agent, in the form of Exhibit D, or such other form as may be accepted by the Administrative Agent from time to time, which in each case shall be irrevocable and effective only upon receipt by the Administrative Agent and shall be received by the Administrative Agent not later than (i) in the case of a Base Rate Loan, 11:00 a.m. Toronto time on the date of such Borrowing, renewal or conversion; and (ii) in the case of Bankers' Acceptances, 12:00 noon Toronto time on a day that is not less than one (1) Business Day prior to the date of such Borrowing, renewal or conversion. Not later than 12:00 noon Toronto time on the date specified for each Borrowing hereunder or each request for the acceptance and purchase of a Bankers' Acceptance, each Lender shall make available the amount of the Loan or the Available Proceeds of the Bankers' Acceptance to be made by such Lender on such date to the Administrative Agent, at account number 219274 maintained by the Administrative Agent at The Royal Bank of Canada, Correspondent Banking Division, Toronto, Canada, in immediately available funds for the account of the Company. The amounts so received by the Administrative Agent shall, subject to the terms and conditions of this Agreement, be made available to the Company by depositing the same, in immediately available funds, in an account of the Company designated by the Company. (d) REPLACEMENT/RENEWAL ACCEPTANCES. Subject to the terms of this Agreement, the Company may elect to cause a new replacement Bankers' Acceptance to be issued, accepted and purchased to replace all or any part of any Bankers' Acceptance at the maturity thereof by giving one (1) Business Day's advance notice to the Administrative Agent of such election, specifying the amount of such new Bankers' Acceptance and the Interest Period therefor. In the absence of such a timely and proper election, the Company shall be deemed to have elected to convert such Bankers' Acceptance to a Base Rate Loan as provided in Section 2.12(b). All or any part of any Bankers' Acceptance may be renewed as provided herein, provided that (i) any renewal Bankers' 7 Acceptance shall meet all requirements for Bankers' Acceptances hereunder, (ii) no Default shall have occurred and be continuing and (iii) the Company shall have paid to the Administrative Agent for the account of Lenders an amount equal to the difference between the amount due on the maturing Bankers' Acceptance and the Available Proceeds of the new Bankers' Acceptance. If a Default shall have occurred and be continuing, each Bankers' Acceptance shall be converted to a Base Rate Loan on the last day of the Interest Period applicable thereto unless the Termination Date has occurred in which event all sums due thereon shall be immediately due and payable. (e) CONVERSION OPTIONS. The Company may elect to convert any Bankers' Acceptance on the last day of the then current Interest Period relating thereto to a Base Rate Loan by giving advance notice to the Administrative Agent of such election. If no Default shall have occurred and be continuing, subject to the terms of this Agreement, the Company may elect to convert all or any part of a Base Rate Loan at any time and from time to time to a Bankers' Acceptance by giving one (1) Business Day's advance notice to the Administrative Agent of such election; provided that any conversion of any Base Rate Loan into a Bankers' Acceptance shall be in an amount not less than $1,000,000 in the aggregate for all Lenders and in whole multiples of $100,000. (f) PRO RATA TREATMENT. Unless otherwise agreed among the Lenders, all Loans shall be made by all Lenders pro rata relative to their respective Commitment Percentage and the aggregate amount of all Bankers' Acceptances issued hereunder shall be issued pro rata by all Lenders relative to their respective Commitment Percentage, rounded, upwards or downwards, as the case may be, to the nearest $100,000. SECTION 2.03 CHANGES OF COMMITMENTS. (a) EXTENSION OF TERMINATION DATE. All of the Lenders and the U.S. Lenders may extend the Termination Date as set forth in Section 2.03(a) of the U.S. Credit Agreement, which section is hereby incorporated by reference into this Agreement and made a part of this Agreement to the same extent as if set forth in full herein, except that for purposes hereof, references therein to "Lenders" and "Canadian Lenders" shall be deemed to be references to "U.S. Lenders" and "Lenders," respectively, and, as appropriate in the context, other corresponding changes shall be made, mutatis mutandis. (b) OPTIONAL REDUCTION. The Company shall have the right to terminate or to reduce the amount of the Commitments at any time or from time to time upon not less than one (1) Business Day's prior notice to the Administrative Agent (which shall promptly notify the Lenders) of each such termination or reduction, which notice shall specify the effective date thereof and the amount of any such reduction (which shall not be less than $5,000,000, or any whole multiple of $1,000,000 in excess thereof), and shall be irrevocable and effective only upon receipt by the Administrative Agent. (c) REINSTATEMENT. Other than increases pursuant to Section 2.09, the Commitments once terminated or reduced may not be reinstated. The amount of the Available Canadian Subcommitment may increase or decrease from time to time in accordance with the terms of this Agreement, including but not limited to, Section 2.09. 8 SECTION 2.04 COMMITMENT FEE AND OTHER FEES. The Company shall pay to the Administrative Agent for the account of the Lenders an aggregate commitment fee on the daily average unused amount of such Lender's Available Canadian Subcommitment for the period from and including the Effective Date of this Agreement to and including the Termination Date, at a rate per annum equal to the Facility Fee Rate. The commitment fee shall be payable in arrears on each Quarterly Date and on the Termination Date. SECTION 2.05 LENDING OFFICES. The Loans made and Bankers' Acceptances accepted and purchased by each Lender shall be made and maintained at such Lender's Applicable Lending Office, which shall be located in Canada. SECTION 2.06 SEVERAL OBLIGATIONS. The failure of any Lender to make any funds available in connection with any Borrowing to be funded by such Lender on the date specified therefor shall not relieve any other Lender of its obligation to provide such funds on such date, but neither the Administrative Agent nor any Lender shall be responsible for the failure of any other Lender to provide funds to be provided by such other Lender. SECTION 2.07 NOTES. (a) SINGLE PROMISSORY NOTE. The Loans made by each Lender shall be evidenced by a single promissory note of the Company in substantially the form of Exhibit A hereto, dated as of the Effective Date or such later date upon a permitted assignment of all or any portion of such Note, payable to the order of such Lender in a principal amount equal to the maximum amount of its Commitment as originally in effect and otherwise duly completed. The date, amount, interest rate and maturity date of each Loan made by each Lender, and all payments made on account of the principal thereof, shall be recorded by such Lender on its books and, prior to any transfer of the Note held by it, endorsed by such Lender on the schedule attached to such Note or any continuation thereof. (b) NO RIGHT TO SUBDIVIDE. No Lender shall be entitled to have its Note subdivided, by exchange for promissory notes of lesser denominations or otherwise, except in connection with a permitted assignment of all or any portion of such Lender's Commitment, Loans and Note pursuant to Section 12.03(b). SECTION 2.08 PREPAYMENTS. (a) OPTIONAL PREPAYMENTS. The Company may prepay any Loans or cash collateralize Bankers' Acceptances on any Business Day upon notice to the Administrative Agent (which shall promptly notify the Lenders), which notice shall be given by the Company not later than 12:00 noon Toronto time on such Business Day, shall specify the amount of the prepayment (which shall be not less than $1,000,000 or the remaining balance of Base Rate Loans outstanding, if less) and shall be irrevocable and effective only upon receipt by the Administrative Agent, provided that interest on the principal prepaid on any Loan, accrued to the prepayment date, shall be paid on the prepayment date. Any prepayment of any Bankers' Acceptances shall be subject to the provisions of Sections 2.08(d), 2.08(e) and 5.05. (b) MANDATORY PREPAYMENT UPON REDUCTION OF COMMITMENT. If, after giving effect to any termination or reduction of the Commitments pursuant to Section 2.03, the sum of 9 the out-standing aggregate principal amount of the Loans and the Acceptance Exposure exceeds the aggregate amount of the Commitments, then the Company shall on the date of such termination or reduction pay or prepay the amount of such excess amount for application first, towards reduction of the outstanding principal balance of the Notes and then, if necessary, by cash collateralizing (or prepaying if acceptable to the holder thereof) Bankers' Acceptances, if any, then outstanding subject to the provisions of Section 2.08(d). The Company shall on the date of such termination or reduction also pay any amounts payable pursuant to Section 5.05 in connection therewith. (c) NO PENALTY OR PREMIUMS. Subject to compensation requirements of Section 5.05 hereof, all prepayments shall be without premium or penalty. (d) PRO RATA TREATMENT. Without duplication of Section 5.05, but subject to Section 2.08(e), any prepayment of Bankers' Acceptances shall be in an amount equal to the full face amount of any Bankers' Acceptance so prepaid (less any unearned Discount Amount and Stamping Fee), and be pro rata among all Lenders relative to their respective Commitments. (e) BANKERS' ACCEPTANCES. A Bankers' Acceptance may only be repaid on the last day of its Interest Period unless consented to by the holder thereof. In lieu of prepayment of a Bankers' Acceptance, the Company may cash collateralize a Bankers' Acceptance by delivery to the Administrative Agent for distribution to each Lender such discounted amount in respect of such Bankers' Acceptance as the Administrative Agent, acting reasonably, advises the Lender will enable the Lender, based upon the rate of return the Lender will be able to earn on the funds so received, to pay the full face amount of such Bankers' Acceptance on the last day of such Interest Period. SECTION 2.09 AVAILABLE CANADIAN SUBCOMMITMENT. (a) ALLOCATED CANADIAN BORROWING BASE. The Allocated Canadian Borrowing Base in effect from time to time shall represent the maximum amount of Loans and Bankers' Acceptances that the Lenders will loan or accept to or for the Company at any one time prior to the Termination Date. On the Effective Date, the Allocated Canadian Borrowing Base shall be U.S. $7,000,000. (b) REALLOCATION. The Company, the Administrative Agent and the Lenders agree that OEI-Delaware shall have the right to request that the Allocated Canadian Borrowing Base be increased or decreased, and the Allocated U.S. Borrowing Base be decreased or increased, respectively, in a corresponding amount, all as more particularly set forth in Section 2.09(a) of the U.S. Credit Agreement, which provisions are hereby incorporated by reference into this Agreement and made a part of this Agreement to the same extent as if set forth in full herein, except that for purposes hereof, references therein to "Lenders" and "Canadian Lenders" shall be deemed to be references to "U.S. Lenders" and "Lenders," respectively, and, as appropriate in the context, other corresponding changes shall be made, mutatis mutandis. (c) NO CHANGE TO GLOBAL COMMITMENT. The Company, the Administrative Agent and the Lenders agree that reallocations of the Allocated U. S. Borrowing Base and Allocated 10 Canadian Borrowing Base shall not, without the prior written agreement of all the U.S. Lenders, the Lenders and OEI-Delaware, affect the Global Commitment Percentage. SECTION 2.10 ACCEPTANCE DATE PROCEDURE. On the Acceptance Date, the following provisions shall apply: (a) On or before 10:30 a.m. Toronto time on the Acceptance Date, the Administrative Agent shall promptly determine the Discount Rate and notify each Lender as to: (i) the Discount Rate; (ii) the face amount of the Bankers' Acceptances to be purchased by such Lender on such Acceptance Date; (iii) the amount of the Stamping Fee applicable to those Bankers' Acceptances to be accepted and purchased by such Lender on such Acceptance Date, such Lender being authorized by the Company to collect the Discount Amount and the Stamping Fee out of the proceeds of the Bankers' Acceptances upon the Lender's acceptance and purchase thereof; (iv) the Available Proceeds by subtracting the Discount Amount and the Stamping Fee mentioned in subsection (iii) from the face amount mentioned in subsection (ii). (b) As provided in Section 2.02(c), not later than 2:00 p.m. Toronto time that same day, each Lender shall make available to the Administrative Agent its Available Proceeds and the Administrative Agent shall make the Available Proceeds available to the Company. SECTION 2.11 PURCHASE OF BANKERS' ACCEPTANCES. The Lenders shall, on the Acceptance Date, accept the Bankers' Acceptances, by inserting the appropriate face amount, Acceptance Date and maturity date thereof in accordance with the Company's notice relating thereto and affixing their acceptance stamps thereto, and shall purchase same as provided in Section 2.10. SECTION 2.12 PAYMENT OF BANKERS' ACCEPTANCES. The Bankers' Acceptances shall be payable in accordance with the following provisions: (a) If such Bankers' Acceptances are held by or presented to the Accepting Lender or the Administrative Agent, the Company shall pay to the Administrative Agent for the account of each Lender an amount equal to the face amount of the Bankers' Acceptances of such Lender on their respective maturity dates. In the event that any Bankers' Acceptance is presented to the Company, rather than the Accepting Lender thereof, for payment on its respective maturity date and the Company shall have made payments to the holders thereof, then the Company shall give notice to the Administrative Agent to such effect together with the original canceled Bankers' Acceptance and the Administrative Agent shall promptly notify the Lenders. (b) In the event the Company fails to notify the Administrative Agent in writing, not later than 12:00 Noon, one (1) Business Day prior to any maturity date of a Bankers' 11 Acceptance, that the Company intends to pay with its own funds the amount of the Bankers' Acceptances due on such maturity date, the Company shall be deemed, for all purposes, to have given the Administrative Agent notice to convert the amount of such Bankers' Acceptances into a Base Rate Loan and the provisions of Section 2.02(f) shall apply, except save that: (i) such maturity date shall be considered to be the borrowing date of such Base Rate Loan; (ii) the proceeds of such Base Rate Loan shall be used to pay the amount of the Bankers' Acceptance due on such maturity date; and (iii) on such maturity date, each Lender, instead of making its funds available to the Administrative Agent to fund such Base Rate Loan, shall first directly apply its pro rata share of such Loan in payment of its pro rata share in the amount of its Bankers' Acceptances due on such date. ARTICLE III: PAYMENTS OF PRINCIPAL AND INTEREST SECTION 3.01 REPAYMENT OF LOANS. The Company will pay on the Termination Date to the Administrative Agent for the account of each Lender the then- outstanding principal amount of each Loan made by such Lender and the amount of the Acceptance Exposure. SECTION 3.02 INTEREST. (a) The Company will pay to the Administrative Agent for the account of each Lender interest on the unpaid principal amount of each Loan made by such Lender for the period commencing on the date of such Loan to but excluding the date such Loan shall be paid in full, at the Base Rate (as in effect from time to time) plus the Applicable Margin for such Loan, but in no event to exceed the Highest Lawful Rate. (b) Accrued interest on each Loan shall be payable quarterly on each Quarterly Date, except that interest payable after maturity shall be payable from time to time on demand. (c) Promptly after the determination of any interest rate provided for herein or any change therein, the Administrative Agent shall notify the Lenders to which such interest is payable and the Company. ARTICLE IV: PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC. SECTION 4.01 PAYMENTS. Except to the extent otherwise provided herein, all payments of principal, interest and other amounts to be made by the Company under this Agreement, the Notes and the Bankers' Acceptances shall be made in Dollars, in immediately available funds, to the Administrative Agent at transit #09591, account number 219-2474-4 maintained by the Administrative Agent at Royal Bank of Canada, Correspondent Banking Division, Toronto Canada, not later than 12:00 noon Toronto Time on the date on which such payments shall become due (each such payment made after such time on such due date to be deemed to have been made on the next succeeding Business Day). The Company shall, subject to Section 4.02, at the time of making each payment under this Agreement or any Note or Bankers' Acceptance, 12 specify to the Administrative Agent the Loans, Bankers' Acceptances or other amounts payable by the Company hereunder to which such payment is to be applied (and in the event that it fails to so specify, and such day is not a Quarterly Date or other day on which a payment of either interest or principal is due, then such payments shall be applied in the following order: first, to interest accrued on Loans, second, any excess to reduce the aggregate principal amount then outstanding on the Loans and, third, any excess to Bankers' Acceptances; provided, however, that if an Event of Default has occurred and is continuing, the Administrative Agent may distribute such payment to the Lenders in such manner as it or the Required Lenders may determine to be appropriate, subject to Section 4.02). Each payment received by the Administrative Agent under this Agreement or any Note or Bankers' Acceptance for the account of a Lender shall be paid promptly to such Lender, in immediately available funds, for account of such Lender's Applicable Lending Office for the Loan or Bankers' Acceptances in respect of which such payment is made. If the due date of any payment under this Agreement or any Loan Document would otherwise fall on a day which is not a Business Day such date shall be extended to the next succeeding Business Day and interest shall be payable for any amount so extended for the period of such extension. SECTION 4.02 PRO RATA TREATMENT. Except to the extent agreed among the Lenders or otherwise provided herein: (a) each Borrowing from the Lenders under Section 2.01 shall be made from the Lenders, each payment of commitment fee or other fees under Section 2.04 shall be made for account of the Lenders, and each termination or reduction of the amount of the Commitments under Section 2.03 shall be applied to the Commitments of the Lenders, pro rata according to their respective Commitment Percentages, (b) each payment of Bankers' Acceptances or principal of Loans by the Company shall be made for account of the Lenders pro rata in accordance with the aggregate unpaid principal amount of Loans and face amount of Bankers' Acceptances held or purchased by the Lenders, and (c) each payment of interest on Loans by the Company shall be made for account of the Lenders pro rata in accordance with the amounts of interest due and payable on such Loans to the respective Lenders. SECTION 4.03 COMPUTATIONS. Interest on Loans and fees shall be computed on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed (including the first day but excluding the last day) occurring in the period for which payable. The Applicable Margin for determining the Stamping Fee for Bankers' Acceptances shall be computed on the basis of a year of 365 days. Any rates of interest not expressed in this Agreement on the basis of a 365 day or 366 day year are the equivalent, expressed on a calendar year basis, of the same rate of interest multiplied by a fraction, the numerator of which is the actual number of days in the applicable calendar year and the denominator of which is the number of days on which interest is expressed to be based. SECTION 4.04 NON-RECEIPT OF FUNDS BY THE ADMINISTRATIVE AGENT. Unless the Administrative Agent shall have been notified by a Lender or the Company prior to the date on which a payment is scheduled to be made to the Administrative Agent of (in the case of a Lender) the proceeds of a Borrowing to be made by it hereunder or (in the case of the Company) a payment to the Administrative Agent for account of one or more of the Lenders hereunder (such payment being herein called a "Required Payment"), which notice shall be effective upon receipt, that it does not intend to make the Required Payment to the Administrative Agent, the Administrative Agent may assume that the Required Payment has been made and may, in 13 reliance upon such assumption (but shall not be required to), make the amount thereof available to the intended recipient(s) on such date and, if such Lender or the Company (as the case may be) has not in fact made the Required Payment to the Administrative Agent, the recipient(s) of such payment shall, on demand, repay to the Administrative Agent the amount so made available together with interest thereon in respect of each day during the period commencing on the date such amount was so made available by the Administrative Agent until the date the Administrative Agent recovers such amount at a rate per annum equal to the Base Rate for such day, but in no event to exceed the Highest Lawful Rate. SECTION 4.05 SHARING OF PAYMENTS, ETC. (a) The Company agrees that, in addition to (and without limitation of) any right of set-off, bankers' lien or counterclaim a Lender may otherwise have, each Lender shall be entitled (after consultation with the Administrative Agent), at its option, during the existence of an Event of Default, to offset balances held by it for account of the Company at any of its offices, in Dollars or in any other currency, against any principal of or interest on any of such Lender's Loans or Bankers' Acceptances, or any other amount payable to such Lender hereunder which is not paid when due (regardless of whether such balances are then due to the Company), in which case such Lender shall promptly notify the Company and the Administrative Agent thereof, provided that such Lender's failure to give such notice shall not affect the validity thereof. (b) If any Lender shall obtain payment of any principal of or interest on any Loan or reimbursement on any Bankers' Acceptance made available to the Company under this Agreement through the exercise of any right of set-off, banker's lien or counterclaim or similar right or otherwise, and, as a result of such payment, such Lender shall have received a greater percentage of the principal or interest or reimbursement obligation then due hereunder by the Company to such Lender than the percentage received by any other Lenders, such Lender shall promptly purchase from such other Lenders participations in (or, if and to the extent specified by such Lender, direct interests in) the Loans or Bankers' Acceptances made by such other Lenders (or in interest due thereon, as the case may be), and make such other adjustments from time to time as shall be equitable, to the end that all the Lenders shall share the benefit of such excess payment (net of any expenses which may be incurred by such Lender in obtaining or preserving such excess payment) pro rata in accordance with the aggregate unpaid principal and interest on the Loans and reimbursement obligations on the Bankers' Acceptances held or accepted by each of the Lenders. To such end, all the Lenders shall make appropriate adjustments among themselves (by the resale of participations sold or other-wise) if such payment is rescinded or must otherwise be restored. The Company agrees that any Lender so purchasing a participation (or direct interest) in the Loans or Bankers' Acceptances made by other Lenders (or in interest due thereon, as the case may be) may exercise all rights of set-off, bankers' lien, counter-claim or similar rights with respect to such participation as fully as if such Lender were a direct holder of Loans or acceptor of Bankers' Acceptances, as the case may be, in the amount of such participation. Nothing contained herein shall require any Lender to exercise any such right or shall affect the right of any Lender to exercise, and retain the benefits of exercising, any such right with respect to any other indebtedness or obligation of the Company. If under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu of a set-off to which this Section 4.05 applies, such Lender shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of the 14 Lenders entitled under this Section 4.05 to share the benefits of any recovery on such secured claim. SECTION 4.06 INTEREST ACT (CANADA). (a) For purposes of the Interest Act (Canada), (i) whenever any interest or fee under this Agreement is calculated using a rate based on a year of 360 days or 365 days, such rate determined pursuant to such calculation, when expressed as an annual rate, is equivalent to (x) the applicable rate based on a year of 360 days or 365 days, as the case may be, (y) multiplied by the actual number of days in the calendar year in which the period for which such interest or fee is payable (or compounded) ends, and (z) divided by 360 or 365 as the case may be. (b) The principle of deemed reinvestment of interest shall not apply to any interest calculation under this Agreement, and the rates of interest stipulated in this Agreement are intended to be nominal rates and not effective rates or yields. (c) To the extent permitted by law, section 6 of the Judgment Interest Act (Alberta) shall not apply to this Agreement and is hereby expressly waived by the Company. ARTICLE V: YIELD PROTECTION AND ILLEGALITY SECTION 5.01 ADDITIONAL COSTS. (a) REGULATORY CHANGE. The Company shall pay directly to each Lender from time to time such amounts as such Lender may determine to be necessary to compensate it for any increased costs incurred by the Lender which such Lender determines are attributable to its making or maintaining any Loans or Bankers' Acceptances or its obligation to make any Loans or Bankers' Acceptances hereunder, or any reduction in any amount receivable by such Lender hereunder in respect of any of such Loans or Bankers' Acceptances (such increases in costs and reductions in amounts receivable being herein called "Additional Costs"), resulting from any Regulatory Change which: (i) changes the basis of taxation of any amounts payable to such Lender under this Agreement in respect of any of such Loans or Bankers' Acceptances (other than franchise taxes, taxes on capital and/or gross receipts or taxes imposed on the overall net income of such Lender or of its Applicable Lending Office for any of such Loans or Bankers' Acceptances by the jurisdiction in which such Lender has its principal office or such Applicable Lending Office ("Excluded Taxes")); or (ii) imposes or modifies any reserve, special deposit, minimum capital, capital ratio or similar requirements relating to any extensions of credit or other assets of, or any deposits with or other liabilities of, such Lender, or any Commitment of such Lender; or (iii) imposes any other condition affecting this Agreement or its Loans or Bankers' Acceptances (or any of such extensions of credit or liabilities) or Commitment. If any Lender requests compensation from the Company under this Section 5.01, the Company may, by notice to such Lender (with a copy to the Administrative Agent), suspend the obligation of such Lender to make additional Loans or accept and purchase additional Bankers' Acceptances of the type with respect to which such compensation is requested until the Regulatory Change giving rise to such request ceases to be in effect (in which case the provisions of Section 5.04 shall be applicable). 15 (b) CAPITAL ADEQUACY. Without limiting the effect of the foregoing provisions of this Section 5.01 (but without duplication), the Company shall pay directly to each Lender from time to time on request such amounts as such Lender may determine to be necessary to compensate such Lender for any costs which it determines are attributable to the maintenance by such Lender (or any Applicable Lending Office), pursuant to any law or regulation or any interpretation, directive or request (whether or not having the force of law) of any court or governmental or monetary authority following any Regulatory Change, of capital in respect of its Commitment, such compensation to include, without limitation, an amount equal to any reduction of the rate of return on assets or equity of such Lender (or any Applicable Lending Office) to a level below that which such Lender (or any Applicable Lending Office) could have achieved but for such law, regulation, interpretation, directive or request. SECTION 5.02 ILLEGALITY. If the introduction of or any change in, applicable law, regulation, treaty or official directive, or regulatory requirement or the interpretation or application thereof by any court or by any governmental authority charged with the administration thereof, makes it unlawful, or prohibited for any Lender (in its sole opinion) to accept, purchase, trade or hold Bankers' Acceptances, such Lender may, by written notice to the Administrative Agent, which notice shall be promptly communicated by the Administrative Agent to the Company, terminate its obligations to accept, purchase, trade or hold Bankers' Acceptances and the Company shall repay or cash collateralize, as the case may be, such Bankers' Acceptances then outstanding forthwith together with any payments required under Section 5.05, or at the end of such period as such Lender in its discretion agrees, (it being understood and agreed that the Lender shall use its best efforts to permit such prepayment to occur on the maturity date of Bankers' Acceptances, if this is legally permissible) together with all additional amounts as may be applicable to the date of payment and may reborrow, subject to the terms hereof, any amount which has been prepaid pursuant to this Section 5.02, by way of one of the remaining legal basis of Borrowings available under this Agreement, as provided in Section 5.04. SECTION 5.03 ADDITIONAL COST IN RESPECT OF TAX. (a) PAYMENTS FREE AND CLEAR. Each payment to be made by the Company hereunder or in connection herewith to any Lender or any other Person shall be made free and clear of and without deduction for or on account of any Tax unless the Company is required to make such payment subject to the deduction or withholding of Tax, in which case (except for Excluded Taxes) the sum payable by the Company in respect of which such deduction or withholding is required to be made shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, such other Person receives and retains (free from any liability in respect of any such deduction or withholding) a net sum equal to the sum which it would have received and so retained had not such deduction or withholding been made or required to be made. (b) OBLIGATION TO INDEMNIFY. If (i) any Lender or the Administrative Agent, on behalf of such Lender or on its own behalf, is required by law to make any payment on account of any Tax (except for Excluded Taxes) on or in relation to any sum received or receivable hereunder by such Lender or the Administrative 16 Agent, or (ii) any liability in respect of any such payment is asserted, imposed, levied or assessed against such Lender or the Administrative Agent (as the case may be) against such payment or liability, the Company shall promptly pay to the Administrative Agent or such Lender, as the case may be, any additional amounts necessary to compensate the Administrative Agent or such Lender for such payment together with any interest, penalties and expenses payable or incurred in connection therewith. If the Administrative Agent or a Lender has paid over on account of Tax (other than Excluded Taxes) an amount paid to the Administrative Agent or such Lender by the Company pursuant to the foregoing indemnification and the amount so paid over is subsequently refunded to the Administrative Agent or such Lender, in whole or in part, the Administrative Agent or such Lender, as appropriate, shall promptly remit such amount refunded to the Company. (c) NOTICE OF CHANGES; PROOF OF PAYMENT. If at any time the Company is required by law to make any deduction or withholding from any sum payable by it hereunder or in connection herewith (or if thereafter there is any change in the rates at which or the manner in which such deductions or withholdings are calculated) the Company shall promptly notify the Administrative Agent thereof. If the Company makes any payment hereunder or in connection herewith in respect of which it is required by law to make any deduction or withholding it shall pay the full amount to be deducted or withheld to the relevant taxation or other authority within the time allowed for such payment under applicable law and shall deliver to the Administrative Agent within thirty (30) days after it has made such payment to the applicable authority (i) a receipt issued by such authority or (ii) other evidence reasonably satisfactory to the Administrative Agent evidencing the payment to such authority of all amounts so required to be deducted or withheld from such payment. SECTION 5.04 BASE RATE LOANS PURSUANT TO SECTIONS 5.01 AND 5.02. If the obligation of any Lender to accept and purchase Bankers' Acceptances shall be suspended pursuant to Section 5.01 or 5.02 ("Affected Loans"), all Affected Loans which would otherwise be made available by such Lender shall be made instead as Base Rate Loans (and, if an event referred to in Section 5.01(a) or Section 5.02 has occurred and such Lender so requests by notice to the Company with a copy to the Administrative Agent, all Affected Loans of such Lender then outstanding shall be automatically converted into Base Rate Loans, subject to Section 5.05, on the date specified by such Lender in such notice) and, to the extent that Affected Loans are so made as (or converted into) Base Rate Loans, all payments which would otherwise be applied to such Lender's Affected Loans shall be applied instead to its Base Rate Loans. SECTION 5.05 COMPENSATION. The Company shall pay to the Administrative Agent for account of each Lender, upon the request of such Lender through the Administrative Agent, such amount or amounts as shall be sufficient (in the reasonable opinion of such Lender) to compensate it for any loss, cost or expense which such Lender determines are attributable to: (a) any payment or conversion of a Bankers' Acceptance for any reason (including, without limitation, the acceleration of the Loans pursuant to Section 10.01) on a date other than the last day of the Interest Period for such Bankers' Acceptance; or (b) any failure by the Company for any reason (including but not limited to, the failure of any of the conditions precedent specified in Article VI to be satisfied, but excluding failures arising out of the negligence, gross negligence or willful misconduct of a Lender or the 17 Administrative Agent) to issue a Bankers' Acceptance to such Lender on the date for such issuance specified in the relevant notice of Borrowing given pursuant to Section 2.02. SECTION 5.06 AVOIDANCE OF TAXES AND ADDITIONAL COSTS. (a) CHANGE APPLICABLE FUNDING OFFICE. If a Lender makes any claim under Section 5.01 or Section 5.03 in respect of Additional Costs or Taxes, such Lender shall be obligated to use reasonable efforts to designate a different Applicable Lending Office for the Commitment or the Loans or the Bankers Acceptances of such Lender affected by such event if such designation will avoid the need for, or reduce the amount of, such compensation or the imposition of any Taxes and will not, in the sole opinion of such Lender, be disadvantageous to such Lender; provided that such Lender shall have no obligation to so designate an Applicable Lending Office located in Canada. (b) REPLACEMENT. If any Lender claims (i) payment of Additional Costs, (ii) the inability to make or maintain the Bankers Acceptances pursuant to Section 5.01 or 5.02 (when such inability is not then being claimed by substantially all of the Lenders) or (iii) payment of any Taxes pursuant to Section 5.03, then the Company shall have the right, upon payment of such requested Additional Costs or Taxes to (i) prepay the Loans made by such Lender, cash collateralize the Bankers Acceptances then outstanding which have been discounted by such Lender, and terminate the Commitment of such Lender on a non pro rata basis or (ii) subject to the approval of the Administrative Agent (such approval not to be unreasonably withheld or delayed), find one or more Persons willing to assume the Loans, Commitment and other obligations of such Lender and replace such Lender pursuant to an Assignment and Acceptance. Any such assumption shall be effected pursuant to Section 12.03(b). The Company shall not, however, be entitled to replace any Lender if an event which with notice or lapse of time, or both, would constitute a Default or an Event of Default exists at the time. SECTION 5.07 LIMITATION ON RIGHT TO COMPENSATION. Any demand for compensation pursuant to Article V (other than Section 5.03) must be made on or before six (6) months after the Lender incurs the expense, cost or economic loss referred to or such Lender shall be deemed to have waived the right to such compensation. Any demand for compensation pursuant to Section 5.03 must be made on or before twelve (12) months after the Lender incurs the expense, cost or economic loss referred to or such Lender shall be deemed to have waived the right to such compensation. SECTION 5.08 COMPENSATION PROCEDURE. Each Lender will notify the Company of any event occurring after the date of this Agreement which will entitle such Lender to compensation pursuant to this Article V as promptly as practicable after it obtains knowledge thereof and determines to request such compensation, and will furnish the Company with a certificate setting forth the basis and amount of each request by such Lender for compensation under this Article V. Such certificate shall also include (i) calculations in reasonable detail computing such claim, and (ii) a statement from such Lender that it is asserting its right for indemnity or compensation not solely with respect to the Indebtedness outstanding under this Agreement, but is generally making such claims with respect to similar borrowers in connection with transactions similar to the one contemplated in this Agreement. Determinations and allocations by any Lender for purposes of this Article V of the effect of any Regulatory Change pursuant to Section 5.01(a), or 18 of the effect of capital maintained pursuant to Section 5.01(b), on its costs or rate of return of accepting and purchasing Bankers' Acceptances or maintaining Loans or its obligation to make Loans or accept and purchase Bankers' Acceptances, or on amounts receivable by it in respect of Loans or Bankers' Acceptances, and of the additional amounts required to compensate such Lender under this Article V, shall be conclusive, provided that such determinations and allocations are made on a reasonable basis. ARTICLE VI: CONDITIONS PRECEDENT SECTION 6.01 EFFECTIVENESS. The effectiveness of this amendment and restatement is subject to the receipt by the Administrative Agent of the following documents and satisfaction of the other conditions provided in this Section 6.01, each of which shall be satisfactory to the Administrative Agent in form and substance: (a) A Certificate of the Secretary or Assistant Secretary of the Company setting forth (i) that the resolutions of its board of directors attached to such certificate are in full force and effect with respect to the authorization of the execution, delivery and performance of the obligations contained in the Notes, this Agreement and the other Loan Documents to which it is a party, (ii) that the officers of the Company specified in such Secretary's Certificate are authorized to sign this Agreement, the Notes, and the other Loan Documents to which it is a party and who, until replaced by another officer or officers duly authorized for that purpose, will act as the Company's respective representative for the purposes of signing documents and giving notices and other communications in connection with this Agreement and the other Loan Documents to which it is a party and the transactions contemplated hereby and thereby, (iii) specimen signatures of the officers so authorized, and (iv) that attached to such certificate are true and complete copies of the articles and memorandum of the Company. The Administrative Agent and the Lenders may conclusively rely on such certificate until the Administrative Agent receives notice in writing from the Company to the contrary. (b) A certificate of the Secretary or Assistant Secretary of each Guarantor setting forth (i) that the resolutions of its board of directors attached to such certificate are in full force and effect with respect to the authorization of the execution, delivery and performance of the obligations contained in the Loan Documents to which it is a party, (ii) that the officers of such Guarantor specified in such Secretary's Certificate are authorized to sign the Loan Documents to which it is a party and who, until replaced by another officer or officers duly authorized for that purpose, will act as its representative(s) for the purposes of signing documents and giving notices and other communications in connection with such Loan Documents and the transactions contemplated thereby, (iii) specimen signatures of the officers so authorized, and (iv) that no amendments or modifications have been made to the certificate or articles of incorporation and the bylaws of such Guarantor since March 27, 1998. The Administrative Agent and the Lenders may conclusively rely on such certificate until the Administrative Agent receives notice in writing from such Guarantor to the contrary. (c) The following legal opinions: 19 (i) An opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel to the Company, addressing such matters as may be reasonably requested by the Administrative Agent. (ii) An opinion of Bennett Jones Verchere, special Canadian counsel to the Company, addressing such matters as may be reasonably requested by the Administrative Agent. (iii) An opinion of Ladner Downs, special British Columbia counsel to the Company, addressing such matters as may be reasonably requested by the Administrative Agent. (iv) An opinion of Onebane, Bernard, Torian, Diaz, McNamera & Abell, addressing such matters as may be reasonably requested by the Administrative Agent. (d) The Notes and bills of exchange referred to in Section 2.01, duly completed and executed. (e) The Guaranty Agreements, duly completed and executed. (f) All conditions precedent under the U. S. Credit Agreement shall have been satisfied or waived to the satisfaction of the Administrative Agent. SECTION 6.02 SUBSEQUENT BORROWINGS. (a) The obligation of the Lenders to provide funds (other than with respect to Base Rate Loans which are made pursuant to the terms hereof solely to replace existing Bankers' Acceptances which have matured in the normal course on the last day of an Interest Period therefor or pursuant to Section 5.02) to the Company upon the occasion of each Borrowing or to accept and purchase a Bankers' Acceptance hereunder is subject to the further conditions precedent that, as of the date of such Loans or acceptance and purchase and after giving effect thereto: (i) no Default or Event of Default shall have occurred and be continuing; (ii) no event or circumstance having a Material Adverse Effect shall have occurred since December 31, 1997, and (iii) the representations and warranties made by the Company in Article VII and the other Loan Documents shall be true in all material respects on and as of the date of such Borrowing with the same force and effect as if made on and as of such date and following such new Borrowing, except as such representations and warranties are modified to give effect to transactions expressly permitted hereby or to the extent expressly limited to an earlier date. (b) Each notice of Borrowing, conversion or renewal (other than Base Rate Loans which are made pursuant to the terms hereof solely to replace existing Bankers' Acceptances which have matured in the normal course on the last day of an Interest Period there-for or pursuant to Section 5.02) and election for acceptance or renewal of a Bankers' Acceptance by the Company hereunder shall constitute a certification by the Company to the effect set forth in the preceding sentence (both as of the date of such notice and, unless the Company otherwise notifies the Administrative Agent, immediately following such Borrowing). 20 ARTICLE VII: REPRESENTATIONS AND WARRANTIES SECTION 7.01 INCORPORATION BY REFERENCE. Except as expressly stated in this Agreement, each of the representations and warranties contained in Article VII of the U. S. Credit Agreement (together with the relevant provisions of any other Section or Sections to which they refer, including definitions) is hereby incorporated by reference into this Agreement and made a part of this Agreement to the same extent as if those terms were set forth in full herein, provided that, as and when appropriate, in the context: (a) any reference to "Company" shall be deemed a reference to Ocean Energy Resources Canada, Ltd.; (b) any reference to the "Guarantors" shall be deemed a reference to OEI- Delaware and OEI-Louisiana; (c) any references to U.S. Governmental Requirements shall, when appropriate in the context, be deemed to be references to corresponding Canadian Governmental Requirements governing such subject matter, if such exist; and (d) any other use of any capitalized term defined in both this Agreement and the U. S. Credit Agreement shall be deemed to refer to such term as defined in this Agreement, where appropriate in the context. As so incorporated, the Company hereby makes and affirms each such representation and warranty. All amendments, modifications, approvals, consents and waivers under the U. S. Credit Agreement entered into by the parties to the U. S. Credit Agreement with respect to Article VII thereof shall be binding upon the Administrative Agent, the Lenders and the Company and shall constitute corresponding amendments, modifications, approvals, consents and waivers hereto. ARTICLE VIII: AFFIRMATIVE COVENANTS The Company agrees that, so long as any of the Commitments are in effect and until payment in full of all Loans and Bankers' Acceptances hereunder, all interest thereon and all other amounts payable by the Company hereunder: SECTION 8.01 INCORPORATION BY REFERENCE. The Company will not, and will not permit any of its Subsidiaries to, enter into, make, take, cause or suffer to exist any transaction, action, omission or condition, if such transaction, action, omission or condition constitutes a breach of any covenant set forth in Sections 8.01, 8.02, 8.03, 8.04, 8.07 and 8.08 of the U.S. Credit Agreement, which Sections (together with the relevant provisions of any other Section or Sections of the U.S. Credit Agreement to which they refer, including definitions) are hereby incorporated by reference into this Agreement and made a part of this Agreement to the same extent as if those provisions were set forth in full herein, provided that, for purposes of this Section, all defined terms used in such provisions shall have the meanings set forth in the U.S. Credit Agreement. As so incorporated, the Company hereby repeats and affirms each such covenant and further covenants and agrees to strictly comply with each such covenant. All amendments, modifications, approvals, consents and waivers under the U. S. Credit Agreement entered into by the parties to the U. S. Credit Agreement with respect to Article VIII thereof shall be binding upon the Administrative Agent, the Lenders and the Company and shall constitute corresponding amendments, modifications, approvals, consents and waivers hereto. 21 ARTICLE IX: NEGATIVE COVENANTS The Company agrees that, so long as any of the Commitments are in effect and until payment in full of all Loans and Bankers' Acceptances hereunder, all interest thereon and all other amounts payable by the Company hereunder: SECTION 9.01 AFFIRMATION OF CERTAIN COVENANTS IN ARTICLE IX OF THE U. S. CREDIT AGREEMENT. The Company will not, and will not permit any of its Subsidiaries to, enter into, make, take, cause or suffer to exist any transaction, action, omission or condition, if such transaction, action, omission or condition constitutes a breach of any covenant set forth in Sections 9.01, 9.02, 9.03, 9.06, 9.07, 9.08, 9.09, 9.10, 9.11, 9.12, 9.13, 9.14, 9.15, 9.16, 9.17, 9.18, 9.19, 9.20, 9.21 and 9.22 of the U.S. Credit Agreement, which Sections (together with the relevant provisions of any other Section or Sections of the U.S. Credit Agreement to which they refer, including definitions) are hereby incorporated by reference into this Agreement and made a part of this Agreement to the same extent as if those provisions were set forth in full herein, provided that, for purposes of this Section, all defined terms used in such provisions shall have the meanings set forth in the U.S. Credit Agreement. As so incorporated, the Company hereby repeats and affirms each such covenant and further covenants and agrees to strictly comply with each such covenant. All amendments, modifications, approvals, consents and waivers under the U. S. Credit Agreement, entered into by the parties to the U. S. Credit Agreement with respect to Article IX thereof, shall be binding upon the Administrative Agent, the Lenders and the Company and shall constitute corresponding amendments, modifications, approvals, consents and waivers hereto. ARTICLE X: EVENTS OF DEFAULT SECTION 10.01 EVENTS OF DEFAULT. If one or more Events of Default shall occur and be continuing, then (a) in the case of an Event of Default other than an Insolvency Event with respect to the Company and either Guarantor, the Administrative Agent may and, upon request of the Required Lenders, shall, by notice to the Company, cancel the Commitments and/or declare the principal amount then outstanding of and the accrued interest on the Loans and all other amounts payable by the Company hereunder and under the Notes and the Bankers' Acceptances to be forthwith due and payable, whereupon such amounts shall be immediately due and payable without presentment, demand, protest, notice of intent to accelerate, notice of acceleration or other formalities of any kind, all of which are hereby expressly waived by the Company; and (b) in the case of the occurrence of an Insolvency Event with respect to the Company and either Guarantor, the Commitments shall be automatically canceled and the principal amount of the Loans, together with accrued interest, and all other amounts payable by the Company hereunder and under the Notes and the Bankers' Acceptances shall become automatically immediately due and payable without presentment, demand, protest, notice of intent to accelerate, notice of acceleration or other formalities of any kind, all of which are hereby expressly waived by the Company and, in either case, the Administrative Agent and the Lenders may pursue all rights and remedies of the Lenders and the Administrative Agent under the other Loan Documents. 22 ARTICLE XI: THE ADMINISTRATIVE AGENT SECTION 11.01 INCORPORATION BY REFERENCE. Sections 11.01 through 11.08 of the U.S. Credit Agreement (together with the relevant provisions of any other Section or Sections of the U.S. Credit Agreement to which they refer, including definitions) are hereby incorporated by reference into this Agreement and made a part of this Agreement to the same extent as if those provisions were set forth in full herein, provided that, for purposes of such incorporated Sections, as appropriate in the context, (i) references therein to "Administrative Agent," "Agreement," "Company" and "Lenders" shall mean such terms as defined in this Agreement; (ii) references therein to "Loans" shall mean "Loans" and "Bankers Acceptances" as such terms are defined in this Agreement; (iii) references therein to "Notes" shall mean "Notes" and "Bankers Acceptances" as such terms are defined in this Agreement; and (iv) as appropriate in the context, other corresponding changes shall be made, mutatis mutandis. ARTICLE XII: MISCELLANEOUS SECTION 12.01 INCORPORATION BY REFERENCE. Sections 12.01, 12.02, 12.03, 12.05, 12.07, 12.08, 12.09, 12.11, 12.12, 12.14, 12.15, 12.17, 12.18 and 12.19 of the U.S. Credit Agreement (together with the relevant provisions of any other Section or Sections of the U.S. Credit Agreement to which they refer, including definitions) are hereby incorporated by reference into this Agreement and made a part of this Agreement to the same extent as if those provisions were set forth in full herein, provided that, for purposes of such incorporated Sections, as appropriate in the context, (i) references therein to "Administrative Agent," "Agreement," "Company" and "Lenders" shall mean such terms as defined in this Agreement; (ii) references therein to "Loans" shall mean "Loans" and "Bankers Acceptances" as such terms are defined in this Agreement; (iii) references therein to "Notes" shall mean "Notes" and "Bankers Acceptances" as such terms are defined in this Agreement; and (iv) as appropriate in the context, other corresponding changes shall be made, mutatis mutandis. SECTION 12.02 AMENDMENTS, ETC. Subject to the terms of the Intercreditor Agreement, any provision of this Agreement or any other Loan Document may be amended, modified or waived as provided in the U. S. Credit Agreement; provided that no amendment, modification or waiver which extends the maturity of the Loans or any Bankers' Acceptances, increases the Available Canadian Subcommitment, or reduces the interest rate applicable to the Loans or the Stamping Fee shall be effective without consent of all Lenders. SECTION 12.03 ASSIGNMENTS AND PARTICIPATIONS. (a) The Company may not assign its rights or obligations hereunder without the prior consent of all of the Lenders and the Administrative Agent. (b) Each Lender may, upon the written consent of the Company and the Administrative Agent, which consent shall not be unreasonably withheld or delayed, assign to one or more assignees all or a portion of its rights and obligations under this Agreement pursuant to an Assignment and Acceptance Agreement substantially in the form of Exhibit C (an "Assignment and Acceptance") provided, however, that (i) any such assignment shall be in the aggregate amount of at least $5,000,000, the entire amount of the Lender's Commitment, if less, 23 or such lesser amount to which the Company has consented, (ii) the assignee shall pay to the Administrative Agent a processing and recordation fee of $3,500; provided that such fee shall not be payable in conjunction with any assignments occurring within 30 days of the Effective Date, and (iii) the assignee is a resident of Canada for purposes of the Income Tax Act (Canada). Any such assignment will become effective upon the issuance by the Administrative Agent of a letter of acknowledgment reflecting such assignment and the resultant effects thereof on the Commitments of the assignor and assignee, and the principal amount outstanding of the Loans owed to the assignor and assignee, the Administrative Agent hereby agreeing to effect such issuance no later than five (5) Business Days after its receipt of an Assignment and Acceptance executed by all parties thereto. Promptly after receipt of an Assignment and Acceptance executed by all parties thereto, the Administrative Agent shall send to the Company a copy of such executed Assignment and Acceptance. Upon receipt of such executed Assignment and Acceptance, the Company, will, at its own expense, execute and deliver new Notes to the assignor and/or assignee, as appropriate, in accordance with their respective interests as they appear on the Administrative Agent's letter of acknowledgment. Upon the effectiveness of any assignment pursuant to this Section, the assignee will become a "Lender," if not already a "Lender," for all purposes of this Agreement and the other Loan Documents. The assignor shall be relieved of its obligations hereunder to the extent of such assignment (and if the assigning Lender no longer holds any rights or obligations under this Agreement, such assigning Lender shall cease to be a "Lender" hereunder except for the purposes of Section 12.04 hereof and the Sections referred to therein). The Administrative Agent will prepare on the last Business Day of each month during which an assignment has become effective pursuant to this Section a revised Annex I to the U. S. Credit Agreement giving effect to all such assignments effected during such month, and will promptly provide the same to the Company and each of the Lenders. (c) Each Lender may transfer, grant or assign participations in all or any part of such Lender's interests hereunder pursuant to this subsection to any Person, provided that: (i) such Lender shall remain a "Lender" for all purposes of this Agreement and the transferee of such participation shall not constitute a "Lender" hereunder; and (ii) no participant under any such participation shall have rights to approve any amendment to or waiver of this Agreement, the Notes or any Loan Document except to the extent such amendment or waiver would (x) extend the Termination Date, (y) reduce the interest rate (other than as a result of waiving the applicability of any post-default increases in interest rates) or fees applicable to any of the Commitments or Loans in which such participant is participating, or postpone the payment of any thereof, or (z) release all or substantially all of the collateral (except as expressly provided in the Loan Documents) supporting any of the Commitments or Loans in which such participant is participating. In the case of any such participation, the participant shall not have any rights under this Agreement or any of the Loan Documents (the participant's rights against the granting Lender in respect of such participation to be those set forth in the agreement with such Lender creating such participation), and all amounts payable by the Company hereunder shall be deter-mined as if such Lender had not sold such participation, provided that if the participant is a resident of Canada for purposes of the Income Tax Act (Canada) and has its principal office in Canada, such participant shall be entitled to receive additional amounts under Article V on the same basis as if it were a Lender. In addition, each agreement creating any participation must include agreements by the participant to be bound by the provisions of Section 12.14 of the U.S. Credit Agreement as incorporated herein and forbidding the transfer, assignment or sub-participation of such participation. 24 (d) The Lenders may furnish any information concerning the Company in the possession of the Lenders from time to time to assignees and participants (including prospective assignees and participants); provided that, such Persons agree in writing to be bound by the provisions of Section 12.14 of the U.S. Credit Agreement as incorporated herein by Section 12.01. SECTION 12.04 SURVIVAL. The obligations of the Company, the Administrative Agent and the Lenders under Sections 5.01, 5.03 and 5.05 hereof, and Sections 12.03 and 12.14 of the U.S. Credit Agreement as incorporated herein by Section 12.01 shall survive the repayment of the Loans and the termination of the Commitments. SECTION 12.05 GOVERNING LAW; SUBMISSION TO JURISDICTION. (a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE PROVINCE OF ALBERTA, CANADA. (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT, THE NOTES, ANY BANKERS' ACCEPTANCE, OR THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF TORONTO, ONTARIO, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE COMPANY HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS. THIS SUBMISSION TO JURISDICTION IS NONEXCLUSIVE AND DOES NOT PRECLUDE THE ADMINISTRATIVE AGENT OR ANY LENDER FROM OBTAINING JURISDICTION OVER THE COMPANY IN ANY COURT OTHERWISE HAVING JURISDICTION. (c) Nothing herein shall affect the right of the Administrative Agent or any Lender to serve process in any manner permitted by law or to commence legal proceedings or otherwise proceed against the Company in any other jurisdiction. (d) THE COMPANY, THE ADMINISTRATIVE AGENT AND EACH LENDER HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN; (ii) IRREVOCABLY WAIVE, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (iii) CERTIFY THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY 25 WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (iv) ACKNOWLEDGE THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 12.05. SECTION 12.06 EFFECTIVENESS. This Agreement shall not be effective until the date (the "Effective Date") that it is delivered to the Lenders in Toronto, Ontario, Canada, accepted by the Lenders in such place, and executed by the Lenders in such place. SECTION 12.07 INTERPRETATION OF LOAN DOCUMENTS. If in the event of any conflict between the terms of Articles VII, VIII, IX and X of this Agreement and the representations, warranties, covenants or events of default contained in any of the Loan Documents (other than the U. S. Credit Agreement), the terms of Articles VII, VIII, IX and X of this Agreement, as appropriate, shall govern. [SIGNATURES BEGIN NEXT PAGE] 26 The parties hereto have caused this Agreement to be duly executed as of the day and year first above written. COMPANY: OCEAN ENERGY RESOURCES CANADA, LTD. By: ------------------------------------------ Jonathan M. Clarkson Senior Vice President Chief Financial Officer 10th Floor, First Canadian Centre Suite 1000 350-7th Avenue S.W. Calgary, Alberta T2P 3N9 Telecopier No: (403) 298-8984 Telephone No.: (403) 264-3333 with a copy to: 1201 Louisiana, Suite 1400 Houston, Texas 77002 Telecopier No.: (713) 653-5024 Telephone No.: (713) 654-9110 Attention: Frank D. Willoughby and Robert K. Reeves S-1 THE CHASE MANHATTAN BANK OF CANADA By: ------------------------------------------ Christine Chan Vice President Lending Office for Base Rate Loans: The Chase Manhattan Bank of Canada 1 First Canadian Place 100 King Street West Suite 6900, P.O. Box 106 Toronto, Ontario M5X 1A4 Address for Notices: The Chase Manhattan Bank of Canada 1 First Canadian Place 100 King Street West Suite 6900, P.O. Box 106 Toronto, Ontario M5X 1A4 Attn: Christine Chan with a copy to: Chase Bank of Texas, National Association 600 Travis Houston, Texas 77002 Telecopier No.: (713) 216-4117 Telephone No.: (713) 216-8869 Attention: Peter Licalzi S-2 TORONTO DOMINION BANK By: ------------------------------------------ Name: ---------------------------------------- Title: --------------------------------------- By: ------------------------------------------ Name: ---------------------------------------- Title: --------------------------------------- Lending Office for Base Rate Loans: 8th Floor Home Oil Tower 324 8th Ave. S.W. Calgary, Alberta T2P 2Z2 Address for Notices: Toronto Dominion Bank Corporate Investment Banking Group 8th Floor Home Oil Tower 324 8th Ave. S.W. Calgary, Alberta T2P 2Z2 Telecopier No.: (403) 292-2772 Telephone No.: (403) 299-7918 Attention: Phil Ghali S-3 THE CHASE MANHATTAN BANK OF CANADA, as Administrative Agent By: ------------------------------------------ Christine Chan Vice President Address for Notices to Chase Administrative Agent: The Chase Manhattan Bank of Canada 1 First Canadian Place 100 King Street West Suite 6900, P.O. Box 106 Toronto, Ontario M5X 1A4 Attn: Christine Chan Telecopier No.: (416) 216-4161 Telephone No.: (416) 216-4133 S-4 EXHIBIT A FORM OF NOTE $________________ ______________, 199__ FOR VALUE RECEIVED, Ocean Energy Resources Canada, Ltd., a company continued under the laws of the Province of British Columbia (the "Company"), hereby promises to pay to the order of ___________________ (the "Lender"), for the account of its Applicable Lending Office as provided for by the Credit Agreement (as hereinafter defined), at the Principal Office of The Chase Manhattan Bank of Canada, as Administrative Agent, the principal sum of _________________________________________________ ($__________) (or such lesser amount as shall equal the aggregate unpaid principal amount of the Loans made by the Lender to the Company under the Credit Agreement) in lawful money of Canada and in immediately available funds, on the dates and in the principal amounts provided in the Credit Agreement, and to pay interest on the unpaid principal amount of each such Loan, at such Principal Office, in like money and funds, for the period commencing on the date of such Loan until such Loan shall be paid in full, at the rates per annum and on the dates provided in the Credit Agreement. The date, amount, interest rate and maturity of each Loan made by the Lender to the Company, and each payment made on account of the principal thereof, shall be recorded by the Lender on its books and, prior to any transfer of this Note, endorsed by the Lender on the schedules attached hereto or any continuation thereof. This Note is a Note referred to in that certain Amended and Restated Credit Agreement dated as of July 8, 1998 between the Company, each of the lenders that is a party thereto and The Chase Manhattan Bank of Canada, as the administrative agent (as such may be amended from time to time, the "Credit Agreement"), and evidences the Loans made by the Lender thereunder. Capitalized terms used in this Note have the respective meanings assigned to them in the Credit Agreement. This Note is issued pursuant to the Credit Agreement and is entitled to the benefits provided for in the Credit Agreement and the Loan Documents. The Credit Agreement provides for the acceleration of the maturity of this Note upon the occurrence of certain events and for prepayments of Loans upon the terms and conditions specified therein and other pertinent terms. A-1 THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE PROVINCE OF ALBERTA, CANADA. Ocean Energy Resources Canada, Ltd. By: ------------------------------------------ Jonathan M. Clarkson Senior Vice President Chief Financial Officer A-2 SCHEDULE OF LOAN AND PAYMENTS OF PRINCIPAL AND INTEREST
Amount of Unpaid Principal Amount of Principal Amount of Paid or Interest Balance Notation Date Loan Prepaid Paid of Loan Made by - ----- ----------- ----------- ----------- ----------- ----------- - ----- ----------- ----------- ----------- ----------- ----------- - ----- ----------- ----------- ----------- ----------- ----------- - ----- ----------- ----------- ----------- ----------- ----------- - ----- ----------- ----------- ----------- ----------- ----------- - ----- ----------- ----------- ----------- ----------- ----------- - ----- ----------- ----------- ----------- ----------- -----------
S-1 EXHIBIT B FORM OF BANKER'S ACCEPTANCE B-1 EXHIBIT C [FORM OF] ASSIGNMENT AND ACCEPTANCE Dated: _____________, 199__ Reference is made to that certain Amended and Restated Credit Agreement dated as of July 8, 1998 among Ocean Energy Resources Canada, Ltd., a company continued under the laws of the Province of British Columbia (the "Company"), The Chase Manhattan Bank of Canada, as Administrative Agent, and the lenders parties thereto (such Amended and Restated Credit Agreement together with all amendments and supplements thereto being the "Credit Agreement"). Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Credit Agreement. This Assignment and Acceptance, between the Assignor (as defined and set forth on Schedule I hereto and made a part hereof) and the Assignee (as defined and set forth on Schedule I hereto and made a part hereof) is dated as of the Effective Date (as set forth on Schedule I hereto and made a part hereof). 1. The Assignor hereby irrevocably sells and assigns to the Assignee without recourse to the Assignor, and the Assignee hereby irrevocably purchases and assumes from the Assignor without recourse to the Assignor, as of the Effective Date, an undivided interest (the "Assigned Interest") in and to all the Assignor's rights and obligations under the Credit Agreement respecting those, and only those, Commitments, Loans and Bankers' Acceptances contained in the Credit Agreement as are set forth on Schedule I, in a principal amount as set forth on Schedule I. 2. The Assignor (i) represents and warrants that it owns the Assigned Interest free and clear from any lien or adverse claim; (ii) other than the representation and warranty set forth in clause (i) above, makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or any other instrument, document or agreement delivered in connection therewith, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement, or any other instrument or document furnished pursuant thereto, other than that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (iii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of either OEI-Delaware or the Company or the performance or observance by OEI-Delaware or any of its Subsidiaries, including the Company, or of any of their respective obligations under the Credit Agreement, or any other instrument or document furnished pursuant thereto; and (iv) attaches the Notes held by it evidencing the Assigned Interest and requests that the Company exchange such Notes for new Notes payable to the Assignor (if the Assignor has retained any interest in the Assigned Interest) and new Notes payable to the Assignee in the respective amounts which reflect the assignment being made hereby (and after giving effect to any other assignments which have become effective on the Effective Date). C-1 3. The Assignee (i) represents and warrants that it is legally authorized to enter into this Assignment and Acceptance; (ii) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 7.02 of the U.S. Credit Agreement, or if later, the most recent financial statements delivered pursuant to Section 8.01 thereof, and such other documents and information as it has deemed appropriate to make its own credit analysis; (iii) agrees that it will, independently and without reliance upon either the Administrative Agent, any other Lender or the Assignor and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iv) agrees that it will be bound by the provisions of the Credit Agreement and will perform in accordance with its terms all the obligations which by the terms of the Credit Agreement are required to be performed by it and (v) represents and warrants that it is a resident of Canada for purposes of the Income Tax Act (Canada) and has its principal office in Canada. 4. Following the execution of this Assignment and Acceptance, it will be delivered to the Company effective as of the Effective Date (which Effective Date shall, unless otherwise agreed, be at least five (5) Business Days after the execution of this Assignment and Acceptance). 5. Upon delivery to the Company, all payments under the Credit Agreement in respect of the Assigned Interest (including without limitation, all payments of principal, interest and fees with respect thereto) for the period up to, but not including, the Effective Date, shall be made to the Assignor, and for the period from and after the Effective Date shall be made to the Assignee. Assignor and Assignee hereby agree that if Assignor receives any of the payments referred to in the preceding sentence which should have been made to Assignee, or if Assignee receives any of the payments referred to in the previous sentence which should have been made to Assignor, such payments shall promptly be paid by Assignor to Assignee, or by Assignee to Assignor, as the case may be, in full. 6. From and after the Effective Date, (i) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance and Section 12.03 of the Credit Agreement, have the rights and obligations thereunder, and (ii) the Assignor shall, to the extent provided in this Assignment and Acceptance and Section 12.03 of the Credit Agreement, relinquish its rights and be released from its obligations under the Credit Agreement. 7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE PROVINCE OF ALBERTA, CANADA. C-2 IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Acceptance to be executed by their respective duly authorized officers on Schedule I hereto. as Assignor By: ------------------------------------------ Name: ---------------------------------------- Title: --------------------------------------- as Assignee By: ------------------------------------------ Name: ---------------------------------------- Title: --------------------------------------- APPROVED: Ocean Energy Resources Canada, Ltd. By: ------------------------------------------ Name: ---------------------------------------- Title: --------------------------------------- THE CHASE MANHATTAN BANK OF CANADA, as Administrative Agent By: ------------------------------------------ Name: ---------------------------------------- Title: --------------------------------------- C-3 SCHEDULE I TO ASSIGNMENT AND ACCEPTANCE
Assignor: ------------------------------------------------------- Total Commitment of Assignor Prior to Effective Date: $ ------------------------ Total Commitment of Assignor After Effective Date: $ ------------------------ Assignee: ------------------------------------------------------- Total Commitment of Assignee Prior to Effective Date: $ ------------------------ Total Commitment of Assignee After Effective Date: $ ------------------------ Effective Date of Assignment: , 199 Amount of Total Commitment Assigned: $ ------------------------
Principal Amount Percentage Assigned (or amount of Commitment) (Shown as a percentage of Assigned aggregate Commitments) - ----------------------------------------------- -------------------------------------------------- $ % ------------------------- ------------ Assignee's Address for Notice: --------------------------------------------- --------------------------------------------- Lending Office: --------------------------------------------- --------------------------------------------- Attn: ---------------------------------------- Telex No.: ----------------------------------- Telecopy No.: -------------------------------- Telephone No.: -------------------------------
SI-1 EXHIBIT D [FORM OF] BORROWING, RENEWAL AND CONVERSION REQUEST _____________________, 199__ Ocean Energy Resources Canada, Ltd., a company continued under the laws of the Province of British Columbia (the "Company"), pursuant to the Amended and Restated Credit Agreement dated as of July 8, 1998 among the Company, The Chase Manhattan Bank of Canada, as Administrative Agent, and the lenders parties thereto (such Amended and Restated Credit Agreement together with all amendments and supplements thereto being the "Credit Agreement"), hereby makes the requests indicated below (unless otherwise defined herein, capitalized terms are defined in the Credit Agreement): 1. Borrowings: (a) Aggregate amount of new Borrowings to be $________________; (b) Requested funding date is _________________, 199__; (c) $_____________________ of such Borrowings are to be Bankers' Acceptances; $_____________________ of such Borrowings are to be Base Rate Loans; and (d) Length of Interest Period for Bankers' Acceptances is: _________________________. 2. Bankers' Acceptance Renewals for Bankers' Acceptances maturing on ______________: (a) Aggregate amount to be renewed as Bankers' Acceptances is $_______________; (b) Aggregate amount to be converted to Base Rate Loans is $_______________; (c) Length of Interest Period for renewed (or reissued) Bankers' Acceptances is ________________________. 3. Conversion of Outstanding Base Rate Loans by issuance of Bankers' Acceptances: Convert $__________________ of the outstanding Base Rate Loans by issuance of Bankers' Acceptances on ____________________ with an Interest Period of ______________________. The undersigned certifies that he is the _____________________ of the Company, and that as such he is authorized to execute this certificate on behalf of the Company. The undersigned further certifies, represents and warrants on behalf of the Company that the D-1 Company is entitled to receive the requested Borrowing, continuation or conversion under the terms and conditions of the Credit Agreement. Ocean Energy Resources Canada, Ltd. By: ------------------------------------------ Name: ---------------------------------------- Title: --------------------------------------- D-2 EX-10.7 6 AMENDED RESTATED AGREEMENT - CHASE CANADA EXHIBIT 10.7 AMENDED AND RESTATED GUARANTY AGREEMENT Dated as of July 8, 1998 by OCEAN ENERGY, INC., a Delaware corporation, in favor of THE CHASE MANHATTAN BANK OF CANADA, as Administrative Agent, and THE LENDERS NOW OR HEREAFTER PARTIES TO THE CREDIT AGREEMENT TABLE OF CONTENTS Page Article I Definitions and Accounting Matters Section 1.01 Terms Defined In Recitals............................ 1 Section 1.02 Certain Definitions.................................. 1 Section 1.03 Credit Agreement Definitions......................... 2 Article II The Guaranty Section 2.01 Obligations Guaranteed............................... 2 Section 2.02 Nature of Guaranty................................... 2 Section 2.03 Lenders' Rights...................................... 2 Section 2.04 Guarantor's Waivers.................................. 3 Section 2.05 Maturity of Obligations; Payment..................... 3 Section 2.06 Lenders' Expenses.................................... 3 Section 2.07 Obligation........................................... 3 Section 2.08 Events and Circumstances Not Reducing or Discharging the Guarantor's Obligations.......................... 3 Section 2.09 Subrogation.......................................... 5 Article III Representations and Warranties Section 3.01 By the Guarantor..................................... 5 Article IV Subordination of Indebtedness Section 4.01 Subordination of All Guarantor Claims................ 6 Section 4.02 Claims in Bankruptcy................................. 6 Section 4.03 Payments Held in Trust............................... 6 Section 4.04 Liens Subordinate.................................... 7 Section 4.05 Notation of Records.................................. 7 Article V Miscellaneous Section 5.01 Successors and Assigns............................... 7 Section 5.02 Notices.............................................. 7 Section 5.03 Authority of Administrative Agent.................... 7 Section 5.04 CONSTRUCTION......................................... 8 Section 5.05 Waivers.............................................. 8 Section 5.06 Judgment Currency.................................... 8 Section 5.07 Amendment and Restatement............................ 9 Section 5.08 Survival of Obligations.............................. 9 Section 5.09 Subject to the Intercreditor Agreement............... 9 Section 5.10 Status as Specified or Designated Senior Indebtedness 9 i AMENDED AND RESTATED GUARANTY AGREEMENT This Amended and Restated Guaranty Agreement dated as of July 8, 1998, is by Ocean Energy, Inc., a corporation duly organized and validly existing under the laws of the state of Delaware ("Guarantor"), in favor of each of the following: each of the financial institutions that is now or hereafter a party to the Credit Agreement (as defined below) (individually, a "Lender" and, collectively, the "Lenders"); and The Chase Manhattan Bank of Canada, as administrative agent for the Lenders (in such capacity, the "Administrative Agent"). Recitals A. Ocean Energy Resources Canada, Ltd., a company continued under the laws of the Province of British Columbia (the "Company"), the Administrative Agent and the Lenders have executed that certain Amended and Restated Credit Agreement of even date herewith (such credit agreement, as amended, the "Credit Agreement"). B. One of the terms and conditions stated in the Credit Agreement for the making of the loans and extensions of credit described in the Credit Agreement is the execution and delivery to the Administrative Agent and the Lenders of this Guaranty Agreement. C. NOW, THEREFORE, (i) in order to comply with the terms and conditions of the Credit Agreement, (ii) to induce the Lenders to enter into the Credit Agreement, and (iii) for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Guarantor hereby agrees as follows: ARTICLE I DEFINITIONS AND ACCOUNTING MATTERS SECTION 1.01 TERMS DEFINED IN RECITALS. As used in this Guaranty Agreement, the terms defined in the Recitals shall have the meanings indicated in the Recitals. SECTION 1.02 CERTAIN DEFINITIONS. As used in this Guaranty Agreement, including the Recitals, the following terms shall have the following meanings, unless the context otherwise requires: "Guarantor Claims" shall have the meaning indicated in Section 4.01. "Guaranty Agreement" shall mean this Amended and Restated Guaranty Agreement, as the same may from time to time be amended or supplemented. "Obligations" shall mean (a) the payment and performance of all present and future indebtedness, obligations and liabilities of the Company and/or the Guarantor to the Administrative Agent and the Lenders under the Credit Agreement, including but not limited to, (i) the full and punctual payment of the Notes issued thereunder, and any and all promissory notes given in substitution for such Notes or in modification, renewal, extension or rearrangement thereof in whole or in part, and (ii) the Acceptance Exposure under all Bankers Acceptances now outstanding or hereafter issued under the Credit Agreement; (b) all obligations of the Guarantor under this Guaranty Agreement; and (c) all interest (whether pre- or post petition), charges, expenses, reasonable attorneys' or other fees and any other sums 1 payable to the Administrative Agent and the Lenders in connection with the execution, administration or enforcement of any of their rights and remedies hereunder or any other Loan Document. SECTION 1.03 CREDIT AGREEMENT DEFINITIONS. Unless otherwise defined herein, all terms beginning with a capital letter which are not defined herein shall have the meaning ascribed such terms in the Credit Agreement and in the Amended and Restated Global Credit Agreement dated of even date herewith among Guarantor, each of the financial institutions that is now or hereafter a party thereto (collectively, the "U.S. Lenders"); Chase Bank of Texas, National Association, as administrative agent for the U.S. Lenders, Morgan Guaranty Trust Company of New York, as syndication agent for the U.S. Lenders, Barclays Bank PLC, as documentation agent for the U.S. Lenders, and ABN Amro Bank, N.V., Bank of America National Trust & Savings Association, Paribas, NationsBank, N.A., Societe Generale, Southwest Agency and Wells Fargo Bank (Texas), N.A., , as co- agents for the U.S. Lenders. ARTICLE II THE GUARANTY SECTION 2.01 OBLIGATIONS GUARANTEED. The Guarantor hereby irrevocably and unconditionally guarantees the prompt payment at maturity of the Obligations. SECTION 2.02 NATURE OF GUARANTY. This guaranty is an absolute, irrevocable, completed and continuing guaranty of payment and not a guaranty of collection, and no notice of the Obligations or any extension of credit already or hereafter contracted by or extended to the Company need be given to the Guarantor. The guaranty evidenced hereby is joint and several with all other guarantees of the Obligations. This guaranty may not be revoked by the Guarantor and shall continue to be effective with respect to debt under the Obligations arising or created after any attempted revocation by the Guarantor and shall remain in full force and effect until the Obligations are paid in full and the Aggregate Commitments are terminated, notwithstanding that from time to time prior thereto no Obligations may be outstanding. The Company, the Administrative Agent and the Lenders may modify, alter, rearrange, extend for any period and/or renew from time to time, the Obligations and the Administrative Agent and the Lenders may waive any Defaults or Events of Default without notice to the Guarantor and in such event the Guarantor will remain fully bound hereunder on the Obligations. Subject to the terms of the Credit Agreement, this Guaranty Agreement may be enforced by the Administrative Agent and/or the Lenders and any subsequent holder of the Obligations and shall not be discharged by the assignment or negotiation of all or part of the Obligations. The Guarantor hereby expressly waives presentment, demand, notice of non-payment, protest and notice of protest and dishonor, notice of Event of Default, notice of intent to accelerate the maturity and notice of acceleration of the maturity and any other notice in connection with the Obligations, and also notice of acceptance of this Guaranty Agreement, acceptance on the part of the Administrative Agent and the Lenders being conclusively presumed by their request for this Guaranty Agreement and delivery of the same to the Administrative Agent. SECTION 2.03 LENDERS' RIGHTS. Subject to the terms of the Credit Agreement, the Guarantor authorizes the Lenders (or the Administrative Agent on behalf of the Lenders), without notice or demand and without affecting the Guarantor's obligation hereunder, to take and hold agreed-upon security for the payment of the Obligations, and exchange, enforce, waive and release any such security; and to apply such security and direct the order or manner of sale thereof as the Administrative Agent and the Lenders in their discretion may determine; and to obtain a guaranty of the Obligations from any one or more 2 Persons and at any time or times to enforce, waive, rearrange, modify, limit or release any of such other Persons from their obligations under such guaranties. SECTION 2.04 GUARANTOR'S WAIVERS. The Guarantor waives any right to require the Administrative Agent and the Lenders to (a) proceed against the Company or any other Person liable on the Obligations, (b) enforce their rights against any other guarantor of the Obligations, (c) proceed or enforce their rights against or exhaust any security given to secure the Obligations, (d) have the Company joined with the Guarantor in any suit arising out of this Guaranty Agreement and/or the Obligations, or (e) pursue any other remedy whatsoever. Neither the Administrative Agent nor the Lenders shall be required to mitigate damages or take any action to reduce, collect or enforce the Obligations. The Guarantor waives any defense arising by reason of any disability, lack of corporate authority or power, or other defense of the Company or any other guarantor of the Obligations, and shall remain liable hereon regardless of whether the Company or any other guarantor be found not liable thereon for any reason. SECTION 2.05 MATURITY OF OBLIGATIONS; PAYMENT. The Guarantor agrees that if the maturity of the Obligations is accelerated by bankruptcy or otherwise, such maturity shall also be deemed accelerated for the purpose of this Guaranty Agreement without demand or notice to the Guarantor. The Guarantor will, forthwith upon notice from the Administrative Agent of the Company's failure to pay the Obligations at maturity, pay to the Administrative Agent for the benefit of the Administrative Agent and the Lenders at the Administrative Agent's Principal Office, the amount due and unpaid by the Company and guaranteed hereby. The failure of the Administrative Agent to give this notice shall not in any way release the Guarantor hereunder. SECTION 2.06 LENDERS' EXPENSES. If the Guarantor fails to pay the Obligations after notice from the Administrative Agent of the Company's failure to pay any Obligations at maturity (whether by acceleration or otherwise), and if the Administrative Agent or the Lenders obtain the services of an attorney for collection of amounts owing by the Guarantor hereunder, or obtain advice of counsel in respect of any of their rights under this Guaranty Agreement, or if suit is filed to enforce this Guaranty Agreement, or if proceedings are had in any bankruptcy, receivership or other judicial proceedings for the establishment or collection of any amount owing by the Guarantor hereunder, or if any amount owing by the Guarantor hereunder is collected through such proceedings, the Guarantor agrees to pay to the Administrative Agent at its Principal Office the reasonable attorneys' fees of the Administrative Agent and the Lenders. SECTION 2.07 OBLIGATION. It is expressly agreed that the obligation of the Guarantor for the payment of the Obligations guaranteed hereby shall be primary and not secondary. SECTION 2.08 EVENTS AND CIRCUMSTANCES NOT REDUCING OR DISCHARGING THE GUARANTOR'S OBLIGATIONS. The Guarantor hereby consents and agrees to each of the following to the fullest extent permitted by law, agrees that its obligations under this Guaranty Agreement shall not be released, diminished, impaired, reduced or adversely affected by any of the following, and waives any rights (including without limitation rights to notice) which it might otherwise have as a result of or in connection with any of the following: (a) Modifications, etc. Any renewal, extension, modification, or increase in the amount of the Aggregate Commitments as in effect on the Effective Date, decrease, alteration or rearrangement of all or any part of the Obligations, any Loan Document or any instrument executed in connection 3 therewith, or any contract or understanding between the Company, any Agent and/or the Lenders, or any other Person, pertaining to the Obligations; (b) Adjustment, etc. Any adjustment, indulgence, forbearance or compromise that might be granted or given by the Administrative Agent or the Lenders to the Company or the Guarantor or any Person liable on the Obligations; (c) Condition of the Company or the Guarantor. The insolvency, bankruptcy, arrangement, reorganization, adjustment, composition, liquidation, disability, dissolution or lack of power of the Company or the Guarantor or any other Person at any time liable for the payment of all or part of the Obligations; or any sale, lease or transfer of any or all of the assets of the Company or the Guarantor, or any changes in the shareholders of the Company or the Guarantor; (d) Invalidity of Obligations. The invalidity, illegality or unenforceability of all or any part of the Obligations or any Loan Document, including the Notes, for any reason whatsoever, including without limitation the fact that the Obligations, or any part thereof, exceed the amount permitted by law, the act of creating the Obligations or any part thereof is ultra vires, the officers or representatives executing any Loan Document or otherwise creating the Obligations acted in excess of their authority, the Obligations violate applicable usury laws, the Company has valid defenses, claims or offsets (whether at law, in equity or by agreement) which render the Obligations wholly or partially uncollectible from the Company, the creation, performance or repayment of the Obligations (or the execution, delivery and performance of any Loan Document) is illegal, uncollectible, legally impossible or unenforceable, or the Credit Agreement, the Notes or other Loan Documents have been forged or otherwise are irregular or not genuine or authentic; (e) Release of Obligors. Any full or partial release of the obligation of the Company on the Obligations or any part thereof, of any co-guarantors, or any other Person now or hereafter liable, whether directly or indirectly, jointly, severally, or jointly and severally, to pay, perform, guarantee or assure the payment of the Obligations or any part thereof, it being recognized, acknowledged and agreed by the Guarantor that the Guarantor may be required to pay the Obligations in full without assistance or support of any other Person, and the Guarantor has not been induced to enter into this Guaranty Agreement on the basis of a contemplation, belief, understanding or agreement that other parties other than the Company will be liable to perform the Obligations, or that the Administrative Agent and the Lenders will look to other parties to perform the Obligations; (f) Security. The taking or accepting of any security, collateral or guaranty, or other assurance of payment, for all or any part of the Obligations; (g) Release of Collateral, etc. Any release, surrender, exchange, subordination, deterioration, waste, loss or impairment (including without limitation negligent, willful, unreasonable or unjustifiable impairment) of any collateral, Property or security, at any time existing in connection with, or assuring or securing payment of, all or any part of the Obligations; (h) Care and Diligence. The failure of any Agent or any Lender or any other Person to exercise diligence or reasonable care in the preservation, protection, enforcement, sale or other handling or treatment of all or any part of such collateral, Property or security; 4 (i) Status of Liens. The fact that any collateral, security or Lien contemplated or intended to be given, created or granted as security for the repayment of the Obligations shall not be properly perfected or created, or shall prove to be unenforceable or subordinate to any other Lien, it being recognized and agreed by the Guarantor that the Guarantor is not entering into this Guaranty Agreement in reliance on, or in contemplation of the benefits of, the validity, enforceability, collectability or value of any of the collateral for the Obligations; (j) Payments Rescinded. Any payment by the Company to any Agent or Lender is held to constitute a preference under the bankruptcy laws, or for any reason an Agent or Lender is required to refund such payment or pay such amount to the Company or someone else; or (k) Other Actions Taken or Omitted. Any other action taken or omitted to be taken with respect to the Credit Agreement or the other Loan Documents, the Obligations, or the security and collateral therefor, whether or not such action or omission prejudices the Guarantor or increases the likelihood that the Guarantor will be required to pay the Obligations pursuant to the terms hereof; it being the unambiguous and unequivocal intention of the Guarantor that the Guarantor shall be obligated to pay the Obligations when due, notwithstanding any occurrence, circumstance, event, action, or omission whatsoever, whether contemplated or uncontemplated, and whether or not otherwise or particularly described herein, except for the full and final payment and satisfaction of the Obligations. SECTION 2.09 SUBROGATION. Until the Obligations have been paid in full and the Aggregate Commitments terminated, the Guarantor hereby waives any claim, right or remedy which the Guarantor may now have or hereafter acquire against the Company which arises out of this Guaranty Agreement or from the performance by the Guarantor hereunder, including without limitation, any claim, remedy or right of subrogation, reimbursement, exoneration, indemnification, or participation in any such claim, right or remedy of any other Person against the Company. The Guarantor further waives any benefit of any right to participate in any security now or hereafter held by the Administrative Agent and/or the Lenders. ARTICLE III REPRESENTATIONS AND WARRANTIES SECTION 3.01 BY THE GUARANTOR. In order to induce the Administrative Agent and the Lenders to accept this Guaranty Agreement, the Guarantor represents and warrants to the Lender Group (which representations and warranties will survive the creation of the Obligations and any extension of credit thereunder) that: (a) Benefit to the Guarantor. The Company is a wholly-owned Subsidiary of the Guarantor; and the Guarantor's guaranty pursuant to this Guaranty Agreement reasonably may be expected to benefit, directly or indirectly, the Guarantor; and the Guarantor has determined that this Guaranty Agreement is necessary and convenient to the conduct, promotion and attainment of the business of the Guarantor and the Company. (b) Solvency. It (i) is not insolvent as of the date hereof and will not be rendered insolvent as a result of this Guaranty Agreement or the transactions contemplated by the Credit Agreement or the making of the Loans or issuance of Bankers Acceptances thereunder, (ii) is not engaged in a business or a transaction, or about to engage in a business or a transaction, for which any Property or assets remaining with the Guarantor constitute unreasonably small capital, and (iii) does not intend to incur, or believe it will incur, debts that will be beyond its ability to pay as such debts mature. 5 (c) No Representation by Administrative Agent or Lenders. Neither any Agent, Lender nor any other Person has made any representation, warranty or statement to the Guarantor in order to induce the Guarantor to execute this Guaranty Agreement. ARTICLE IV SUBORDINATION OF INDEBTEDNESS SECTION 4.01 SUBORDINATION OF ALL GUARANTOR CLAIMS. As used herein, the term "Guarantor Claims" shall mean all debts and obligations of the Company to the Guarantor, whether such debts and obligations now exist or are hereafter incurred or arise, or whether the obligation be direct, contingent, primary, secondary, several, joint and several, or otherwise, and irrespective of whether such debts or obligations be evidenced by note, contract, open account, or otherwise, and irrespective of the Person or Persons in whose favor such debts or obligations may, at their inception, have been, or may hereafter be created, or the manner in which they have been or may hereafter be acquired by the Guarantor. Except for payments permitted by the Credit Agreement, until the Obligations shall be paid and satisfied in full, the Aggregate Commitments are terminated and the Guarantor shall have performed all of its obligations hereunder and the Loan Documents to which it is a party, the Guarantor shall not receive or collect, directly or indirectly, from the Company any amount upon the Guarantor Claims. SECTION 4.02 CLAIMS IN BANKRUPTCY. In the event of receivership, bankruptcy, reorganization, arrangement, debtor's relief, or other insolvency proceedings involving the Company, the Administrative Agent on behalf of the Administrative Agent and the Lenders shall have the right to prove their claim in any proceeding, so as to establish their rights hereunder and receive directly from the receiver, trustee or other court custodian, dividends and payments which would otherwise be payable upon Guarantor Claims. The Guarantor hereby assigns such dividends and payments to the Administrative Agent for the benefit of the Administrative Agent and the Lenders. Should any Agent or Lender receive, for application upon the Obligations, any such dividend or payment which is otherwise payable to the Guarantor, and which, as between the Company and the Guarantor, shall constitute a credit upon the Guarantor Claims, then upon payment in full of the Obligations, the Guarantor shall become subrogated to the rights of the Administrative Agent and the Lenders to the extent that such payments to the Administrative Agent and the Lenders on the Guarantor Claims have contributed toward the liquidation of the Obligations, and such subrogation shall be with respect to that proportion of the Obligations which would have been unpaid if the Administrative Agent and the Lenders had not received dividends or payments upon the Guarantor Claims. SECTION 4.03 PAYMENTS HELD IN TRUST. In the event that notwithstanding Sections 4.01 and 4.02, the Guarantor should receive any funds, payments, claims or distributions which is prohibited by such Sections, the Guarantor agrees (a) to hold in trust for the Administrative Agent and the Lenders an amount equal to the amount of all funds, payments, claims or distributions so received, and (b) that it shall have absolutely no dominion over the amount of such funds, payments, claims or distributions except to pay them promptly to the Administrative Agent, for the benefit of the Administrative Agent and the Lenders; and the Guarantor covenants promptly to pay the same to the Administrative Agent. SECTION 4.04 LIENS SUBORDINATE. The Guarantor agrees that, until the Obligations are paid in full and the Aggregate Commitments terminated, any Liens upon the Company's assets securing payment of the Guarantor Claims shall be and remain inferior and subordinate to any Liens upon the Company's assets securing payment of the Obligations, regardless of whether such encumbrances in favor of the 6 Guarantor, any Agent or Lender presently exist or are hereafter created or attach. Without the prior written consent of the Administrative Agent, the Guarantor, during the period in which any of the Obligations are outstanding or the Aggregate Commitments are in effect, shall not (a) exercise or enforce any creditor's right it may have against the Company, or (b) foreclose, repossess, sequester or otherwise take steps or institute any action or proceeding (judicial or otherwise, including without limitation the commencement of or joinder in any liquidation, bankruptcy, rearrangement, debtor's relief or insolvency proceeding) to enforce any Lien, mortgages, deeds of trust, security interest, collateral rights, judgments or other encumbrances on assets of the Company held by the Guarantor. SECTION 4.05 NOTATION OF RECORDS. All promissory notes and, upon the request of the Administrative Agent, all accounts receivable ledgers or other evidence of the Guarantor Claims accepted by or held by the Guarantor shall contain a specific written notice thereon that the indebtedness evidenced thereby is subordinated under the terms of this Guaranty Agreement. ARTICLE V MISCELLANEOUS SECTION 5.01 SUCCESSORS AND ASSIGNS. This Guaranty Agreement is and shall be in every particular available to the successors and assigns of the Administrative Agent and the Lenders and is and shall always be fully binding upon the legal representatives, successors and assigns of the Guarantor, notwithstanding that some or all of the monies, the repayment of which this Guaranty Agreement applies, may be actually advanced after any bankruptcy, receivership, reorganization or other event affecting either the Company or the Guarantor. SECTION 5.02 NOTICES. Any notice or demand to the Guarantor under or in connection with this Guaranty Agreement may be given and shall conclusively be deemed and considered to have been given and received in the manner and to the address of the Guarantor as provided for in the Credit Agreement. SECTION 5.03 AUTHORITY OF ADMINISTRATIVE AGENT. The Guarantor acknowledges that the rights and responsibilities of the Administrative Agent under this Guaranty Agreement with respect to any action taken by the Administrative Agent or the exercise or non-exercise by the Administrative Agent of any option, right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Guaranty Agreement shall, as between the Administrative Agent and the Lenders, be governed by the Credit Agreement and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Administrative Agent and the Guarantor, the Administrative Agent shall be conclusively presumed to be acting as agent for the Lenders with full and valid authority so to act or refrain from acting; and the Guarantor shall not be under any obligation, or entitlement, to make any inquiry respecting such authority. SECTION 5.04 CONSTRUCTION. THIS GUARANTY AGREEMENT (INCLUDING, BUT NOT LIMITED TO, THE VALIDITY AND ENFORCEABILITY HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE PROVINCE OF ALBERTA, CANADA. SECTION 5.05 WAIVERS. THE GUARANTOR AND EACH LENDER AND THE ADMINISTRATIVE AGENT BY ITS ACCEPTANCE HEREOF HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTY AGREEMENT OR ANY LOAN DOCUMENT AND FOR ANY COUNTERCLAIM 7 THEREIN; (ii) IRREVOCABLY WAIVE, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (iii) CERTIFY THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (iv) ACKNOWLEDGE THAT IT HAS BEEN INDUCED TO ENTER INTO THIS GUARANTY AGREEMENT, THE LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 5.05. SECTION 5.06 JUDGMENT CURRENCY . This is an international loan transaction in which the specification of Canadian Dollars or U.S. Dollars is of the essence, and the stipulated currency shall in each instance be the Currency of account and payment in all instances. A payment obligation in one Currency hereunder (the "Original Currency") shall not be discharged by an amount paid in another currency (the "Other Currency"), whether pursuant to any judgment expressed in or converted into any Other Currency or in another place except to the extent that such tender or recovery results in the effective receipt by the payee of the full amount of the Original Currency payable to it under this Guaranty Agreement. If for the purpose of obtaining judgment in any court it is necessary to convert a sum due hereunder in the Original Currency into the Other Currency, the rate of exchange that shall be applied shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase Original Currency at the Principal Office with the Other Currency on the Business Day next preceding the day on which such judgment is rendered. The obligation of the Guarantor in respect of any such sum due from it to the Administrative Agent or any Lender hereunder or under any other Loan Document (in this Section 5.06 called an "Entitled Person") shall, notwithstanding the rate of exchange actually applied in rendering such judgment, be discharged only to the extent that on the Business Day following receipt by such Entitled Person of any sum adjudged to be due hereunder in the Other Currency such Entitled Person may in accordance with normal banking procedures purchase and transfer the Original Currency to Toronto with the amount of the judgment currency so adjudged to be due; and the Guarantor hereby, as a separate obligation and notwithstanding any such judgment, agrees jointly and severally to indemnify such Entitled Person against, and to pay such Entitled Person on demand, in the Original Currency, the amount (if any) by which the sum originally due to such Entitled Person in the Original Currency hereunder exceeds the amount of the Original Currency so purchased and transferred. 8 SECTION 5.07 AMENDMENT AND RESTATEMENT. This Amended and Restated Guaranty Agreement amends, restates, supersedes and replaces that certain Guaranty Agreement dated as of March 27, 1998, by and among the parties hereto, and such Guaranty Agreement shall be void and have no further effect. SECTION 5.08 SURVIVAL OF OBLIGATIONS. To the extent that any payments on the Obligations or proceeds of any collateral are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, debtor in possession, receiver or other Person under any bankruptcy law, common law or equitable cause, then to such extent, the Obligations so satisfied shall be revived and continue as if such payment or proceeds had not been received and the Administrative Agent's and the Lenders' Liens, rights, powers and remedies under this Guaranty Agreement and each Loan Document shall continue in full force and effect. In such event, each Loan Document shall be automatically reinstated and the Guarantor shall take such action as may be reasonably requested by the Administrative Agent and the Lenders to effect such reinstatement. SECTION 5.09 SUBJECT TO THE INTERCREDITOR AGREEMENT. This Guaranty Agreement is subject to the terms of the Intercreditor Agreement which (a) subjects the ability of the Lender Group to pursue remedies hereunder to the prior consent of the U.S. Lenders and (b) sets forth a priority for the application of proceeds upon any disposition of amounts received hereunder. SECTION 5.10 STATUS AS SPECIFIED OR DESIGNATED SENIOR INDEBTEDNESS. The Guarantor hereby acknowledges and confirms that: (a) this Guaranty Agreement and the obligations of the Guarantor hereunder are "Senior Indebtedness" and "Specified Senior Indebtedness" under and for purposes of the 95 Indenture; and (b) this Guaranty Agreement and the obligations of the Guarantor hereunder are "Senior Indebtedness" and "Designated Senior Indebtedness" under and for purposes of the 96 Indenture, the 97 Indenture and the 98 Senior Subordinated Indenture; and that as such, the Lender Group is entitled to the rights and privileges afforded holders of Senior Indebtedness, Specified Senior Indebtedness or Designated Senior Indebtedness, as applicable, under each of such Indentures. WITNESS THE EXECUTION HEREOF, effective as of the date first written above. OCEAN ENERGY, INC., a Delaware corporation By: ----------------------------------------- Jonathan M. Clarkson Executive Vice President Chief Financial Officer 9 EX-10.8 7 GUARANTEE AGREEMENT - OEI LOUISIANA EXHIBIT 10.8 GUARANTY AGREEMENT Dated as of July 8, 1998 by OCEAN ENERGY, INC., a Louisiana corporation in favor of CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, as Administrative Agent, MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Syndication Agent, BARCLAYS BANK PLC, as Documentation Agent, ABN AMRO BANK, N.V., BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION, PARIBAS, NATIONSBANK, N.A., SOCIETE GENERALE, SOUTHWEST AGENCY, AND WELLS FARGO BANK (TEXAS), N.A., as Co-Agents, and THE LENDERS NOW OR HEREAFTER PARTIES TO THE CREDIT AGREEMENT TABLE OF CONTENTS
Page ---- Article I Definitions and Accounting Matters Section 1.01 Terms Defined in Recitals.............................................. 1 Section 1.02 Certain Definitions.................................................... 1 Section 1.03 Credit Agreement Definitions........................................... 2 Article II The Guaranty Section 2.01 Obligations Guaranteed................................................. 2 Section 2.02 Nature of Guaranty..................................................... 2 Section 2.03 Lenders' Rights........................................................ 2 Section 2.04 Guarantor's Waivers.................................................... 3 Section 2.05 Maturity of Obligations; Payment....................................... 3 Section 2.06 Lenders' Expenses...................................................... 3 Section 2.07 Obligation............................................................. 3 Section 2.08 Events and Circumstances Not Reducing or Discharging the Guarantor's Obligations.......................................................... 3 Section 2.09 Limitations on Obligation of the Guarantor Hereunder................... 5 Section 2.10 Subrogation............................................................ 5 Article III Representations, Warranties and Covenants Section 3.01 Representations and Warranties......................................... 5 Section 3.02 Covenants.............................................................. 7 Article IV Subordination of Indebtedness Section 4.01 Subordination of All Guarantor Claims.................................. 7 Section 4.02 Claims in Bankruptcy................................................... 7 Section 4.03 Payments Held in Trust................................................. 7 Section 4.04 Liens Subordinate...................................................... 8 Section 4.05 Notation of Records.................................................... 8 Article V Miscellaneous Section 5.01 Successors and Assigns................................................ 8 Section 5.02 Notices............................................................... 8 Section 5.03 Authority of Administrative Agent..................................... 8 Section 5.04 CONSTRUCTION.......................................................... 9 Section 5.05 Survival of Obligations............................................... 10 Section 5.06 Subject to the Intercreditor Agreement................................ 10 Section 5.07 Status as Specified or Designated Senior Indebtedness................. 10 Section 5.08 Interest.............................................................. 10
i GUARANTY AGREEMENT This Guaranty Agreement dated as of July 8, 1998 is by Ocean Energy, Inc., a corporation duly organized and validly existing under the laws of the state of Louisiana (the "Guarantor"), in favor of each of the following: each of the financial institutions that is now or hereafter a party to the Credit Agreement (as defined below) as a lender (individually, a "Lender" and, collectively, the "Lenders"); Chase Bank of Texas, National Association, as administrative agent for the Lenders (in such capacity, the "Administrative Agent"), Morgan Guaranty Trust Company of New York, as syndication agent for the Lenders (in such capacity, the "Syndication Agent"), Barclays Bank PLC, as documentation agent for the Lenders (in such capacity, the "Documentation Agent"), and ABN Amro Bank, N.V., Bank of America National Trust & Savings Association, Paribas, NationsBank, N.A., Societe Generale, Southwest Agency and Wells Fargo Bank (Texas), N.A., as co-agents for the Lenders (in such capacity, the "Co-Agents"). RECITALS A. Ocean Energy, Inc., a Delaware corporation (the "Company"), the Administrative Agent, the Syndication Agent, the Documentation Agent, the Co- Agents (collectively the "Agents") and the Lenders have executed that certain Amended and Restated Global Credit Agreement of even date herewith (such credit agreement, as amended, the "Credit Agreement"). B. One of the terms and conditions stated in the Credit Agreement for the making of the loans and extensions of credit described in the Credit Agreement is the execution and delivery to the Agents and the Lenders of this Guaranty Agreement. C. NOW, THEREFORE, (i) in order to comply with the terms and conditions of the Credit Agreement, (ii) to induce the Lenders to enter into the Credit Agreement, and (iii) for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Guarantor hereby agrees as follows: ARTICLE I DEFINITIONS AND ACCOUNTING MATTERS ARTICLE I DEFINITIONS AND ACCOUNTING MATTERS SECTION 1.01 TERMS DEFINED IN RECITALS. As used in this Guaranty Agreement, the terms defined in the Recitals shall have the meanings indicated in the Recitals. SECTION 1.02 CERTAIN DEFINITION. As used in this Guaranty Agreement, including the Recitals, the following terms shall have the following meanings, unless the context otherwise requires: "Guarantor Claims" shall have the meaning indicated in Section 4.01. "Guaranty Agreement" shall mean this Guaranty Agreement, as the same may from time to time be amended or supplemented. "Obligations" shall mean (a) the payment and performance of all present and future indebtedness, obligations and liabilities of the Company to the Agents and the Lenders under the Credit Agreement, including but not limited to, (i) the full and punctual payment of the Notes issued thereunder, and any and 1 all promissory notes given in substitution for such Notes or in modification, renewal, extension or rearrangement thereof in whole or in part, and (ii) the reimbursement and other obligations of the Company under and with respect to Letters of Credit and Letter of Credit Agreements now outstanding or hereafter issued under the Credit Agreement; (b) all obligations of the Guarantor under this Guaranty Agreement; and (c) all interest (whether pre- or post petition), charges, expenses, reasonable attorneys' or other fees and any other sums payable to the Agents and the Lenders in connection with the execution, administration or enforcement of any of their rights and remedies hereunder or any other Loan Document. SECTION 1.03 CREDIT AGREEMENT DEFINITIONS. Unless otherwise defined herein, all terms beginning with a capital letter which are defined in the Credit Agreement shall have the same meanings herein as therein. ARTICLE II THE GUARANTY SECTION 2.01 OBLIGATIONS GUARANTEED. The Guarantor hereby irrevocably and unconditionally guarantees the prompt payment at maturity of the Obligations. SECTION 2.02 NATURE OF GUARANTY. This guaranty is an absolute, irrevocable, completed and continuing guaranty of payment and not a guaranty of collection, and no notice of the Obligations or any extension of credit already or hereafter contracted by or extended to the Company need be given to the Guarantor. This guaranty may not be revoked by the Guarantor and shall continue to be effective with respect to debt under the Obligations arising or created after any attempted revocation by the Guarantor and shall remain in full force and effect until the Obligations are paid in full and the Aggregate Commitments are terminated, notwithstanding that from time to time prior thereto no Obligations may be outstanding. The Company, the Agents and the Lenders may modify, alter, rearrange, extend for any period and/or renew from time to time, the Obligations and the Agents and the Lenders may waive any Defaults or Events of Default without notice to the Guarantor and in such event the Guarantor will remain fully bound hereunder on the Obligations. Subject to the terms of the Credit Agreement, this Guaranty Agreement may be enforced by the Agents and/or the Lenders and any subsequent holder of the Obligations and shall not be discharged by the assignment or negotiation of all or part of the Obligations. The Guarantor hereby expressly waives presentment, demand, notice of non-payment, protest and notice of protest and dishonor, notice of Event of Default, notice of intent to accelerate the maturity and notice of acceleration of the maturity and any other notice in connection with the Obligations, and also notice of acceptance of this Guaranty Agreement, acceptance on the part of the Agents and the Lenders being conclusively presumed by their request for this Guaranty Agreement and delivery of the same to the Administrative Agent. SECTION 2.03 LENDERS' RIGHTS. Subject to the terms of the Credit Agreement, the Guarantor authorizes the Lenders (or the Administrative Agent on behalf of the Lenders), without notice or demand and without affecting the Guarantor's obligation hereunder, to take and hold agreed-upon security for the payment of the Obligations, and exchange, enforce, waive and release any such security; and to apply such security and direct the order or manner of sale thereof as the Agents and the Lenders in their discretion may determine; and to obtain a guaranty of the Obligations from any one or more Persons and at any time or times to enforce, waive, rearrange, modify, limit or release any of such other Persons from their obligations under such guaranties. SECTION 2.04 GUARANTOR'S WAIVERS. The Guarantor waives any right to require the Agents and the Lenders to (a) proceed against the Company or any other Person liable on the Obligations, (b) enforce their 2 rights against any other guarantor of the Obligations, (c) proceed or enforce their rights against or exhaust any security given to secure the Obligations, (d) have the Company joined with the Guarantor in any suit arising out of this Guaranty Agreement and/or the Obligations, or (e) pursue any other remedy whatsoever. Neither the Agents nor the Lenders shall be required to mitigate damages or take any action to reduce, collect or enforce the Obligations. The Guarantor waives any defense arising by reason of any disability, lack of corporate authority or power, or other defense of the Company or any other guarantor of the Obligations, and shall remain liable hereon regardless of whether the Company or any other guarantor be found not liable thereon for any reason. SECTION 2.05 MATURITY OF OBLIGATIONS; PAYMENT. The Guarantor agrees that if the maturity of the Obligations is accelerated by bankruptcy or otherwise, such maturity shall also be deemed accelerated for the purpose of this Guaranty Agreement without demand or notice to the Guarantor. The Guarantor will, forthwith upon notice from the Administrative Agent of the Company's failure to pay the Obligations at maturity, pay to the Administrative Agent for the benefit of the Agents and the Lenders at the Administrative Agent's Principal Office, the amount due and unpaid by the Company and guaranteed hereby. The failure of the Administrative Agent to give this notice shall not in any way release the Guarantor hereunder. SECTION 2.06 LENDERS' EXPENSES. If the Guarantor fails to pay the Obligations after notice from the Administrative Agent of the Company's failure to pay any Obligations at maturity (whether by acceleration or otherwise), and if the Agents or the Lenders obtain the services of an attorney for collection of amounts owing by the Guarantor hereunder, or obtain advice of counsel in respect of any of their rights under this Guaranty Agreement, or if suit is filed to enforce this Guaranty Agreement, or if proceedings are had in any bankruptcy, receivership or other judicial proceedings for the establishment or collection of any amount owing by the Guarantor hereunder, or if any amount owing by the Guarantor hereunder is collected through such proceedings, the Guarantor agrees to pay to the Administrative Agent at its Principal Office the reasonable attorneys' fees of the Agents and the Lenders. SECTION 2.07 OBLIGATION. It is expressly agreed that the obligation of the Guarantor for the payment of the Obligations guaranteed hereby shall be primary and not secondary. SECTION 2.08 EVENTS AND CIRCUMSTANCES NOT REDUCING OR DISCHARGING THE GUARANTOR'S OBLIGATIONS. The Guarantor hereby consents and agrees to each of the following to the fullest extent permitted by law, agrees that its obligations under this Guaranty Agreement shall not be released, diminished, impaired, reduced or adversely affected by any of the following, and waives any rights (including without limitation rights to notice) which it might otherwise have as a result of or in connection with any of the following: (a) Modifications, etc. Any renewal, extension, modification, or increase in the amount of the Aggregate Commitments as in effect on the Effective Date, decrease, alteration or rearrangement of all or any part of the Obligations, any Loan Document or any instrument executed in connection therewith, or any contract or understanding between the Company, any Agent and/or the Lenders, or any other Person, pertaining to the Obligations; (b) Adjustment, etc. Any adjustment, indulgence, forbearance or compromise that might be granted or given by the Agents or the Lenders to the Company, the Guarantor or any Person liable on the Obligations; 3 (c) Condition of the Company or the Guarantor. The insolvency, bankruptcy, arrangement, reorganization, adjustment, composition, liquidation, disability, dissolution or lack of power of the Company or the Guarantor or any other Person at any time liable for the payment of all or part of the Obligations; or any sale, lease or transfer of any or all of the assets of the Company or the Guarantor, or any changes in the shareholders of the Company or the Guarantor; (d) Invalidity of Obligations. The invalidity, illegality or unenforceability of all or any part of the Obligations or any Loan Document, including the Notes, for any reason whatsoever, including without limitation the fact that the Obligations, or any part thereof, exceed the amount permitted by law, the act of creating the Obligations or any part thereof is ultra vires, the officers or representatives executing any Loan Document or otherwise creating the Obligations acted in excess of their authority, the Obligations violate applicable usury laws, the Company has valid defenses, claims or offsets (whether at law, in equity or by agreement) which render the Obligations wholly or partially uncollectible from the Company, the creation, performance or repayment of the Obligations (or the execution, delivery and performance of any Loan Document) is illegal, uncollectible, legally impossible or unenforceable, or the Credit Agreement, the Notes or other Loan Documents have been forged or otherwise are irregular or not genuine or authentic; (e) Release of Obligors. Any full or partial release of the obligation of the Company on the Obligations or any part thereof, of any co-guarantors, or any other Person now or hereafter liable, whether directly or indirectly, jointly, severally, or jointly and severally, to pay, perform, guarantee or assure the payment of the Obligations or any part thereof, it being recognized, acknowledged and agreed by the Guarantor that the Guarantor may be required to pay the Obligations in full without assistance or support of any other Person, and the Guarantor has not been induced to enter into this Guaranty Agreement on the basis of a contemplation, belief, understanding or agreement that other parties other than the Company will be liable to perform the Obligations, or that the Agents and the Lenders will look to other parties to perform the Obligations; (f) Security. The taking or accepting of any security, collateral or guaranty, or other assurance of payment, for all or any part of the Obligations; (g) Release of Collateral, etc. Any release, surrender, exchange, subordination, deterioration, waste, loss or impairment (including without limitation negligent, willful, unreasonable or unjustifiable impairment) of any collateral, Property or security, at any time existing in connection with, or assuring or securing payment of, all or any part of the Obligations; (h) Care and Diligence. The failure of any Agent or any Lender or any other Person to exercise diligence or reasonable care in the preservation, protection, enforcement, sale or other handling or treatment of all or any part of such collateral, Property or security; (i) Status of Liens. The fact that any collateral, security or Lien contemplated or intended to be given, created or granted as security for the repayment of the Obligations shall not be properly perfected or created, or shall prove to be unenforceable or subordinate to any other Lien, it being recognized and agreed by the Guarantor that the Guarantor is not entering into this Guaranty Agreement in reliance on, or in contemplation of the benefits of, the validity, enforceability, collectability or value of any of the collateral for the Obligations; 4 (j) Payments Rescinded. Any payment by the Company to any Agent or Lender is held to constitute a preference under the bankruptcy laws, or for any reason an Agent or Lender is required to refund such payment or pay such amount to the Company or someone else; or (k) Other Actions Taken or Omitted. Any other action taken or omitted to be taken with respect to the Credit Agreement or the other Loan Documents, the Obligations, or the security and collateral therefor, whether or not such action or omission prejudices the Guarantor or increases the likelihood that the Guarantor will be required to pay the Obligations pursuant to the terms hereof; it being the unambiguous and unequivocal intention of the Guarantor that the Guarantor shall be obligated to pay the Obligations when due, notwithstanding any occurrence, circumstance, event, action, or omission whatsoever, whether contemplated or uncontemplated, and whether or not otherwise or particularly described herein, except for the full and final payment and satisfaction of the Obligations. SECTION 2.09 LIMITATIONS ON OBLIGATION OF THE GUARANTOR HEREUNDER. The parties hereto (i) intend that the obligation of the Guarantor hereunder be limited to the maximum amount that would not result in the obligation created hereby being avoidable under Section 548 of the Federal Bankruptcy Code (11 U.S.C. (S) 548; hereinafter "Section 548") or other applicable state fraudulent conveyance or transfer law and (ii) agree that this Guaranty Agreement shall be so construed. Accordingly, the obligation of the Guarantor hereunder is limited to an amount that is the greater of (x) the "reasonably equivalent value" or "fair consideration" received by the Guarantor in exchange for the obligation incurred hereunder, within the meaning of Section 548, as amended, or any applicable state fraudulent conveyance or transfer law, as amended; or (y) the lesser of (1) the maximum amount that will not render the Guarantor insolvent or (2) the maximum amount that will not leave the Guarantor with any Property deemed an unreasonably small capital. Clauses (1) and (2) are and shall be determined pursuant to Section 548, as amended, or other applicable state fraudulent conveyance or transfer law, as amended. SECTION 2.10 SUBROGATION. The Guarantor shall not exercise any rights which it may acquire by way of subrogation, reimbursement, exoneration, indemnification or participation, by any payment made under this Guaranty Agreement, under any other Loan Document or otherwise until the Obligations have been paid in full and the Aggregate Commitments are terminated; provided that, notwithstanding the foregoing, the Guarantor reserves its rights of contribution and reimbursement, if any, from its co-guarantors and other Persons liable on the Obligations or otherwise. Except as described in this Section 2.10, the Guarantor further waives any benefit of any right to participate in any security now or hereafter held by the Agents and/or the Lenders. ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS SECTION 3.01 REPRESENTATIONS AND WARRANTIES. In order to induce the Agents and the Lenders to accept this Guaranty Agreement, the Guarantor represents and warrants to the Lender Group (which representations and warranties will survive the creation of the Obligations and any extension of credit thereunder) that: (a) Benefit to the Guarantor. The Guarantor is a wholly-owned Subsidiary of the Company and the Guarantor's guaranty pursuant to this Guaranty Agreement reasonably may be expected to benefit, directly or indirectly, the Guarantor; and the Guarantor has determined that this Guaranty Agreement is necessary and convenient to the conduct, promotion and attainment of the business of the Guarantor and the Company. 5 (b) Corporate Existence. The Guarantor: (i) is duly organized and validly existing under the laws of the jurisdiction of its formation; (ii) has all requisite power, and has all material governmental licenses, authorizations, consents and approvals necessary to own its assets and carry on its business as now being conducted; and (iii) is qualified to do business in all jurisdictions in which the nature of the business conducted by it makes such qualification necessary and where failure so to qualify would have a Material Adverse Effect. (c) No Breach. The execution and delivery by the Guarantor of this Guaranty Agreement and the other Loan Documents to which it is a party, the consummation of the transactions herein or therein contemplated, and the compliance with the terms and provisions hereof will not (i) conflict with or result in a breach of, or require any consent under (A) the charter or by-laws of the Guarantor, or (B) any applicable law or regulation, or any order, writ, injunction or decree of any court or other Governmental Authority, or any material agreement or instrument to which the Guarantor is a party or by which it is bound or to which it is subject in each case in such manner as could reasonably be expected to have a Material Adverse Effect; or (ii) constitute a default under any such agreement or instrument, or result in the creation or imposition of any Lien upon any of the revenues or Property of the Guarantor in each case in such manner as could reasonably be expected to have a Material Adverse Effect. (d) Corporate Action. The Guarantor has all necessary corporate power and authority to execute, deliver and perform its obligations under this Guaranty Agreement and the Loan Documents to which it is a party; and the execution, delivery and performance by the Guarantor of this Guaranty Agreement and the other Loan Documents to which such Person is a party have been duly authorized by all necessary corporate action on its part. This Guaranty Agreement and the Loan Documents to which the Guarantor is a party constitute the legal, valid and binding obligation of the Guarantor, enforceable against the Guarantor in accordance with their terms, except as may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting creditors' rights and general principals of equity. (e) Approvals. Other than consents heretofore obtained or described in the Credit Agreement, no authorizations, approvals or consents of, and no filings or registrations with, any Governmental Authority are necessary for the execution, delivery or performance by the Guarantor of this Guaranty Agreement or the Loan Documents to which it is a party or for the validity or enforceability thereof. It is understood that continued performance by the Guarantor of this Guaranty Agreement and the other Loan Documents to which it is a party will require various filings, such as filings related to environmental matters, ERISA matters, Taxes and intellectual property, filings required to maintain corporate and similar standing and existence, filings pursuant to the Uniform Commercial Code and other security filings and recordings and filings required by the SEC, routine filings in the ordinary course of business, and filings required in connection with the exercise by the Lenders and the Agents of remedies in connection with the Loan Documents. (f) Solvency. The Guarantor (i) is not insolvent and will not be rendered insolvent as a result of this Guaranty Agreement, (ii) is not engaged in a business or a transaction, or about to engage in a business or a transaction, for which any Property or assets remaining with the Guarantor are unreasonably small capital, and (iii) does not intend to incur, or believe it will incur, debts that will be beyond its ability to pay as such debts mature. 6 (g) No Representation by Agents or Lenders. Neither any Agent, any Lender nor any other Person has made any representation, warranty or statement to the Guarantor in order to induce the Guarantor to execute this Guaranty Agreement. SECTION 3.02 COVENANTS. The Guarantor acknowledges that it is has read the Credit Agreement and hereby covenants and agrees to comply with covenants and agreements set forth therein which restrict Restricted Subsidiaries of the Company in so far as such covenants and agreements apply to it. ARTICLE IV SUBORDINATION OF INDEBTEDNESS SECTION 4.01 SUBORDINATION OF ALL GUARANTOR CLAIMS. As used herein, the term "Guarantor Claims" shall mean all debts and obligations of the Company to the Guarantor, whether such debts and obligations now exist or are hereafter incurred or arise, or whether the obligation be direct, contingent, primary, secondary, several, joint and several, or otherwise, and irrespective of whether such debts or obligations be evidenced by note, contract, open account, or otherwise, and irrespective of the Person or Persons in whose favor such debts or obligations may, at their inception, have been, or may hereafter be created, or the manner in which they have been or may hereafter be acquired by the Guarantor. Except for payments permitted by the Credit Agreement, until the Obligations shall be paid and satisfied in full, the Aggregate Commitments are terminated and the Guarantor shall have performed all of its obligations hereunder and the Loan Documents to which it is a party, the Guarantor shall not receive or collect, directly or indirectly, from the Company any amount upon the Guarantor Claims. SECTION 4.02 CLAIMS IN BANKRUPTCY. In the event of receivership, bankruptcy, reorganization, arrangement, debtor's relief, or other insolvency proceedings involving the Company, the Administrative Agent on behalf of the Agents and the Lenders shall have the right to prove their claim in any proceeding, so as to establish their rights hereunder and receive directly from the receiver, trustee or other court custodian, dividends and payments which would otherwise be payable upon Guarantor Claims. The Guarantor hereby assigns such dividends and payments to the Administrative Agent for the benefit of the Agents and the Lenders. Should any Agent or Lender receive, for application upon the Obligations, any such dividend or payment which is otherwise payable to the Guarantor, and which, as between the Company and the Guarantor, shall constitute a credit upon the Guarantor Claims, then upon payment in full of the Obligations, the Guarantor shall become subrogated to the rights of the Agents and the Lenders to the extent that such payments to the Agents and the Lenders on the Guarantor Claims have contributed toward the liquidation of the Obligations, and such subrogation shall be with respect to that proportion of the Obligations which would have been unpaid if the Agents and the Lenders had not received dividends or payments upon the Guarantor Claims. SECTION 4.03 PAYMENTS HELD IN TRUST. In the event that notwithstanding Sections 4.01 and 4.02, the Guarantor should receive any funds, payments, claims or distributions which is prohibited by such Sections, the Guarantor agrees (a) to hold in trust for the Agents and the Lenders an amount equal to the amount of all funds, payments, claims or distributions so received, and (b) that it shall have absolutely no dominion over the amount of such funds, payments, claims or distributions except to pay them promptly to the Administrative Agent, for the benefit of the Agents and the Lenders; and the Guarantor covenants promptly to pay the same to the Administrative Agent. 7 SECTION 4.04 LIENS SUBORDINATE. The Guarantor agrees that, until the Obligations are paid in full and the Aggregate Commitments terminated, any Liens upon the Company's assets securing payment of the Guarantor Claims shall be and remain inferior and subordinate to any Liens upon the Company's assets securing payment of the Obligations, regardless of whether such encumbrances in favor of the Guarantor, any Agent or Lender presently exist or are hereafter created or attach. Without the prior written consent of the Administrative Agent, the Guarantor, during the period in which any of the Obligations are outstanding or the Aggregate Commitments are in effect, shall not (a) exercise or enforce any creditor's right it may have against the Company, or (b) foreclose, repossess, sequester or otherwise take steps or institute any action or proceeding (judicial or otherwise, including without limitation the commencement of or joinder in any liquidation, bankruptcy, rearrangement, debtor's relief or insolvency proceeding) to enforce any Lien, mortgages, deeds of trust, security interest, collateral rights, judgments or other encumbrances on assets of the Company held by the Guarantor. SECTION 4.05 NOTATION OF RECORDS. All promissory notes and, upon the request of the Administrative Agent, all accounts receivable ledgers or other evidence of the Guarantor Claims accepted by or held by the Guarantor shall contain a specific written notice thereon that the indebtedness evidenced thereby is subordinated under the terms of this Guaranty Agreement. ARTICLE V MISCELLANEOUS SECTION 5.01 SUCCESSORS AND ASSIGNS. This Guaranty Agreement is and shall be in every particular available to the successors and assigns of the Agents and the Lenders and is and shall always be fully binding upon the legal representatives, successors and assigns of the Guarantor, notwithstanding that some or all of the monies, the repayment of which this Guaranty Agreement applies, may be actually advanced after any bankruptcy, receivership, reorganization or other event affecting either the Company or the Guarantor. SECTION 5.02 NOTICES. Any notice or demand to the Guarantor under or in connection with this Guaranty Agreement may be given and shall conclusively be deemed and considered to have been given and received in the manner and to the address of the Guarantor as provided for in Section 12.02 of the Credit Agreement. SECTION 5.03 AUTHORITY OF ADMINISTRATIVE AGENT. The Guarantor acknowledges that the rights and responsibilities of the Administrative Agent under this Guaranty Agreement with respect to any action taken by the Administrative Agent or the exercise or non-exercise by the Administrative Agent of any option, right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Guaranty Agreement shall, as between the Agents and the Lenders, be governed by the Credit Agreement and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Administrative Agent and the Guarantor, the Administrative Agent shall be conclusively presumed to be acting as agent for the Lenders with full and valid authority so to act or refrain from acting; and the Guarantor shall not be under any obligation, or entitlement, to make any inquiry respecting such authority. SECTION 5.04 CONSTRUCTION. (a) THIS GUARANTY AGREEMENT (INCLUDING, BUT NOT LIMITED TO, THE VALIDITY AND ENFORCEABILITY HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS. 8 (B) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY AGREEMENT OR THE OTHER LOAN DOCUMENTS TO WHICH THE GUARANTOR IS A PARTY MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF TEXAS, AND, BY EXECUTION AND DELIVERY OF THIS GUARANTY AGREEMENT, THE GUARANTOR HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE GUARANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS. THIS SUBMISSION TO JURISDICTION IS NONEXCLUSIVE AND DOES NOT PRECLUDE THE ADMINISTRATIVE AGENT OR ANY LENDER FROM OBTAINING JURISDICTION OVER THE GUARANTOR IN ANY COURT OTHERWISE HAVING JURISDICTION. (c) The Guarantor irrevocably consents to the service of process of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to it, as the case may be, at its said address, such service to become effective 30 days after such mailing. (d) Nothing herein shall affect the right of any Agent or any Lender or any holder of a Note to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against the Guarantor in any other jurisdiction. (e) THE GUARANTOR AND, BY ITS ACCEPTANCE HEREOF, EACH AGENT AND EACH LENDER HEREBY (I) IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTY AGREEMENT OR ANY LOAN DOCUMENT TO WHICH IT IS A PARTY AND FOR ANY COUNTERCLAIM THEREIN; (II) IRREVOCABLY WAIVE, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (III) CERTIFY THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (IV) ACKNOWLEDGE THAT IT HAS BEEN INDUCED TO ENTER INTO THIS GUARANTY AGREEMENT, THE LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 5.04. SECTION 5.05 SURVIVAL OF OBLIGATIONSSECTION 5.05. To the extent that any payments on the Obligations or proceeds of any collateral are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, debtor in possession, receiver or other Person under any bankruptcy law, common law or equitable cause, then to such extent, the Obligations so satisfied shall be revived and continue as if such payment or proceeds had not been received and the Agents' and the Lenders' Liens, rights, powers and remedies under this Guaranty Agreement and each Loan Document shall continue in full force and effect. 9 In such event, each Loan Document shall be automatically reinstated and the Guarantor shall take such action as may be reasonably requested by the Administrative Agent and the Lenders to effect such reinstatement. SECTION 5.06 SUBJECT TO THE INTERCREDITOR AGREEMENT. This Guaranty Agreement is subject to the terms of the Intercreditor Agreement which (a) subjects the ability of the Lender Group to pursue remedies hereunder to the prior consent of the Canadian Lenders and (b) sets forth a priority for the application of proceeds upon any disposition of amounts received hereunder. SECTION 5.07 STATUS AS SPECIFIED OR DESIGNATED SENIOR INDEBTEDNESS. The Guarantor hereby acknowledges and confirms that: (a) this Guaranty Agreement and the obligations of the Guarantor hereunder are "Guarantor Senior Indebtedness" and "Specified Guarantor Senior Indebtedness" under and for purposes of the 95 Indenture; and (b) this Guaranty Agreement and the obligations of the Guarantor hereunder are "Guarantor Senior Indebtedness" and "Designated Guarantor Senior Indebtedness" under and for purposes of the 96 Indenture, the 97 Indenture and the 98 Senior Subordinated Indenture; and that as such, the Lender Group is entitled to the rights and privileges afforded holders of Guarantor Senior Indebtedness, Specified Guarantor Senior Indebtedness or Designated Guarantor Senior Indebtedness, as applicable, under each of such Indentures. SECTION 5.08 INTEREST. It is in the interest of the Guarantor and the Lender Group to conform strictly to the usury laws applicable to each member of the Lender Group. Accordingly, reference is made to Section 12.15 of the Credit Agreement which is incorporated herein by reference for all purposes. 10 WITNESS THE EXECUTION HEREOF, effective as of the date first written above. OCEAN ENERGY, INC., a Louisiana corporation By: Jonathan M. Clarkson Executive Vice President Chief Financial Officer 11 EX-10.22 8 07/08/1998 INDENTURE - U.S. BANK TRUST NATIONAL Exhibit 10.22 - -------------------------------------------------------------------------------- OCEAN ENERGY, INC. SUBSIDIARY GUARANTORS parties hereto AND U.S. BANK TRUST NATIONAL ASSOCIATION Trustee ------------------------- Indenture Dated as of July 8, 1998 ------------------------- $250,000,000 8 3/8% Series A Senior Subordinated Notes due 2008 8 3/8% Series B Senior Subordinated Notes due 2008 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION.............2 Section 1.1 Definitions.....................................................2 Section 1.2 Other Definitions..............................................34 Section 1.3 Incorporation by Reference of Trust Indenture Act..............35 Section 1.4 Rules of Construction..........................................35 ARTICLE II SECURITY FORMS....................................................36 Section 2.1 Forms Generally................................................36 Section 2.2 Form of Face of Security.......................................36 Section 2.3 Form of Reverse of Security....................................40 Section 2.4 Form of Notation Relating to Subsidiary Guarantees.............48 Section 2.5 Form of Trustee's Certificate of Authentication................49 ARTICLE III THE SECURITIES...................................................50 Section 3.1 Title and Terms................................................50 Section 3.2 Denominations..................................................50 Section 3.3 Execution, Authentication, Delivery and Dating.................50 Section 3.4 Temporary Securities...........................................52 Section 3.5 Registration, Registration of Transfer and Exchange............52 Section 3.6 Transfer and Exchange..........................................52 Section 3.7 Additional Provisions for Global Security......................60 Section 3.8 Mutilated, Destroyed, Lost and Stolen Securities...............61 Section 3.9 Payment of Interest; Interest Rights Preserved.................61 Section 3.10 Persons Deemed Owners..........................................62 Section 3.11 Cancellation...................................................63 Section 3.12 Computation of Interest........................................63 Section 3.13 CUSIP Numbers..................................................63 ARTICLE IV SATISFACTION AND DISCHARGE........................................63 Section 4.1 Satisfaction and Discharge of Indenture........................63 Section 4.2 Application of Trust Money.....................................64 ARTICLE V REMEDIES...........................................................65 Section 5.1 Events of Default..............................................65 Section 5.2 Acceleration of Maturity; Rescission and Annulment.............67 Section 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee........................................................68 Section 5.4 Trustee May File Proofs of Claim...............................69 i Section 5.5 Trustee May Enforce Claims Without Possession of Securities....69 Section 5.6 Application of Money Collected.................................70 Section 5.7 Limitation on Suits............................................70 Section 5.8 Unconditional Right of Holders to Receive Principal, Premium and Interest...........................................71 Section 5.9 Restoration of Rights and Remedies.............................71 Section 5.10 Rights and Remedies Cumulative.................................71 Section 5.11 Delay or Omission Not Waiver...................................71 Section 5.12 Control by Holders.............................................71 Section 5.13 Waiver of Past Defaults........................................72 Section 5.14 Waiver of Stay, Extension or Usury Laws........................72 ARTICLE VI THE TRUSTEE.......................................................72 Section 6.1 Notice of Defaults.............................................72 Section 6.2 Certain Rights and Duties of Trustee...........................73 Section 6.3 Trustee Not Responsible for Recitals or Issuance of Securities.....................................................75 Section 6.4 May Hold Securities............................................75 Section 6.5 Money Held in Trust............................................75 Section 6.6 Compensation and Reimbursement.................................75 Section 6.7 Corporate Trustee Required; Eligibility........................76 Section 6.8 Conflicting Interests..........................................76 Section 6.9 Resignation and Removal; Appointment of Successor..............77 Section 6.10 Acceptance of Appointment by Successor.........................78 Section 6.11 Merger, Conversion, Consolidation or Succession to Business....78 Section 6.12 Preferential Collection of Claims Against Company..............79 ARTICLE VII HOLDERS' LISTS AND REPORTS BY TRUSTEE............................79 Section 7.1 Disclosure of Names and Addresses of Holders...................79 Section 7.2 Reports By Trustee.............................................79 ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE..............................................79 Section 8.1 Company May Consolidate, etc., Only on Certain Terms...........79 Section 8.2 Successor Substituted..........................................81 ARTICLE IX SUPPLEMENTAL INDENTURES...........................................81 Section 9.1 Supplemental Indentures Without Consent of Holders.............81 Section 9.2 Supplemental Indenture with Consent of Holders.................82 Section 9.3 Execution of Supplemental Indentures...........................83 Section 9.4 Effect of Supplemental Indentures..............................83 Section 9.5 Conformity With Trust Indenture Act............................83 Section 9.6 Reference in Securities to Supplemental Indentures.............83 Section 9.7 Notice of Supplemental Indentures..............................84 ii ARTICLE X COVENANTS..........................................................84 Section 10.1 Payment of Principal, Premium, if any, and Interest............84 Section 10.2 Maintenance of Office or Agency................................84 Section 10.3 Money for Security Payments to Be Held in Trust................85 Section 10.4 Corporate Existence............................................86 Section 10.5 Payment of Taxes and Other Claims..............................86 Section 10.6 Maintenance of Properties......................................86 Section 10.7 Insurance......................................................87 Section 10.8 Statement by Officers as to Default............................87 Section 10.9 Provision of Financial Information.............................87 Section 10.10 Limitation on Other Senior Subordinated Indebtedness...........88 Section 10.11 Limitation on Restricted Payments..............................88 Section 10.12 Limitation on Indebtedness.....................................92 Section 10.13 Limitation on Guarantees of Indebtedness by Subsidiaries; Additional Subsidiary Guarantors..............................92 Section 10.14 Limitation on Issuances and Sale of Capital Stock by Restricted Subsidiaries.......................................93 Section 10.15 Limitation on Liens............................................94 Section 10.16 Purchase of Securities Upon Change of Control..................94 Section 10.17 Disposition of Proceeds of Asset Sales.........................96 Section 10.18 Limitation on Transactions with Affiliates.....................98 Section 10.19 Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries.............................99 Section 10.20 Limitation on Restrictive Covenants...........................100 Section 10.21 Waiver of Certain Covenants...................................100 Section 10.22 Suspension of Certain Covenants...............................100 ARTICLE XI REDEMPTION OF SECURITIES.........................................101 Section 11.1 Right of Redemption...........................................101 Section 11.2 Applicability of Article......................................101 Section 11.3 Election to Redeem; Notice to Trustee.........................101 Section 11.4 Selection by Trustee of Securities to Be Redeemed.............102 Section 11.5 Notice of Redemption..........................................102 Section 11.6 Deposit of Redemption Price...................................102 Section 11.7 Securities Payable on Redemption Date.........................103 Section 11.8 Securities Redeemed in Part...................................103 ARTICLE XII DEFEASANCE AND COVENANT DEFEASANCE..............................103 Section 12.1 Company's Option to Effect Defeasance or Covenant Defeasance...................................................103 Section 12.2 Defeasance and Discharge......................................103 Section 12.3 Covenant Defeasance...........................................104 Section 12.4 Conditions to Defeasance or Covenant Defeasance...............104 iii Section 12.5 Deposited Money and U.S. Government Obligations to Be Held in Trust; Other Miscellaneous Provisions.....................106 Section 12.6 Reinstatement.................................................107 ARTICLE XIII GUARANTEES.....................................................107 Section 13.1 Unconditional Guarantee.......................................107 Section 13.2 Subsidiary Guarantors May Consolidate, etc., on Certain Terms........................................................108 Section 13.3 Release of a Subsidiary Guarantor.............................109 Section 13.4 Limitation of Subsidiary Guarantor's Liability................110 Section 13.5 Contribution..................................................110 Section 13.6 Execution and Delivery of Notation of Subsidiary Guarantee....110 Section 13.7 Severability..................................................111 Section 13.8 Subsidiary Guarantees Subordinated to Guarantor Senior Indebtedness..........................................111 Section 13.9 Subsidiary Guarantors Not to Make Payments with Respect to Subsidiary Guarantees in Certain Circumstances...............111 Section 13.10 Subsidiary Guarantees Subordinated to Prior Payment of All Guarantor Senior Indebtedness upon Dissolution, etc..........113 Section 13.11 Holders to be Subrogated to Rights of Holders of Guarantor Senior Indebtedness..........................................114 Section 13.12 Obligations of the Subsidiary Guarantors Unconditional........114 Section 13.13 Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice............................................115 Section 13.14 Application by Trustee of Money Deposited with it.............115 Section 13.15 Subordination Rights Not Impaired by Acts of Omissions of Subsidiary Guarantors or Holders of Guarantor Senior Indebtedness..........................................116 Section 13.16 Holders Authorize Trustee to Effectuate Subordination of Subsidiary Guarantees........................................116 Section 13.17 Right of Trustee to Hold Guarantor Senior Indebtedness........116 Section 13.18 Article XIII Not to Prevent Events of Default.................117 Section 13.19 Payment.......................................................117 ARTICLE XIV SUBORDINATION OF SECURITIES.....................................117 Section 14.1 Securities Subordinate to Senior Indebtedness.................117 Section 14.2 Payment Over of Proceeds upon Dissolution, etc................117 Section 14.3 Suspension of Payment When Senior Indebtedness in Default.....118 Section 14.4 Trustee's Relation to Senior Indebtedness.....................120 Section 14.5 Subrogation to Rights of Holders of Senior Indebtedness.......120 Section 14.6 Provisions Solely To Define Relative Rights...................120 Section 14.7 Trustee To Effectuate Subordination...........................121 Section 14.8 Waiver of Subordination Provision.............................121 Section 14.9 Notice to Trustee.............................................122 iv Section 14.10 Reliance on Judicial Order or Certificate of Liquidating Agent........................................................123 Section 14.11 Rights of Trustee as Holder of Senior Indebtedness; Preservation of Trustee's Rights.............................123 Section 14.12 Article Applicable to Paying Agents...........................123 Section 14.13 No Suspension of Remedies.....................................123 ARTICLE XV MISCELLANEOUS....................................................124 Section 15.1 Compliance Certificates and Opinions..........................124 Section 15.2 Form of Documents Delivered to Trustee........................124 Section 15.3 Acts of Holders...............................................125 Section 15.4 Notices, etc. to Trustee, Company and Subsidiary Guarantors...126 Section 15.5 Notice to Holders; Waiver.....................................126 Section 15.6 Effect of Headings and Table of Contents......................127 Section 15.7 Successors and Assigns........................................127 Section 15.8 Separability Clause...........................................127 Section 15.9 Benefits of Indenture.........................................127 Section 15.10 Governing Law; Trust Indenture Act Controls...................127 Section 15.11 Legal Holidays................................................128 Section 15.12 No Recourse Against Others....................................128 Section 15.13 Duplicate Originals...........................................128 Section 15.14 No Adverse Interpretation of Other Agreements.................128 v INDENTURE, dated as of July 8, 1998 between OCEAN ENERGY, INC., a Delaware corporation (hereinafter called the "Company"), the SUBSIDIARY GUARANTORS (as defined hereinafter) and U.S. BANK TRUST NATIONAL ASSOCIATION, as trustee (hereinafter called the "Trustee"). RECITALS OF THE COMPANY Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Company's 8 3/8% Series A Senior Subordinated Notes due 2008 (the "Series A Securities") and the Company's 8 3/8% Series B Senior Subordinated Notes due 2008 (the "Series B Securities" and, collectively with the Series A Securities, the "Securities" or each, a "Security"). The Company owns beneficially and of record all of the equity ownership of the outstanding Voting Stock of the initial Subsidiary Guarantor, and the initial Subsidiary Guarantor is a member of the Company's consolidated group of companies that are engaged in related businesses. The initial Subsidiary Guarantor will derive direct and indirect benefit from the issuance of the Securities; accordingly, the initial Subsidiary Guarantor has authorized its guarantee of the Company's obligations under this Indenture and the Securities, and to provide therefor the initial Subsidiary Guarantor has duly authorized the execution and delivery of this Indenture. This Indenture is subject to the provisions of the Trust Indenture Act of 1939, as amended, that are required to be part of this Indenture and shall, to the extent applicable, be governed by such provisions. All things necessary have been done to make the Securities, when executed by the Company and authenticated and delivered hereunder and duly issued by the Company, the valid obligations of the Company, to make the Subsidiary Guarantee contained in this Indenture, when executed by the Subsidiary Guarantor, the valid obligation of the Subsidiary Guarantor and to make this Indenture a valid agreement of the Company, the Subsidiary Guarantor and the Trustee, in accordance with their and its terms. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities (together with the related Subsidiary Guarantee) by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities (together with the related Subsidiary Guarantee), as follows: 1 ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION ------------------------------------------------------- Section 1.1 Definitions. "Acquired Indebtedness" means Indebtedness of a Person (a) assumed in connection with an Asset Acquisition from such Person, (b) outstanding at the time such Person becomes a Subsidiary of any other Person (other than any Indebtedness incurred in connection with, or in contemplation of, such Asset Acquisition or such Person becoming such a Subsidiary) or (c) any renewals, extensions, substitutions, refinancings or replacements (each, for purposes of this clause, a "refinancing") by the Company of any Indebtedness described in clause (a) or (b) of this definition, including any successive refinancings, so long as (i) any such new Indebtedness shall be a principal amount that does not exceed the principal amount (or, if such Indebtedness being refinanced provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration thereof, such lesser amount as of the date of determination) so refinanced plus the amount of any premium required to be paid in connection with such refinancing pursuant to the terms of the Indebtedness refinanced or the amount of any premium reasonably determined by the Company as necessary to accomplish such refinancing, plus the amount of expenses of the Company incurred in connection with such refinancing, and (ii) in the case of any refinancing of Subordinated Indebtedness, such new Indebtedness is made subordinate to the Securities at least to the same extent as the Indebtedness being refinanced and (iii) such new Indebtedness has an Average Life longer than the Average Life of the Securities and a final Stated Maturity later than the final Stated Maturity of the Securities. "Act," when used with respect to any Holder, has the meaning specified in Section 15.3. "Adjusted Consolidated Net Tangible Assets" means (without duplication), as of the date of determination, (a) the sum of (i) 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 or federal income taxes, with no less than 70% of such discounted future net revenues estimated or audited by one or more nationally recognized firms of independent petroleum engineers in a reserve report prepared as of the end of the Company's most recently completed fiscal year, as increased by, as of the date of determination, the estimated discounted future net revenues from (A) estimated proved oil and gas reserves acquired since the date of such year-end reserve report, and (B) estimated oil and gas reserves attributable to upward revisions of estimates of proved oil and gas reserves since the date of such year-end reserve report due to exploration, development or exploitation activities, 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 (C) estimated proved oil and gas reserves produced or disposed of since the date of such year- end reserve report and (D) estimated oil and gas reserves attributable to downward revisions of estimates of proved oil and gas reserves since the date of such year-end reserve report due to changes in geological conditions or other factors which would, in 2 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 (A) through (D), such increases and decreases shall be as estimated by the Company's petroleum engineers, unless in the event that there is a Material Change as a result of such acquisitions, dispositions or revisions, then the discounted future net revenues utilized for purposes of this clause (a)(i) shall be confirmed in writing by estimate or audit of one or more nationally recognized firms of independent petroleum engineers as to at least 70% of such discounted future net revenues, (ii) the capitalized costs that are attributable to oil and gas properties of the Company and its Restricted Subsidiaries to which no proved oil and gas reserves are attributable, based on the Company's books and records as of a date no earlier than the date of the Company's latest annual or quarterly financial statements, (iii) the Net Working Capital on a date no earlier than the date of the Company's latest annual or quarterly financial statements and (iv) the greater of (A) the net book value on a date no earlier than the date of the Company's latest annual or quarterly financial statements or (B) 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 Company's latest audited financial statements, minus (b) the sum of (i) minority interests, (ii) any gas balancing liabilities of the Company and its Restricted Subsidiaries reflected in the Company's latest audited financial statements, (iii) to the extent included in (a) (i) above, the discounted future net revenues, calculated in accordance with SEC guidelines (utilizing the prices utilized in the Company's year-end reserve report), attributable to reserves which are required to be delivered to third parties to fully satisfy the obligations of the Company and its Restricted Subsidiaries with respect to Volumetric Production Payments on the schedules specified with respect thereto and (iv) 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 (a)(i) above, would be necessary to fully satisfy the payment obligations of the Company and its Restricted Subsidiaries with respect to Dollar-Denominated Production Payments on the schedules specified with respect thereto. If the Company changes its method of accounting from the full cost method to the successful efforts method or a similar method of accounting, "Adjusted Consolidated Net Tangible Assets" will continue to be calculated as if the Company was still using the full cost method of accounting. "Adjusted Net Assets" of a Subsidiary Guarantor at any date shall mean the amount by which the fair value of the properties and assets of such Subsidiary Guarantor exceeds the total amount of liabilities, including, without limitation, contingent liabilities (after giving effect to all other fixed and contingent liabilities incurred or assumed on such date), but excluding liabilities under the Subsidiary Guarantee, of such Subsidiary Guarantor at such date. "Affiliate" means, with respect to any specified Person, 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 Person, means the power to direct the management and policies of such Person, directly or indirectly, whether 3 through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. For purposes of this definition, beneficial ownership of 10% or more of the voting common equity (on a fully diluted basis) or options or warrants to purchase such equity (but only if exercisable at the date of determination or within 60 days thereof) of a Person shall be deemed to constitute control of such Person. "Asset Acquisition" means (a) an Investment by the Company or any Restricted Subsidiary in any other Person pursuant to which such Person shall become a Restricted Subsidiary or any Restricted Subsidiary shall be merged with or into the Company or any other Restricted Subsidiary or (b) the acquisition by the Company or any Restricted Subsidiary of the assets of any Person which constitute all or substantially all of the assets of such Person or any division or line of business of such Person. "Asset Sale" means any sale, issuance, conveyance, transfer, lease or other disposition to any Person other than the Company or any of its Restricted Subsidiaries (including, without limitation, by means of a Sale/ Leaseback Transaction or by way of merger or consolidation) (collectively, for purposes of this definition, a "transfer"), directly or indirectly, in one or a series of related transactions, of (a) any Capital Stock of any Restricted Subsidiary (or North American Unrestricted Subsidiary) held by the Company or any Restricted Subsidiary (or North American Unrestricted Subsidiary); (b) all or substantially all of the properties and assets of any division or line of business of the Company or any of its Restricted Subsidiaries (or North American Unrestricted Subsidiaries); or (c) any other properties or assets of the Company or any of its Restricted Subsidiaries (or North American Unrestricted Subsidiaries) other than (A) a transfer of hydrocarbons or other mineral products, cash or Cash Equivalents in the ordinary course of business or (B) any lease, abandonment, disposition, relinquishment or farm-out of any oil and gas Property in the ordinary course of business. For the purposes of this definition, the term "Asset Sale" shall not include (i) any transfer of properties or assets that is governed by, and made in accordance with, the provisions described in Section 8.1 hereof; (ii) any transfer of properties or assets to an Unrestricted Subsidiary, if permitted under Section 10.11 hereof; (iii) any trade or exchange by the Company or any Restricted Subsidiary (or North American Unrestricted Subsidiary) of oil and gas properties for other oil and gas properties owned or held by another Person which the Board of Directors of the Company determines in good faith to be of approximately equivalent value; (iv) any transfer of Properties having a fair market value of less than $5,000,000; or (v) any transfer that is a Permitted Investment, a Restricted Payment not prohibited by Section 10.11 hereof or an investment specifically excluded from the definition of the term "Investment." "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 of determination 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 4 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. "Average Life" means, with respect to any Indebtedness, at any date of determination, the quotient obtained by dividing (a) the sum of the products of (i) the number of years (and any portion thereof) from the date of determination to the date or dates of each successive scheduled principal payment (including, without limitation, any sinking fund or mandatory redemption payment requirements) of such Indebtedness multiplied by (ii) the amount of each such principal payment by (b) the sum of all such principal payments. "Bank Agent" means Chase Bank of Texas, National Association or any successor or replacement agent under the Credit Agreement. "Board of Directors" means, with respect to the Company, either the board of directors of the Company or any duly authorized committee of such board of directors, and, with respect to any Restricted Subsidiary, either the board of directors of such Restricted Subsidiary or any duly authorized committee of that board. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by its Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee, and with respect to a Restricted Subsidiary, a copy of a resolution certified by the Secretary or an Assistant Secretary of such Restricted Subsidiary to have been duly adopted by its Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in the Borough of Manhattan, The City of New York, New York or the city in which the Trustee's Corporate Trust Office is located, are authorized or obligated by law or executive order to close. "Capital Stock" means, with respect to any Person, any and all shares, interests, participations, rights in or other equivalents in the equity interests (however designated) in such Person, and any rights (other than debt securities convertible into an equity interest), warrants or options exercisable for, exchangeable for or convertible into such an equity interest in such Person. "Capitalized Lease Obligation" means any obligation to pay rent or other amounts under a lease of (or other agreement conveying the right to use) any Property (whether real, personal or mixed) that is required to be classified and accounted for as a capital lease obligation under GAAP, 5 and, for the purpose of this Indenture, the amount of such obligation at any date shall be the capitalized amount thereof at such date, determined in accordance with GAAP. "Cash Equivalents" means (i) any evidence of Indebtedness with a maturity of 365 days or less issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof); (ii) demand and time deposits and certificates of deposit or acceptances with a maturity of 365 days or less of any financial institution organized in the United States that is a member of the Federal Reserve System having combined capital and surplus and undivided profits of not less than $500,000,000 or any commercial bank organized under the laws of any other country that is a member of the Organization for Economic Cooperation and Development ("OECD") and has total assets in excess of $500,000,000; (iii) direct obligations issued by any state of the United States of America or Canada or any political subdivision of any such state or Canada or any public instrumentality of any such state or Canada maturing within 90 days after the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either S&P or Moody's (or, if at any time neither S&P nor Moody's shall be rating such obligations, then from such other rating service as may be acceptable to the Trustee); (iv) commercial paper issued by a corporation that is not an Affiliate of the Company and is organized under the laws of any state of the United States or the District of Columbia and rated at least A- 1 by S&P or at least P- 1 by Moody's; (v) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (i) above entered into with any commercial bank meeting the specifications of clause (ii) above; (vi) overnight bank deposits and bankers' acceptances at any commercial bank meeting the qualifications specified in clause (ii) above; (vii) deposits available for withdrawal on demand with any commercial bank not meeting the qualifications specified in clause (ii) above but which is organized under the laws of (a) any country that is a member of the OECD and has total assets in excess of $50,000,000 or (b) any other country in which the Company or any Restricted Subsidiary maintains an office or is engaged in the Oil and Gas Business, provided that, in either case (A) all such deposits are required to be made in such accounts in the ordinary course of business, (B) such deposits do not at any one time exceed $5,000,000 in the aggregate and (C) no funds so deposited remain on deposit in such bank for more than 30 days; (viii) deposits available for withdrawal on demand with any commercial bank not meeting the qualifications specified in clause (ii) above but which is a lending bank under any of the Company's or any Restricted Subsidiary's credit facilities, provided all such deposits do not exceed $5,000,000 in the aggregate at any one time; (ix) deposits at any one time not in excess of $200,000 in the aggregate, available for withdrawal on demand, with any commercial bank organized in the United States, and not meeting the qualifications specified in clause (ii) above; and (x) investments in money market funds substantially all of whose assets comprise securities of the types described in clauses (i) through (vi). "Change of Control" means the occurrence of any of the following events: (a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 50% of the total Voting Stock of the Company; (b) the Company is merged with or into 6 or consolidated with another Person and, immediately after giving effect to the merger or consolidation, (A) less than 50% of the total voting power of the outstanding Voting Stock of the surviving or resulting Person is then "beneficially owned" (within the meaning of Rule 13d-3 under the Exchange Act) in the aggregate by (x) the stockholders of the Company immediately prior to such merger or consolidation, or (y) if a record date has been set to determine the stockholders of the Company entitled to vote with respect to such merger or consolidation, the stockholders of the Company as of such record date and (B) any "person" or "group" (as defined in Section 13(d)(3) or 14(d)(2) of the Exchange Act, has become the direct or indirect "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of the total voting power of the Voting Stock of the surviving or resulting Person; (c) the Company, either individually or in conjunction with one or more Restricted Subsidiaries, sells, conveys, transfers or leases, or the Restricted Subsidiaries sell, convey, transfer or lease, all or substantially all of the assets of the Company and the Restricted Subsidiaries, taken as a whole (either in one transaction or a series of related transactions), including Capital Stock of the Restricted Subsidiaries, to any Person (other than the Company or a Wholly Owned Restricted Subsidiary) (but in no event shall the sale, conveyance, transfer or lease of the assets of, or the Capital Stock of, a North American Restricted Subsidiary, in the absence of other factors, result in a Change of Control); (d) during any consecutive two-year period, individuals who at the beginning of such period constituted the Board of Directors of the Company (together with any new directors whose election by such Board of Directors or whose nomination for election by the stockholders of the Company was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Company then in office; or (e) the liquidation or dissolution of the Company. "Code" shall mean the Internal Revenue Code of 1986, as amended, as now or hereafter in effect, together with all regulations, rulings and interpretations thereof or thereunder issued by the Internal Revenue Service. "Commission" or "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 this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Common Stock" of any Person means Capital Stock of such Person that does not rank prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such Person, to shares of Capital Stock of any other class of such Person. "Company" means the Person named as the "Company" in the first paragraph of this Indenture, until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. 7 "Company Request" or "Company Order" means a written request or order signed in the name of the Company by its Chairman, its President, any Vice President, its Treasurer or an Assistant Treasurer, and delivered to the Trustee. "Consolidated Exploration Expenses" means, for any period, exploration expenses of the Company and its Restricted Subsidiaries for such period as determined on a consolidated basis in accordance with GAAP. "Consolidated Fixed Charge Coverage Ratio" means, for any period, the ratio of (a) the sum of Consolidated Net Income, Consolidated Interest Expense, Consolidated Exploration Expenses, Consolidated Income Tax Expense and Consolidated Non-cash Charges deducted in computing Consolidated Net Income, in each case, for such period, of the Company and its Restricted Subsidiaries on a consolidated basis, all determined in accordance with GAAP, decreased (to the extent included in determining Consolidated Net Income) by the sum of (x) the amount of deferred revenues that are amortized during such period and are attributable to reserves that are subject to Volumetric Production Payments and (y) amounts recorded in accordance with GAAP as repayments of principal and interest pursuant to Dollar-Denominated Production Payments, to (b) the sum of such Consolidated Interest Expense for such period; provided that (i) in making such computation, the Consolidated Interest Expense attributable to interest on any Indebtedness required to be computed on a pro forma basis in accordance with clause (x) of Section 10.12 hereof and bearing a floating interest rate shall be computed as if the rate in effect on the date of computation had been the applicable rate for the entire period, (ii) in making such computation, the Consolidated Interest Expense attributable to interest on any Indebtedness under a revolving credit facility required to be computed on a pro forma basis in accordance with clause (x) of Section 10.12 hereof shall be computed based upon the average daily balance of such Indebtedness during the applicable period, provided that such average daily balance shall be reduced by the amount of any repayment of Indebtedness under a revolving credit facility during the applicable period, which repayment permanently reduced the commitments or amounts available to be reborrowed under such facility, (iii) notwithstanding clauses (i) and (ii) of this proviso, interest on Indebtedness determined on a fluctuating basis, to the extent such interest is covered by agreements relating to Interest Rate Protection Obligations, shall be deemed to have accrued at the rate per annum resulting after giving effect to the operation of such agreements and (iv) in making such calculation, Consolidated Interest Expense shall exclude interest attributable to Dollar-Denominated Production Payments. "Consolidated Income Tax Expense" means, for any period, the provision for federal, state, local and foreign income taxes of the Company and its Restricted Subsidiaries for such period as determined on a consolidated basis in accordance with GAAP. "Consolidated Interest Expense" means, for any period, without duplication, the sum of (i) the interest expense of the Company and its Restricted Subsidiaries for such period as determined on a consolidated basis in accordance with GAAP, including, without limitation, (a) any amortization of debt discount, (b) the net cost under Interest Rate Protection Obligations (including any amortization of discounts), (c) the interest portion of any deferred payment obligation, (d) all 8 commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing and (e) all accrued interest, in each case to the extent attributable to such period, (ii) to the extent any Indebtedness of any Person (other than the Company or a Restricted Subsidiary) is guaranteed by the Company or any Restricted Subsidiary, the aggregate amount of interest paid or accrued by such other Person during such period attributable to any such Indebtedness, in each case to the extent attributable to that period, (iii) the aggregate amount of the interest component of Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or accrued by the Company and its Restricted Subsidiaries during such period as determined on a consolidated basis in accordance with GAAP and (iv) the aggregate amount of dividends paid or accrued on Redeemable Capital Stock or Preferred Stock of the Company and its Restricted Subsidiaries, to the extent such Redeemable Capital Stock or Preferred Stock is owned by Persons other than Restricted Subsidiaries, less (v) to the extent included in clauses (i), (ii) or (iii), writeoff of capitalized debt issuance costs of the Company and its Restricted Subsidiaries during such period. "Consolidated Net Income" means, for any period, the consolidated net income (or loss) of the Company and its Restricted Subsidiaries for such period as determined in accordance with GAAP, adjusted by excluding (a) net after-tax extraordinary gains or losses (less all fees and expenses relating thereto), (b) net after-tax gains or losses (less all fees and expenses relating thereto) attributable to Asset Sales, (c) the net income (or net loss) of any Person (other than the Company or any of its Restricted Subsidiaries), in which the Company or any of its Restricted Subsidiaries has an ownership interest, except to the extent of the amount of dividends or other distributions or interest on indebtedness actually paid to the Company or its Restricted Subsidiaries in cash by such other Person during such period (regardless of whether such cash dividends, distributions or interest on indebtedness is attributable to net income (or net loss) of such Person during such period or during any prior period), (d) net income (or net loss) of any Person combined with the Company or any of its Restricted Subsidiaries on a "pooling of interests" basis attributable to any period prior to the date of combination, (e) the net income of any Restricted Subsidiary to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary is not at the date of determination permitted, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, provided, however, that the net income of a Foreign Subsidiary subject to restrictions on the payment of dividends or similar distributions related to project financing Indebtedness incurred in compliance with Section 10.12 hereof shall not be excluded to the extent of the sum of, without duplication, (i) the aggregate amount of all principal and interest on such project financing Indebtedness, plus (ii) capital expenditures; provided further, however, that the net income of a Foreign Subsidiary subject to restrictions on the payment of dividends or similar distributions shall not be excluded to the extent that such restrictions relate to completion of the project being financed by such project financing Indebtedness and such restriction is in effect for a period of no more than 18 months from the time of incurrence of such project financing Indebtedness, (f) any writedowns of non- current assets, provided, however, that any ceiling limitation writedowns under SEC guidelines shall be treated as capitalized costs, as if such writedowns had not occurred, and (g) any expenses associated with the merger between the 9 Company and United Meridian Corporation occurring prior to December 31, 1998 and not in excess of $40 million in the aggregate. "Consolidated Net Worth" means, at any date, the consolidated stockholders' equity of the Company less the amount of such stockholders' equity attributable to Redeemable Capital Stock or treasury stock of the Company and its Restricted Subsidiaries, as determined in accordance with GAAP. "Consolidated Non-cash Charges" means, for any period, the aggregate depreciation, depletion, amortization and other non-cash expenses of the Company and its Restricted Subsidiaries reducing Consolidated Net Income for such period, determined on a consolidated basis in accordance with GAAP (excluding any such non-cash charge which requires an accrual of or reserve for cash charges for any future period). "Corporate Trust Office" means the corporate trust office of the Trustee, at which at any particular time its corporate trust business shall be administered, which office at the date of execution of this Indenture is located at 950 17th Street, Suite 650, Denver, Colorado 80202, Attention: Corporate Trust Department, except that with respect to presentation of Securities for payment or for registration of transfer or exchange, such term shall mean the office or agency of the Trustee at which, at any particular time, its corporate agency business shall be conducted. "Credit Agreement" means the Amended and Restated Credit Agreement dated as of July 8, 1998 among the Company, as borrower, OEI Louisiana, as guarantor, and Chase Bank of Texas, National Association, as agent, the other agents parties thereto, and the lenders parties thereto, as such agreement may be amended, modified, supplemented, extended, restated, replaced (including replacement after the termination of such agreement), restructured, increased, renewed or refinanced from time to time in one or more credit agreements, loan agreements, instruments or similar agreements, with the same or different agents or lenders, as such may be further amended, modified, supplemented, extended, restated, replaced (including replacement after the termination of such agreement), restructured, increased, renewed or refinanced from time to time, in each case in accordance with and as permitted by this Indenture. "Credit Agreement Obligations" means all monetary obligations of every nature of the Company or a Restricted Subsidiary, including without limitation, obligations to pay principal and interest, reimbursement obligations under letters of credit, fees, expenses and indemnities, from time to time owed to the lenders or any agent under or in respect of the Credit Agreement. "Default" means any event, act or condition that is, or after notice or passage of time or both would be, an Event of Default. "Defaulted Interest" has the meaning specified in Section 3.9 hereof. 10 "Definitive Securities" means Securities that are in the form set forth in Section 2.2 hereto (but without including the paragraph referred to in the footnote in Section 2.2 hereof). "Depositary" means with respect to the Securities issuable or issued in whole or in part in global form, the Person specified in Section 3.5 hereof as the Depositary with respect to the Securities, until a successor shall have been appointed and become such pursuant to the applicable provision of this Indenture, and, thereafter, "Depositary" shall mean or include such successor. "Designated Guarantor Senior Indebtedness" means, with respect to a Subsidiary Guarantor, (i) all Guarantor Senior Indebtedness of such Subsidiary Guarantor under the Credit Agreement Obligations, (ii) all Guarantor Senior Indebtedness of such Subsidiary Guarantor under the Senior Note Obligations and (iii) any other Guarantor Senior Indebtedness which (a) at the time of incurrence equals or exceeds $10,000,000 in aggregate principal amount and (b) is specifically designated by such Subsidiary Guarantor in the instrument evidencing such Guarantor Senior Indebtedness as "Designated Guarantor Senior Indebtedness" for purposes of this Indenture. "Designated Senior Indebtedness" means (i) all Senior Indebtedness under the Credit Agreement Obligations, (ii) all Senior Indebtedness under the Senior Note Obligations and (iii) any other Senior Indebtedness which (a) at the time of incurrence equals or exceeds $10,000,000 in aggregate principal amount and (b) is specifically designated by the Company in the instrument evidencing such Senior Indebtedness as "Designated Senior Indebtedness" for purposes of this Indenture. "Disinterested Director" means, with respect to any transaction or series of transactions in respect of which the Board of Directors of the Company is required to deliver a Board Resolution hereunder, a member of the Board of Directors of the Company who does not have any material direct or indirect financial interest (other than an interest arising solely from the beneficial ownership of Capital Stock of the Company) in or with respect to such transaction or series of transactions. "Dollar-Denominated Production Payments" means production payment obligations recorded as liabilities in accordance with GAAP, together with all undertakings and obligations in connection therewith. "Event of Default" has the meaning specified in Section 5.1 hereof. "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, and any successor act thereto. "Exchange Offer" means the offer by the Company to the Holders of all outstanding Transfer Restricted Securities to exchange all such outstanding Transfer Restricted Securities held by such Holders for Series B Securities, in an aggregate principal amount equal to the aggregate principal amount of the Transfer Restricted Securities tendered in such exchange offer by such Holders. 11 "Existing Indentures" means, collectively, the indenture related to the Company's 10 3/8% Senior Subordinated Notes due 2005, the indenture related to the Company's 9 3/4% Senior Subordinated Notes due 2006 and the indenture related to the Company's 8 7/8% Senior Subordinated Notes due 2007, in each case as amended and supplemented to the date hereof and as such may be further amended and supplemented from time to time. "Existing Notes" means (i) the 10 3/8% Senior Subordinated Notes due 2005 of the Company issued pursuant to the Indenture, dated as of October 30, 1995, between the Company, as successor by merger to United Meridian Corporation, as issuer, OEI Louisiana, as successor by merger to UMC Petroleum Corporation, as subsidiary guarantor, and U.S. Bank Trust National Association, as trustee, as amended and supplemented by the First and Second Supplemental Indentures thereto, (ii) the 9 3/4% Senior Subordinated Notes due 2006 of the Company issued pursuant to the Indenture, dated as of September 26, 1996, between the Company, as issuer, OEI Louisiana, as subsidiary guarantor, and State Street Bank and Trust Company, as trustee, as amended and supplemented by the First Supplemental Indenture thereto, and (iii) the 8 7/8% Senior Subordinated Notes due 2007 of the Company issued pursuant to the Indenture, dated as of July 2, 1997, between the Company, as issuer, OEI Louisiana, as subsidiary guarantor, and State Street Bank and Trust Company, as trustee, as amended and supplemented by the First Supplemental Indenture thereto, in each case as such notes and indentures may be further amended and supplemented from time to time. "Existing Senior Notes" means the 13 1/2% Senior Notes due 2004 of the Company issued pursuant to the Indenture, dated as of December 1, 1994, between the Company, as issuer, OEI Louisiana, as subsidiary guarantor, and State Street Bank and Trust Company, as trustee, as amended and supplemented by the First, Second and Third Supplemental Indentures thereto, and as further amended and supplemented from time to time. "Fair Market Value" means the fair market value of a Property (including shares of Capital Stock) or Redeemable Capital Stock as determined by a Board Resolution of the Company adopted in good faith, which determination shall be conclusive for purposes of this Indenture; provided however, that unless otherwise specified herein, the Board of Directors shall be under no obligation to obtain any valuation or assessment from any investment banker, appraiser or other third party. "Federal Bankruptcy Code" means the United States Bankruptcy Code of Title 11 of the United States Code, as amended from time to time. "Foreign Subsidiary" means (i) any Restricted Subsidiary engaged in the Oil and Gas Business exclusively outside the United States of America, irrespective of its jurisdiction of incorporation, and (ii) any other Restricted Subsidiary whose assets (excluding any cash and Cash Equivalents) consist exclusively of Capital Stock or Indebtedness of one or more Restricted Subsidiaries described in clause (i) of this definition. 12 "GAAP" means generally accepted accounting principles in the United States as in effect on the Issue Date. "Guarantee" means, as applied to any obligation, (i) a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner, of any part or all of such obligation and (ii) an agreement, direct or indirect, contingent or otherwise, the practical effect of which is to assure in any way the payment or performance (or payment of damages in the event of non-performance) of all or any part of such obligation, including, without limiting the foregoing, the payment of amounts drawn down by letters of credit. When used as a verb, "guarantee" shall have a corresponding meaning. "Guarantor" means any Restricted Subsidiary that incurs a Subsidiary Guarantee. "Guarantor Senior Indebtedness" means all Indebtedness of a Subsidiary Guarantor (present and future) created, incurred, assumed or guaranteed by such Subsidiary Guarantor (and all renewals, substitutions, refinancings or replacements thereof) (including the principal of, interest on and fees, premiums, expenses (including costs of collection), indemnities and other amounts payable in connection with such Indebtedness) (and including, in the case of the Credit Agreement and any guarantees related to the Senior Notes and the Existing Senior Notes, interest accruing after the filing of a petition by or against such Subsidiary Guarantor under any bankruptcy law, in accordance with and at the rate, including any default rate, specified with respect to such indebtedness, whether or not a claim for such interest is allowed as a claim after such filing in any proceeding under such bankruptcy law), unless the instrument governing such Indebtedness expressly provides that such Indebtedness is not senior in right of payment to its Subsidiary Guarantee. Notwithstanding the foregoing, Guarantor Senior Indebtedness of a Subsidiary Guarantor will not include (i) Indebtedness of such Subsidiary Guarantor evidenced by its Subsidiary Guarantee, (ii) Indebtedness of such Subsidiary Guarantor that is expressly subordinate or junior in right of payment to any Guarantor Senior Indebtedness of such Subsidiary Guarantor or its Subsidiary Guarantee, (iii) Indebtedness which, when incurred and without respect to any election under Section 1111(b) of Title 11 United States Code, is by its terms without recourse to such Subsidiary Guarantor, (iv) any repurchase, redemption or other obligation in respect of Redeemable Capital Stock of such Subsidiary Guarantor, (v) to the extent it might constitute Indebtedness, any liability for federal, state, local or other taxes owed or owing by such Subsidiary Guarantor, (vi) Indebtedness of such Subsidiary Guarantor to the Company or any of the Company's other Subsidiaries or any other Affiliate of the Company or any of such Affiliate's Subsidiaries, and (vii) that portion of any Indebtedness of such Subsidiary Guarantor which at the time of issuance is issued in violation of this Indenture (but, as to any such Indebtedness, no such violation shall be deemed to exist for purposes of this clause (vii) if the holder(s) of such Indebtedness or their representative or such Subsidiary Guarantor shall have furnished to the Trustee an opinion of counsel unqualified in all material respects of independent legal counsel, addressed to the Trustee (which legal counsel may, as to matters of fact, rely upon a certificate of such Subsidiary Guarantor) to the effect that the incurrence of such Indebtedness does not violate the provisions of this Indenture); provided that the foregoing exclusions shall not affect the priorities of any Indebtedness arising solely by operation of law in any case or proceeding or 13 similar event described in clause (a), (b) or (c) of the definition of "Insolvency or Liquidation Proceeding" included herein. "Holder" means a Person in whose name a Security is registered in the Security Register. "Indebtedness" means, with respect to any Person, without duplication, (a) all liabilities of such Person for borrowed money or for the deferred purchase price of Property or services, excluding any trade accounts payable and other accrued current liabilities incurred in the ordinary course of business, but including, without limitation, all obligations, contingent or otherwise, of such Person in connection with any letters of credit, bankers' acceptance or other similar credit transaction and in connection with any agreement to purchase, redeem, exchange, convert or otherwise acquire for value any Capital Stock of such Person, or any warrants, rights or options to acquire such Capital Stock, now or hereafter outstanding, if, and to the extent, any of the foregoing would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, (b) all obligations of such Person evidenced by bonds, notes, debentures or other similar instruments, if, and to the extent, any of the foregoing would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, (c) all Indebtedness of such Person created or arising under any conditional sale or other title retention agreement with respect to Property acquired by such Person (even if the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such Property), but excluding trade accounts payable arising in the ordinary course of business, (d) all Capitalized Lease Obligations of such Person, (e) the Attributable Indebtedness (in excess of any related Capitalized Lease Obligations) related to any Sale/Leaseback Transaction of such Person, (f) all Indebtedness referred to in the preceding clauses of other Persons and all dividends of other Persons, the payment of which is secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon Property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness (the amount of such obligation being deemed to be the lesser of the value of such Property or asset or the amount of the obligation so secured), (g) all guarantees by such Person of Indebtedness referred to in this definition (including, with respect to any Production Payment, any warranties or guaranties of production or payment by such Person with respect to such Production Payment but excluding other contractual obligations of such Person with respect to such Production Payment), (h) all Redeemable Capital Stock of such Person valued at the greater of its voluntary or involuntary maximum fixed repurchase price plus accrued dividends, (i) all obligations of such Person under or in respect of currency exchange contracts and Interest Rate Protection Obligations and (j) any amendment, supplement, modification, deferral, renewal, extension or refunding of any liability of such Person of the types referred to in clauses (a) through (i) above. For purposes hereof, the "maximum fixed repurchase price" of any Redeemable Capital Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Redeemable Capital Stock as if such Redeemable Capital Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to this Indenture, and if such price is based upon, or measured by, the Fair Market Value of such Redeemable Capital Stock, such Fair Market Value shall be determined in good faith by the board of directors of the issuer of such Redeemable Capital Stock, 14 provided, however, that if such Redeemable Capital Stock is not at the date of determination permitted or required to be repurchased, the "maximum fixed repurchase price" shall be the book value of such Redeemable Capital Stock. Subject to clause (g) of the first sentence of this definition, neither Dollar- Denominated Production Payments nor Volumetric Production Payments shall be deemed to be Indebtedness. "Indenture" means this instrument as originally executed and as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof. "Initial Purchasers" means Merrill Lynch, Pierce, Fenner & Smith Incorporated, Chase Securities Inc., J.P. Morgan Securities Inc., Lehman Brothers Inc. and Salomon Brothers Inc as initial purchasers in the Offering. "Insolvency or Liquidation Proceeding" means, with respect to any Person, (a) an insolvency or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding, relative to such Person or to its creditors, as such, or its assets, or (b) any liquidation, dissolution or other winding-up of such Person, whether voluntary or involuntary and whether or not involving insolvency or bankruptcy, or (c) any general assignment for the benefit of creditors or any other marshaling of assets and liabilities of such Person. "Interest Payment Date" means the Stated Maturity of an installment of interest on the Securities. "Interest Rate Protection Obligations" means the obligations of any Person pursuant to any arrangement with any other Person whereby, directly or indirectly, such Person is entitled to receive from time to time periodic payments calculated by applying either a floating or a fixed rate of interest on a stated notional amount in exchange for periodic payments made by such Person calculated by applying a fixed or a floating rate of interest on the same notional amount and shall include, without limitation, interest rate swaps, caps, floors, collars and similar agreements or arrangements designed to protect against or manage such Person's and any of its Subsidiaries' exposure to fluctuations in interest rates. "Investment" means, with respect to any Person, any direct or indirect advance, loan, guarantee of Indebtedness or other extension of credit or capital contribution to (by means of any transfer of cash or other Property or assets to others or any payment for Property, assets or services for the account or use of others), or any purchase or acquisition by such Person of any Capital Stock, bonds, notes, debentures or other securities (including derivatives) or evidences of Indebtedness issued by, any other Person. In addition, the Fair Market Value of the net assets of any Restricted Subsidiary at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary shall be deemed to be an "Investment" made by the Company in such Unrestricted Subsidiary at such time. "Investments" shall exclude (a) extensions of trade credit on commercially reasonable terms in accordance with normal trade practices, (b) Interest Rate Protection Obligations entered into in 15 the ordinary course of business or as required by any Permitted Indebtedness or any Indebtedness incurred in compliance with Section 10.12 hereof, but only to the extent that the notional principal amount of such Interest Rate Protection Obligations does not exceed 105% of the principal amount of such Indebtedness to which such Interest Rate Protection Obligations relate and (c) Capital Stock, bonds, notes, debentures or other securities received as a result of Asset Sales permitted under Section 10.17 hereof. "Issue Date" means the closing date for the sale and original issuance of the Securities to the Initial Purchasers. "Lien" means any mortgage, charge, pledge, lien (statutory or other), security interest, hypothecation, assignment for security, claim, or preference or priority or other encumbrance or similar agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any agreement to give or grant a Lien or any lease, conditional sale or other title retention agreement having substantially the same economic effect as any of the foregoing) upon or with respect to any Property of any kind. A Person shall be deemed to own subject to a Lien any Property which such Person has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement. "Make-Whole Premium" means, in connection with any optional redemption of any Security prior to the Five-Year Date, the excess, if any, of (i) the aggregate present value as of the date of such redemption of each dollar of principal of such Security being redeemed and the amount of interest (exclusive of interest accrued to the date of redemption) and premium that would have been payable in respect of such dollar if such redemption had been made on the Five- Year Date, determined by discounting, on a semiannual basis, such principal, interest and premium at a rate equal to the sum of the Treasury Yield (determined on the business day immediately preceding the date of such redemption) plus 0.45% per annum, from the respective dates on which such principal, interest and premium would have been payable if such redemption had been made on the Five-Year Date, over (ii) the aggregate principal amount of such Securities being redeemed. "Material Change" means an increase or decrease (excluding changes that result solely from changes in prices) of more than 50% during a fiscal quarter in the estimated discounted future net cash flows from proved oil and gas reserves of the Company and its Restricted Subsidiaries, calculated in accordance with clause (a) (i) of the definition of Adjusted Consolidated Net Tangible Assets; provided, however, that the following will be excluded from the calculation of Material Change: (i) any acquisitions during the quarter of oil and gas reserves that have been estimated by a nationally recognized firm of independent petroleum engineers and on which a report or reports exist and (ii) any disposition of Properties existing at the beginning of such quarter that have been disposed of as provided in Section 10.17 hereof. "Maturity" means, with respect to any Security, the date on which any principal of such Security becomes due and payable as therein or herein provided, whether at the Stated Maturity with 16 respect to such principal or by declaration of acceleration, call for redemption or purchase or otherwise. "Moody's" means Moody's Investors Service, Inc. and its successors. "Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds thereof in the form of cash or Cash Equivalents including payments in respect of deferred payment obligations when received in the form of cash or Cash Equivalents (except to the extent that such obligations are financed or sold with recourse to the Company or any Restricted Subsidiary), net of (i) brokerage commissions and other fees and expenses (including fees and expenses of legal counsel and investment banks) related to such Asset Sale, (ii) provisions for all taxes payable as a result of such Asset Sale, (iii) amounts required to be paid to any Person (other than the Company or any Restricted Subsidiary) owning a beneficial interest in the assets subject to the Asset Sale and (iv) appropriate amounts to be provided by the Company or any Restricted Subsidiary, as the case may be, as a reserve required in accordance with GAAP consistently applied against any liabilities associated with such Asset Sale and retained by the Company or any Restricted Subsidiary, as the case may be, after such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale, all as reflected in an Officers' Certificate delivered to the Trustee; provided, however, that any amounts remaining after adjustments, revaluations or liquidations of such reserves shall constitute Net Cash Proceeds. "Net Working Capital" means (i) all current assets of the Company and its Restricted Subsidiaries, minus (ii) all current liabilities of the Company and its Restricted Subsidiaries, except current liabilities included in Indebtedness, in each case as set forth in financial statements of the Company prepared in accordance with GAAP. "Non-payment Default" means, for purposes of Article XIV hereof, any event (other than a Payment Default) the occurrence of which entitles one or more Persons to act to accelerate the maturity of any Designated Senior Indebtedness. "Non-recourse Indebtedness" means Indebtedness or that portion of Indebtedness of the Company incurred in connection with the acquisition by the Company of any Property or assets and as to which (a) the holders of such Indebtedness agree that they will look solely to the Property or assets so acquired and securing such Indebtedness for payment on or in respect of such Indebtedness and (b) no default with respect to such Indebtedness would permit (after notice or passage of time or both), according to the terms thereof, any holder of any Indebtedness of the Company or a Restricted Subsidiary to declare a default on such Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity. "North American Restricted Subsidiary" means any Restricted Subsidiary at least 90% of the Adjusted Consolidated Net Tangible Assets of which are located onshore (or in water not deeper than 15 feet) in the United States or Canada (as evaluated immediately prior to the designation of 17 such Subsidiary to be an Unrestricted Subsidiary); and "North American Unrestricted Subsidiary" means such Subsidiary after such designation. "Obligations" means any principal of, premium, if any, and interest on, and any other amounts (including, without limitation, any payment obligations with respect to the Securities as a result of any Asset Sale, Change of Control or redemption) owing in respect of, the Securities payable pursuant to the terms of the Securities or this Indenture or upon acceleration of the Securities. "OEI Louisiana" means Ocean Energy, Inc., a Louisiana corporation and wholly-owned subsidiary of the Company. "Offering" means the Offering of the Series A Securities pursuant to the Offering Memorandum. "Offering Memorandum" means the Offering Memorandum of the Company, dated July 1, 1998, relating to the Offering. "Officer" means, with respect to any Person, the Chairman of the Board, the President, any Vice President, the Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of such Person. "Officers' Certificate" means a certificate signed by the Chairman, the President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of the Company, and delivered to the Trustee. "Oil and Gas Business" means (i) the acquisition, exploration, development, operation and disposition of interests in oil, gas and other hydrocarbon Properties, (ii) the gathering, marketing, treating, processing, storage, refining, selling and transporting of any production from such interests or Properties, (iii) any business relating to or arising from exploration for or development, production, treatment, processing, storage, refining, transportation or marketing of oil, gas and other minerals and products produced in association therewith, (iv) any power generation and electrical transmission business in a jurisdiction outside of North America where fuel required by such business is supplied, directly or indirectly, from production reserves substantially from blocks in which the Company or its Restricted Subsidiaries participate and (v) any activity necessary, appropriate or incidental to the activities described in the foregoing clauses (i) through (iv) of this definition. "Opinion of Counsel" means a written opinion of counsel, who may be counsel for the Company (or any Subsidiary Guarantor, if applicable), including an employee of the Company (or any Subsidiary Guarantor, if applicable), and who shall be reasonably acceptable to the Trustee. 18 "Outstanding," when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except: (i) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (ii) Securities, or portions thereof, for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; provided that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; (iii) Securities, except to the extent provided in Sections 12.2 and 12.3 hereof, with respect to which the Company has effected legal defeasance and/or covenant defeasance as provided in Article XII hereof; and (iv) Securities which have been paid pursuant to Section 3.8 hereof or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands the Securities are valid obligations of the Company; provided, however, that in determining whether the Holders of the requisite principal amount of Outstanding Securities have given any request, demand, authorization, direction, consent, notice or waiver hereunder, and for the purpose of making the calculations required by TIA Section 313, Securities owned by the Company, any Subsidiary Guarantor, or any other obligor upon the Securities or any Affiliate of the Company, any Subsidiary Guarantor, or such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in making such calculation or in relying upon any such request, demand, authorization, direction, consent, notice or waiver, only Securities which the Trustee knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company, any Subsidiary Guarantor, or any other obligor upon the Securities or any Affiliate of the Company, any Subsidiary Guarantor, or such other obligor. "Pari Passu Indebtedness" means any Indebtedness of the Company that is pari passu in right of payment to the Securities. "Paying Agent" means any Person (including the Company acting as Paying Agent) authorized by the Company to pay the principal of (and premium, if any, on) or interest on any Securities on behalf of the Company. 19 "Payment Default" means any default in the payment when due (whether at Stated Maturity, upon scheduled repayment, upon acceleration or otherwise) of principal of or premium, if any, or interest on, or of unreimbursed amounts under drawn letters of credit or fees relating to letters of credit constituting, any Designated Senior Indebtedness. "Permitted Guarantor Junior Securities" means with respect to any Subsidiary Guarantor, so long as the effect of any exclusion employing this definition is not to cause such Subsidiary Guarantee to be treated in any case or proceeding or similar event described in clause (a), (b) or (c) of the definition of Insolvency or Liquidation Proceeding as part of the same class of claims as Guarantor Senior Indebtedness of such Subsidiary Guarantor or any class of claims pari passu with, or senior to, Guarantor Senior Indebtedness of such Subsidiary Guarantor, for any payment or distribution, debt or equity securities of such Subsidiary Guarantor or any successor Person provided for or by a plan of reorganization or readjustment that are subordinated at least to the same extent that such Subsidiary Guarantee is subordinated to the payment of all Guarantor Senior Indebtedness of such Subsidiary Guarantor when outstanding; provided that (i) if a new Person results from such reorganization or readjustment, such Person assumes any Guarantor Senior Indebtedness of such Subsidiary Guarantor not paid in full in cash or Cash Equivalents in connection with such reorganization or readjustment and (ii) the rights of the holders of such Guarantor Senior Indebtedness are not, without the consent of such holders, altered by such reorganization or readjustment. "Permitted Indebtedness" means any of the following: (i) Indebtedness of the Company under one or more bank credit or revolving credit facilities in an aggregate principal amount at any one time outstanding not to exceed the greater of (A) $500 million and (B) an amount equal to the sum of (x) $350 million and (y) 25% of Adjusted Consolidated Net Tangible Assets determined as of the date of the incurrence of such Indebtedness (such greater amount being referred to as the "Adjusted Maximum Credit Amount") (plus interest and fees under such facilities), less any amounts derived from Asset Sales and applied to the required permanent reduction of Senior Indebtedness (and a permanent reduction of the related commitment to lend or amount available to be reborrowed in the case of a revolving credit facility) under such credit facilities as contemplated by Section 10.17(b) hereof (the "Maximum Credit Amount") (with the Maximum Credit Amount to be an aggregate maximum amount for the Company and all Restricted Subsidiaries, pursuant to clause (i) of the definition of "Permitted Subsidiary Indebtedness"), and any renewals, amendments, extensions, supplements, modifications, deferrals, refinancings or replacements (each, for purposes of this clause, a "refinancing") thereof by the Company, including any successive refinancings thereof by the Company, so long as the aggregate principal amount of any such new Indebtedness, together with the aggregate principal amount of all other Indebtedness outstanding pursuant to this clause (i) (and clause (i) of the definition of "Permitted Subsidiary Indebtedness"), shall not at any one time exceed the Maximum Credit Amount; 20 (ii) Indebtedness of the Company under the Senior Notes and the Securities; (iii) Indebtedness of the Company outstanding on the Issue Date; (iv) obligations of the Company pursuant to Interest Rate Protection Obligations, but only to the extent such obligations do not exceed 105% of the aggregate principal amount of the Indebtedness covered by such Interest Rate Protection Obligations; obligations under currency exchange contracts entered into in the ordinary course of business; and hedging arrangements that the Company enters into in the ordinary course of business for the purpose of protecting the production of the Company and its Restricted Subsidiaries against fluctuations in oil or natural gas prices; (v) Indebtedness of the Company to any Restricted Subsidiaries; (vi) in-kind obligations relating to net gas balancing positions arising in the ordinary course of business and consistent with past practice; (vii) Indebtedness in respect of bid, performance or surety bonds issued for the account of the Company or any Restricted Subsidiary in the ordinary course of business (including obligations of the type described in clause (g) of the definition of the term "Permitted Liens"), including guarantees and letters of credit supporting such bid, performance, surety or other obligations (in each case other than for an obligation for money borrowed); (viii) any renewals, extensions, substitutions, refinancings or replacements (each, for purposes of this clause, a "refinancing") by the Company of any Indebtedness of the Company other than Indebtedness incurred pursuant to clauses (iv), (v), (vi) and (vii) of this definition, including any successive refinancings by the Company, so long as (A) any such new Indebtedness shall be in a principal amount that does not exceed the principal amount (or, if such Indebtedness being refinanced provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration thereof, such lesser amount as of the date of determination) so refinanced plus the amount of any premium required to be paid in connection with such refinancing pursuant to the terms of the Indebtedness refinanced or the amount of any premium reasonably determined by the Company as necessary to accomplish such refinancing, plus the amount of expenses of the Company incurred in connection with such refinancing, (B) in the case of any refinancing of Subordinated Indebtedness, such new Indebtedness is made subordinate to the Securities at least to the same extent as the Indebtedness being refinanced and (C) such new Indebtedness has an Average Life equal to or longer than the Average Life of the Indebtedness being refinanced and a final Stated Maturity equal to or later than the final Stated Maturity of the Indebtedness being refinanced; (ix) Non-recourse Indebtedness; 21 (x) Indebtedness arising from agreements of the Company or a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition; (xi) Indebtedness of the Company to an Unrestricted Subsidiary for money borrowed, provided that such Indebtedness is subordinated in right of payment to the Securities and the Stated Maturity of such Indebtedness is later than the final Stated Maturity of the Securities; (xii) any guarantee of Guarantor Senior Indebtedness or Indebtedness of a Foreign Subsidiary incurred in compliance with Section 10.12 hereof; and (xiii) other Indebtedness of the Company and the Restricted Subsidiaries that are Subsidiary Guarantors in an aggregate principal amount not in excess of $50,000,000 at any one time outstanding. "Permitted Investments" means any of the following: (i) Investments in Cash Equivalents; (ii) Investments in the Company or any of its Restricted Subsidiaries; (iii) Investments in an amount not to exceed 5% of Adjusted Consolidated Net Tangible Assets at any one time outstanding; (iv) Investments by the Company or any of its Restricted Subsidiaries in another Person, if as a result of such Investment (A) such other Person becomes a Restricted Subsidiary of the Company; or (B) such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all of its assets to, the Company or a Restricted Subsidiary; (v) entry into operating agreements, joint ventures, partnership agreements (whether general or limited), limited liability company agreements, subscription agreements, stock purchase agreements, stockholder agreements, working interests, royalty interests, mineral leases, processing agreements, farm-out agreements, contracts for the sale, transportation or exchange of oil and natural gas, unitization agreements, pooling arrangements, area of mutual interest agreements, production sharing agreements and other similar or customary agreements, transactions, properties, interests or arrangements, and Investments and expenditures in connection therewith or pursuant thereto, in each case made or entered into in the ordinary course of the Oil and Gas Business; (vi) shares of Capital Stock or other securities received in settlement of debts owed to the Company or any of its Restricted Subsidiaries as a result of foreclosure, perfection or enforcement of any Lien or indebtedness or in connection with any good faith settlement or a bankruptcy proceeding; (vii) entry into any hedging arrangements in the ordinary course of business for the purpose of protecting the Company's or any Restricted Subsidiary's production against fluctuations in oil or natural gas prices; (viii) entry into any currency exchange contract in the ordinary course of business; (ix) Investments in any Person engaged in the power generation and electrical transmission business where fuel required by such business is supplied, directly or indirectly, from production reserves substantially from blocks in which the Company or its Restricted Subsidiaries participate, provided that the aggregate amount of 22 Investments outstanding at any one time in such Person shall be no more than $15,000,000; (x) Investments in any Person that is the purchaser of a portion of the interests of a Foreign Subsidiary, provided that such Investments are in the nature of a note or other deferred payment obligation to the Company or such Foreign Subsidiary and are in an amount of no more than $35,000,000 at any one time outstanding; (xi) workers' compensation, utility, lease and similar deposits and prepaid expenses in the ordinary course of business; (xii) endorsements of negotiable instruments and documents in the ordinary course of business; or (xiii) designation of a North American Restricted Subsidiary to be an Unrestricted Subsidiary if the credit ratings assigned to the Securities by each of S&P and Moody's, respectively, immediately after giving effect to such designation (the "post-designation credit ratings") are or will be greater than or equal to the greater of (A) the credit rating assigned to the Securities by such Rating Agency immediately prior to giving effect to such designation and (B) such credit rating as of the Issue Date. For purposes of determining compliance with clause (xiii) of the preceding sentence, (1) subsequent changes in such credit rating unrelated to such designation shall not cause such designation to fail to constitute a "Permitted Investment," and (2) without limitation of other forms of proof of the post-designation credit rating assigned to the Securities, any press release issued by such Rating Agency or any written notification from such Rating Agency to the Company addressing the impact of such designation on the credit rating assigned to the Securities (whether such press release or written notification is issued before, contemporaneously with or after such designation) shall constitute conclusive evidence of the post-designation credit rating. "Permitted Junior Securities" means, so long as the effect of any exclusion employing this definition is not to cause the Securities to be treated in any case or proceeding or similar event described in clause (a), (b) or (c) of the definition of Insolvency or Liquidation Proceeding as part of the same class of claims as Senior Indebtedness or any class of claims pari passu with, or senior to, Senior Indebtedness, for any payment or distribution, debt or equity securities of the Company or any successor Person provided for or by a plan of reorganization or readjustment that are subordinated at least to the same extent that the Securities are subordinated to the payment of all Senior Indebtedness when outstanding; provided that (i) if a new Person results from such reorganization or readjustment, such Person assumes any Senior Indebtedness not paid in full in cash or Cash Equivalents in connection with such reorganization or readjustment and (ii) the rights of the holders of such Senior Indebtedness are not, without the consent of such holders, altered by such reorganization or readjustment. "Permitted Liens" means the following types of Liens: (a) Liens existing as of the Issue Date; (b) Liens securing the Securities; (c) Liens in favor of the Company or a Restricted Subsidiary that is a Subsidiary Guarantor; 23 (d) Liens securing Senior Indebtedness, Guarantor Senior Indebtedness or Indebtedness of a Restricted Subsidiary incurred in compliance with Section 10.12 hereof; (e) Liens for taxes, assessments and governmental charges or claims either (i) not delinquent or (ii) contested in good faith by appropriate proceedings and as to which the Company or its Restricted Subsidiaries shall have set aside on its books such reserves as may be required pursuant to GAAP; (f) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens imposed by law incurred in the ordinary course of business for sums not delinquent or being contested in good faith, if such reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made in respect thereof; (g) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security, or to secure the payment or performance of tenders, statutory or regulatory obligations, surety and appeal bonds, bids, leases, government contracts and leases, performance and return of money bonds and other similar obligations, including letters of credit and bank guarantees required or requested by the United States, any State thereof or any foreign government or any subdivision, department, agency, organization or instrumentality of any of the foregoing in connection with any contract or statute (exclusive of obligations for the payment of borrowed money but including lessee or operator obligations under statutes, governmental regulations, contracts or instruments related to the ownership, exploration and production of oil, gas and minerals on state, Federal or foreign lands or waters); (h) judgment Liens not giving rise to an Event of Default so long as any appropriate legal proceedings which may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within which such proceeding may be initiated shall not have expired; (i) easements, rights-of-way, restrictions and other similar charges or encumbrances not interfering in any material respect with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries; (j) any interest or title of a lessor under any Capitalized Lease Obligation or operating lease; (k) Liens resulting from the deposit of funds or evidences of Indebtedness in trust for the purpose of defeasing Indebtedness of the Company or any of the Subsidiaries; 24 (l) Liens securing obligations under hedging agreements that the Company or any Restricted Subsidiary enters into in the ordinary course of business for the purpose of protecting their production against fluctuations in oil or natural gas prices, and Liens securing obligations under any foreign currency exchange agreement, option or futures contract or other similar agreement or arrangement entered into in the ordinary course of business and designed to protect against or manage the Company's or any of its Restricted Subsidiaries' exposure to fluctuation in foreign currency rates; (m) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person's obligations in respect of bankers' acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods; (n) Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other Property relating to such letters of credit and products and proceeds thereof; (o) Liens encumbering Property or assets under construction arising from progress or partial payments by a customer of the Company or its Restricted Subsidiaries relating to such Property or assets; (p) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual or warranty requirements of the Company or any of its Restricted Subsidiaries, including rights of offset and set- off; (q) Liens securing Interest Rate Protection Obligations which Interest Rate Protection Obligations relate to Indebtedness that is secured by Liens otherwise permitted under this Indenture; (r) Liens on, or related to, Properties or assets to secure all or part of the costs incurred in the ordinary course of business for the exploration, drilling, development or operation thereof; (s) Liens on pipeline or pipeline facilities which arise out of operation of law; (t) Liens arising under operating agreements, joint venture agreements, partnership agreements, oil and gas leases, farm-out agreements, division orders, contracts for the sale, transportation or exchange of oil and natural gas, unitization and pooling declarations and agreements, area of mutual interest agreements and other agreements which are customary in the Oil and Gas Business; (u) Liens reserved in oil and gas mineral leases for bonus or rental payments and for compliance with the terms of such leases; 25 (v) Liens constituting survey exceptions, encumbrances, easements, or reservations of, or rights to others for, rights-of-way, zoning or other restrictions as to the use of real properties, and minor defects of title which, in the case of any of the foregoing, were not incurred or created to secure the payment of borrowed money or the deferred purchase price of Property or services, and in the aggregate do not materially adversely affect the value of Property of the Company and the Restricted Subsidiaries, taken as a whole, or materially impair the use of such Properties for the purposes for which such Properties are held by the Company or any Restricted Subsidiaries; (w) Liens securing Non-recourse Indebtedness; provided, however, that the related Non-recourse Indebtedness shall not be secured by any Property or assets of the Company or any Restricted Subsidiary other than the Property and assets acquired by the Company with the proceeds of such Non- recourse Indebtedness, all improvements, additions and accessions thereto and all proceeds thereof; (x) purchase money Liens; provided, however, that (i) the related purchase money Indebtedness shall not be secured by any Property of the Company or any Restricted Subsidiary other than the Property so acquired, all improvements, additions and accessions thereto and all proceeds thereof and (ii) the Lien securing such Indebtedness shall be created within 90 days of such acquisition; and (y) Liens securing Acquired Indebtedness, provided that any such Lien extends only to the Properties that were subject to such Lien prior to the related acquisition by the Company or such Restricted Subsidiary, all improvements, additions and accessions thereto and all proceeds thereof, and was not created, incurred or assumed in contemplation of such transaction; Notwithstanding anything in clauses (a) through (y) of this definition, the term "Permitted Liens" does not include any Liens resulting from the creation, incurrence, issuance, assumption or guarantee of any Production Payments other than Production Payments that are created, incurred, issued, assumed or guaranteed in connection with the financing of, and within 30 days after, the acquisition of the Properties or assets that are subject thereto. "Permitted Subsidiary Indebtedness" means any of the following: (i) Indebtedness of any Restricted Subsidiary under one or more bank credit or revolving credit facilities (and "refinancings" thereof) in an amount at any one time outstanding not to exceed the Maximum Credit Amount (in the aggregate for all Restricted Subsidiaries and the Company, pursuant to clause (i) of the definition of "Permitted Indebtedness"); (ii) Indebtedness of any Restricted Subsidiary outstanding on the Issue Date; 26 (iii) obligations of any Restricted Subsidiary pursuant to Interest Rate Protection Obligations, but only to the extent such obligations do not exceed 105% of the aggregate principal amount of the Indebtedness covered by such Interest Rate Protection Obligations; obligations under currency exchange contracts entered into in the ordinary course of business; and hedging arrangements that any Restricted Subsidiary enters into in the ordinary course of business for the purpose of protecting the production of the Company and its Restricted Subsidiaries against fluctuations in oil or natural gas prices; (iv) the Subsidiary Guarantees, the Senior Guarantees and the Guarantees of the Existing Senior Notes and the Existing Notes (and any assumption of the obligations guaranteed thereby); (v) Indebtedness of any Restricted Subsidiary relating to guarantees by such Restricted Subsidiary of Permitted Indebtedness pursuant to clause (i) of the definition of "Permitted Indebtedness"; (vi) in-kind obligations relating to net gas balancing positions arising in the ordinary course of business and consistent with past practice; (vii) Indebtedness in respect of bid, performance or surety bonds issued for the account of any Restricted Subsidiary in the ordinary course of business (including obligations of the type described in clause (g) of the definition of the term "Permitted Liens"), including guarantees and letters of credit supporting such bid, performance, surety or other obligations (in each case other than for an obligation for money borrowed); (viii) Indebtedness of any Restricted Subsidiary to any other Restricted Subsidiary or to the Company; (ix) Indebtedness relating to guarantees by any Restricted Subsidiary permitted to be incurred pursuant to Section 10.13 hereof; (x) any guarantee of Guarantor Senior Indebtedness or Indebtedness of a Foreign Subsidiary incurred in compliance with Section 10.12 hereof; (xi) Indebtedness of any Restricted Subsidiary permitted under clauses (vi), (vii), (x) or (xiii) of the definition of "Permitted Indebtedness"; and (xii) any renewals, extensions, substitutions, refinancings or replacements (each, for purposes of this clause, a "refinancing") by any Restricted Subsidiary of any Indebtedness of such Restricted Subsidiary, including any successive refinancings by such Restricted Subsidiary, so long as (x) any such new Indebtedness shall be in a principal amount that does not exceed the principal amount (or, if such Indebtedness being refinanced provides for an amount less than the principal amount thereof to be due and payable upon 27 a declaration of acceleration thereof, such lesser amount as of the date of determination) so refinanced plus the amount of any premium required to be paid in connection with such refinancing pursuant to the terms of the Indebtedness refinanced or the amount of any premium reasonably determined by such Restricted Subsidiary as necessary to accomplish such refinancing, plus the amount of expenses of such Subsidiary incurred in connection with such refinancing and (y) such new Indebtedness has an Average Life equal to or longer than the Average Life of the Indebtedness being refinanced and a final Stated Maturity equal to or later than the final Stated Maturity of the Indebtedness being refinanced. "Person" means any individual, corporation, limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 3.8 hereof in exchange for a mutilated Security or in lieu of a lost, destroyed or stolen Security shall be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Security. "Preferred Stock" means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated) of such Person's preferred or preference stock, whether outstanding on or issued after the Issue Date, including, without limitation, all classes and series of preferred or preference stock of such Person. "Production Payments" means, collectively, Dollar-Denominated Production Payments and Volumetric Production Payments. "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, without limitation, Capital Stock in any other Person. "Public Equity Offering" means an underwritten public offering for cash by the Company of its Qualified Capital Stock pursuant to a registration statement that has been declared effective by the Commission (other than a registration statement on Form S-8 or any successor form or otherwise relating to equity securities issuable under any employee benefit plan of the Company). "Qualified Capital Stock" of any Person means any and all Capital Stock of such Person other than Redeemable Capital Stock. "Redeemable Capital Stock" means any class or series of Capital Stock that, either by its terms, by the terms of any security into which it is convertible or exchangeable or by contract or otherwise, is, or upon the happening of an event or passage of time would be, required to be redeemed prior to the final Stated Maturity of the Securities or is redeemable at the option of the 28 holder thereof at any time prior to such final Stated Maturity, or is convertible into or exchangeable for debt securities at any time prior to such final Stated Maturity. "Redemption Date," when used with respect to any Security to be redeemed, in whole or in part, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price," when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture. "Registrable Securities" shall have the meaning assigned to such term in the Registration Rights Agreement. "Registration Rights Agreement" means that certain Registration Rights Agreement dated as of July 8, 1998, among the Company and the Initial Purchasers. "Regular Record Date" for the interest payable on any Interest Payment Date means the December 15 or June 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. "Responsible Officer," when used with respect to the Trustee, means any officer in the Corporate Trust Administration Department of the Trustee, and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Restricted Subsidiary" means any Subsidiary of the Company, whether existing on or after the Issue Date, unless such Subsidiary of the Company is an Unrestricted Subsidiary or is designated as an Unrestricted Subsidiary pursuant to the terms of this Indenture. "Rule 144A" means Rule 144A under the Securities Act. "S&P" means Standard and Poor's Ratings Group and its successors. "Sale/Leaseback Transaction" means, with respect to any Person, any direct or indirect arrangement pursuant to which Properties or assets are sold or transferred by such Person or a Subsidiary of such Person and are thereafter leased back from the purchaser or transferee thereof by such Person or one of its Subsidiaries. "Securities" has the meaning stated in the first recital of this Indenture and more particularly means any Securities authenticated and delivered under this Indenture. "Securities Act" means the Securities of 1933, as amended, or any successor statute. 29 "Security Custodian" means the Trustee, as custodian with respect to the Global Securities, or any successor entity thereto. "Security Register" and "Security Registrar" have the respective meanings specified in Section 3.5 hereof. "Senior Guarantees" means any guarantee of the Senior Notes by any Restricted Subsidiary. "Senior Indebtedness" means the principal of, premium, if any, and interest on any Indebtedness of the Company (including, in the case of the Credit Agreement, the Senior Notes and the Existing Senior Notes, interest accruing after the filing of a petition by or against the Company under any bankruptcy law, in accordance with and at the rate, including any default rate, specified with respect to such indebtedness, whether or not a claim for such interest is allowed as a claim after such filing in any proceeding under such bankruptcy law), whether outstanding on the Issue Date or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall not be senior in right of payment to the Securities. Without limiting the generality of the foregoing, "Senior Indebtedness" shall also include the Senior Note Obligations. Notwithstanding the foregoing, "Senior Indebtedness" shall not include (a) Indebtedness evidenced by the Securities, (b) Indebtedness that is expressly subordinate or junior in right of payment to any Senior Indebtedness of the Company, (c) Indebtedness which, when incurred and without respect to any election under Section 1111 (b) of Title 11 United States Code, is by its terms without recourse to the Company, (d) any repurchase, redemption or other obligation in respect of Redeemable Capital Stock of the Company, (e) to the extent it might constitute Indebtedness, any liability for federal, state, local or other taxes owed or owing by the Company, (f) Indebtedness of the Company to a Subsidiary of the Company or any other Affiliate of the Company or any of such Affiliate's Subsidiaries, and (g) that portion of any Indebtedness of the Company which at the time of issuance is issued in violation of this Indenture (but, as to any such Indebtedness, no such violation shall be deemed to exist for purposes of this clause (g) if the holder(s) of such Indebtedness or their representative or the Company shall have furnished to the Trustee an opinion of counsel unqualified in all material respects of independent legal counsel, addressed to the Trustee (which legal counsel may, as to matters of fact, rely upon a certificate of the Company) to the effect that the incurrence of such Indebtedness does not violate the provisions of this Indenture); provided that the foregoing exclusions shall not affect the priorities of any Indebtedness arising solely by operation of law in any case or proceeding or similar event described in clause (a), (b) or (c) of the definition of Insolvency or Liquidation Proceeding included herein. "Senior Notes" means (i) the 7 5/8% Senior Notes due 2005 of the Company issued pursuant to the Indenture, dated as of July 8, 1998, between the Company, as issuer, OEI Louisiana, as subsidiary guarantor, and Norwest Bank Minnesota, National Association, as trustee, as amended and supplemented from time to time, and (ii) the 8 1/4% Senior Notes due 2018 of the Company issued pursuant to the Indenture, dated as of July 8, 1998, between the Company, as issuer, OEI 30 Louisiana, as subsidiary guarantor, and Norwest Bank Minnesota, National Association, as trustee, as amended and supplemented from time to time. "Senior Note Obligations" means all monetary obligations of every nature of the Company or a Restricted Subsidiary, including without limitation, obligations to pay principal and interest, fees, expenses and indemnities, from time to time owed to the holders or the trustee in respect of the Senior Notes and the Existing Senior Notes. "Senior Representative" means the Bank Agent or any other representatives designated in writing to the Trustee of the holders of any class or issue of Designated Senior Indebtedness; provided that, in the absence of a representative of the type described above, any holder or holders of a majority of the principal amount outstanding of any class or issue of Designated Senior Indebtedness may collectively act as Senior Representative for such class or issue, subject to the provisions of any agreements relating to such Designated Senior Indebtedness. "Series A Securities" means the Company's 8 3/8% Series A Senior Notes due 2008 to be issued pursuant to this Indenture. "Series B Securities" means the Company's 8 3/8% Series B Senior Notes due 2008 to be issued pursuant to this Indenture in the Exchange Offer. "Significant Subsidiary" means any Restricted Subsidiary the consolidated assets of which comprise in excess of 5% of Adjusted Consolidated Net Tangible Assets (as shown in the most recent audited consolidated balance sheet of the Company and its Subsidiaries). "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.9 hereof. "Stated Maturity" means, when used with respect to any Security or any installment of interest thereon, the date specified in such Security as the fixed date on which the principal of such Security or such installment of interest is due and payable, and, when used with respect to any other Indebtedness or any installment of interest thereon, means the date specified in the instrument evidencing or governing such Indebtedness as the fixed date on which the principal of such Indebtedness or such installment of interest is due and payable. "Subordinated Indebtedness" means Indebtedness of the Company which is expressly subordinated in right of payment to the Securities. "Subsidiary" means, with respect to any Person, (i) a corporation a majority of whose Voting Stock is at the time, directly or indirectly, owned by such Person, by one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries thereof or (ii) any other Person (other than a corporation), including, without limitation, a joint venture, in which such Person, one or more Subsidiaries thereof or such Person and one or more Subsidiaries thereof, directly or indirectly, at 31 the date of determination thereof, has at least majority ownership interest entitled to vote in the election of directors, managers or trustees thereof (or other Persons performing similar functions). "Subsidiary Guarantee" has the meaning specified in Section 13.1 hereof. "Subsidiary Guarantor" means (i) OEI Louisiana, (ii) each of the Company's Restricted Subsidiaries that becomes a guarantor of the Securities in compliance with the provisions of Section 10.13 or Article XIII hereof and (iii) each of the Company's Subsidiaries executing a supplemental indenture in which such Subsidiary agrees to be bound by the terms of this Indenture and to guarantee on an unsubordinated basis the payment of the Securities pursuant to the provisions of Article XIII hereof. "Transfer Restricted Securities" means the Registrable Securities under the Registration Rights Agreement. "Treasury Yield" means, in connection with the calculation of any Make- Whole Premium on any Security, the yield to maturity at the time of 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) that has become publicly available at least two business days prior to the date fixed for redemption (or, if such Statistical Release is no longer published, any publicly available source of similar data)) equal to the then remaining period of time until the Five-Year Date; provided that if no United States Treasury security is available with such a constant maturity and for which a closing yield is given, the Treasury Yield shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the closing yields of United States Treasury securities for which such yields are given, except that if the remaining period of time until the Five-Year Date 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. "Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939, as amended and in force at the Issue Date, except as provided in Section 9.5 hereof. "Trustee" means the Person named as the "Trustee" in the first paragraph of this Indenture until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean such successor Trustee. "Unrestricted Subsidiary" means (i) Havre Pipeline Company, LLC and Lion GPL, S.A., (ii) any Subsidiary of the Company that at the time of determination will be designated an Unrestricted Subsidiary by the Board of Directors of the Company as provided below and (iii) any Subsidiary of an Unrestricted Subsidiary, in each case until such time as such Subsidiary is designated as a Restricted Subsidiary for purposes of this Indenture. The Board of Directors of the Company may designate any Subsidiary of the Company as an Unrestricted Subsidiary so long as (a) neither the Company nor any Restricted Subsidiary is directly or indirectly liable pursuant to the terms of any Indebtedness of such Subsidiary; (b) no default with respect to any Indebtedness of 32 such Subsidiary would permit (upon notice, lapse of time or otherwise) any holder of any other Indebtedness of the Company or any Restricted Subsidiary to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; (c) neither the Company nor any Restricted Subsidiary has made an Investment in such Subsidiary unless such Investment was made pursuant to, and in accordance with Section 10.11 hereof, (including as a Permitted Investment thereunder); and (d) such designation shall not result in the creation or imposition of any Lien on any of the Properties of the Company or any Restricted Subsidiary (other than any Permitted Lien or any Lien the creation or imposition of which shall have been in compliance with Section 10.15 hereof); provided, however, that with respect to clause (a), the Company or a Restricted Subsidiary may be liable for Indebtedness of an Unrestricted Subsidiary if (x) such liability constituted a Permitted Investment or a Restricted Payment permitted by Section 10.11 hereof, in each case at the time of incurrence, or (y) the liability would be a Permitted Investment at the time of designation of such Subsidiary as an Unrestricted Subsidiary. Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by filing a Board Resolution with the Trustee giving effect to such designation. Any such designation shall be deemed to be an Investment, as more particularly described in the definition of such term, above. The Board of Directors of the Company may designate any Unrestricted Subsidiary as a Restricted Subsidiary if, immediately after giving effect to such designation, (i) no Default or Event of Default shall have occurred and be continuing, (ii) the Company could incur $1.00 of additional Indebtedness (not including the incurrence of Permitted Indebtedness) under Section 10.12 hereof, and (iii) if any of the Properties of the Company or any of its Restricted Subsidiaries would upon such designation become subject to any Lien (other than a Permitted Lien), the creation or imposition of such Lien shall have been in compliance with Section 10.15 hereof. "Vice President," when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president." "Volumetric Production Payments" means production payment obligations recorded as deferred revenue in accordance with GAAP, together with all undertakings and obligations in connection therewith. "Voting Stock" means any class or classes of Capital Stock 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 any Person (irrespective of whether or not, at the time, 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 any Restricted Subsidiary to the extent (i) all of the Capital Stock or other ownership interests in such Restricted Subsidiary, other than any directors qualifying shares mandated by applicable law, is owned directly or indirectly by the Company or (ii) such Restricted Subsidiary is organized in a foreign jurisdiction and is required by the applicable laws and regulations of such foreign jurisdiction to be partially owned by the 33 government of such foreign jurisdiction or individual or corporate citizens of such foreign jurisdiction in order for such Restricted Subsidiary to transact business in such foreign jurisdiction, provided that the Company, directly or indirectly, owns the remaining Capital Stock or ownership interest in such Restricted Subsidiary and, by contract or otherwise, controls the management and business of such Restricted Subsidiary and derives the economic benefits of ownership of such Restricted Subsidiary to substantially the same extent as if such Restricted Subsidiary were a wholly owned Subsidiary. Section 1.2 Other Definitions. Defined Term in Section ---- ---------- "Agent Members"........................... 3.7 "Change of Control Notice"................ 10.16(c) "Change of Control Offer"................. 10.16(a) "Change of Control Purchase Date"......... 10.16(a) "Change of Control Purchase Price"........ 10.16(a) "Defaulted Interest"...................... 3.9 "Five-Year Date".......................... 11.1 "Global Security"......................... 2.1 "Funding Guarantor"....................... 13.5 "Excess Proceeds"......................... 10.17(b) "Investment Grade Ratings"................ 10.22 "Net Proceeds Deficiency"................. 10.17(c) "Net Proceeds Offer"...................... 10.17(c) "Net Proceeds Payment Date"............... 10.17(c) "Offered Price"........................... 10.17(c) "Pari Passu Indebtedness Amount".......... 10.17(c) "Pari Passu Offer"........................ 10.17(c) "Payment Amount".......................... 10.17(c) "Payment Blockage Notice"................. 14.3(b) "Payment Blockage Period"................. 14.3(b) "Physical Securities"..................... 2.1 "Purchase Notice"......................... 10.17 "Rating Agencies"......................... 10.22 "Restricted Payment"...................... 10.11(a) "SEC"..................................... 1.1 ("Commission") "Subsidiary Guarantor Non-payment Default" 13.9(b) "Subsidiary Guarantor Payment Default".... 13.9(a) "Subsidiary Guarantor Payment Notice"..... 13.9(b) "Surviving Entity"........................ 8.1 "Suspended Covenants"..................... 10.22 "Trigger Date"............................ 10.17 "U.S. Government Obligations"............. 12.4(a) 34 Section 1.3 Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "indenture securities" means the Securities, "indenture security holder" means a Holder, "indenture to be qualified" means this Indenture, "indenture trustee" or "institutional trustee" means the Trustee, and "obligor" on the indenture securities means the Company or any other obligor on the Securities. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by Commission rule and not otherwise defined herein have the meanings assigned to them therein. Section 1.4 Rules of Construction. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (a) The terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular; (b) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP; (c) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; (d) unless the context otherwise requires, the word "or" is not exclusive; (e) provisions apply to successive events and transactions; and (f) references to agreements and other instruments include subsequent amendments and waivers but only to the extent not prohibited by this Indenture. 35 ARTICLE II SECURITY FORMS -------------- Section 2.1 Forms Generally. The Definitive Securities shall be printed, lithographed or engraved on steel-engraved borders or may be produced in any other manner, all as determined by the officers executing such Securities or notations of Subsidiary Guarantees, as the case may be, as evidenced by their execution of such Securities or notations of Subsidiary Guarantees, as the case may be. Securities (including the notations thereon relating to the Subsidiary Guarantees and the Trustee's certificate of authentication) bought and sold in reliance on Rule 144A shall be issued initially in the form of one or more permanent global Securities substantially in the form set forth in Sections 2.2 through 2.5 hereof (the "Global Security") deposited with the Trustee, as custodian for the Depositary, duly executed by the Company and authenticated by the Trustee as hereinafter provided. Subject to the limitation set forth in Section 3.1, the principal amount of the Global Securities may be increased or decreased from time to time by adjustments made on the records of the Trustee as custodian for the Depositary, as hereinafter provided. Securities (including the notations thereon relating to the Subsidiary Guarantees and the Trustee's certificate of authentication) offered and sold other than as described in the preceding paragraph shall be issued in the form of permanent certificated Securities in registered form in substantially the form set forth in Sections 2.2 through 2.5 hereto ("Physical Securities"). The Securities, the notations thereon relating to the Subsidiary Guarantees and the Trustee's certificate of authentication shall be in substantially the forms set forth in this Article, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Securities or notations of Subsidiary Guarantees, as the case may be, as evidenced by their execution of the Securities or notations of Subsidiary Guarantees, as the case may be. Any portion of the text of any Security may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Security. In addition to the requirements of Section 2.3, the Securities may also have set forth on the reverse side thereof a form of assignment and forms to elect purchase by the Company pursuant to Sections 10.16 and 10.17 hereof. Section 2.2 Form of Face of Security. OCEAN ENERGY, INC. 8 3/8% Series [A/B] Senior Subordinated Note due 2008 No. $_________ 36 CUSIP No. [Series A: ________] [Series B: ________] Ocean Energy, Inc., a Delaware corporation (herein called the "Company," which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to ____________________ or registered assigns the principal sum of ______ Dollars on July 1, 2008, at the office or agency of the Company referred to below, and to pay interest thereon, commencing on January 1, 1999 and continuing semiannually thereafter, on January 1 and July 1 in each year, from July 8, 1998, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, at the rate of 8 3/8% per annum, until the principal hereof is paid or duly provided for, and (to the extent lawful) to pay on demand interest on any overdue interest at the rate borne by the Securities from the date on which such overdue interest becomes payable to the date payment of such interest has been made or duly provided for. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the December 15 or June 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date, or, in the case of interest payable at the Maturity of the principal of the Securities, to the Person to whom principal is paid. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date, and such defaulted interest, and (to the extent lawful) interest on such defaulted interest at the rate borne by the Securities, may be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities not less than 10 days prior to such Special Record Date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. Payment of the principal of (and premium, if any, on) and interest on this Security will be made at the office or agency of the Company maintained for that purpose in The City of New York, or at such other office or agency of the Company as may be maintained for such purpose, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided however, that payment of principal, premium, if any, and interest may be made at the option of the Company (i) by check mailed to the address of the Person entitled thereto as such address shall appear on the Security Register or (ii) with respect to Securities held in book- entry form, by wire transfer to an account maintained by the Holder located in the United States, as specified in a written notice to the Trustee by any such Holder requesting payment by wire transfer and specifying the account to which transfer is requested. Unless and until it is exchanged in whole or in part for Securities in definitive form, this Security may not be transferred except as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the 37 Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. The Depository Trust Company shall act as the Depositary until a successor shall be appointed by the Company and the Registrar. Unless this certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) ("DTC"), to the issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as may be requested by an authorized representative of DTC (and any payment is made to Cede & Co. or such other entity as may be requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein./1/ THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ( THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES (1) NOT TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO (X) THE DATE THAT IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(k) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF THIS SECURITY) AND THE LAST DAY ON WHICH OCEAN ENERGY, INC. (THE "COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAWS (THE "RESALE RESTRICTION TERMINATION DATE"), EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT IS ACQUIRING SUCH SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND (2) THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO - --------------- /1/ This paragraph should be included only if the Security is issued in global form. 38 THE EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY, THE TRUSTEE, THE TRANSFER AGENT AND THE REGISTRAR SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A OR (2) A NON-U.S. PERSON AND IS ACQUIRING THE NOTE IN AN "OFFSHORE TRANSACTION" PURSUANT TO RULE 904 OF REGULATION S UNDER THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been duly executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture, or be valid or obligatory for any purpose. 39 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. OCEAN ENERGY, INC., a Delaware corporation By: ----------------------------------- Chairman of the Board Attest: - -------------------------------- Secretary Section 2.3 Form of Reverse of Security. This Security is one of a duly authorized issue of securities of the Company designated as its 8 3/8% Series [A/B] Senior Subordinated Notes due 2008 (herein called the "Securities"), limited (except as otherwise provided in the Indenture referred to below) in aggregate principal amount to $250,000,000, which may be issued under an indenture (as amended and supplemented from time to time, the "Indenture") dated as of July 8, 1998, between the Company, the Subsidiary Guarantors and U.S. Bank Trust National Association, as trustee (herein called the "Trustee," which term includes any successor trustee under the Indenture), to which Indenture reference is hereby made for a statement of the respective rights, limitations of rights, duties, obligations and immunities thereunder of the Company, the Subsidiary Guarantors, the Trustee and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered. The Indebtedness evidenced by the Securities is, to the extent and in the manner provided in the Indenture, subordinate and subject in right of payment to the prior payment in full of all Senior Indebtedness (as defined in the Indenture) and this Security is issued subject to such provisions. Each Holder of this Security, by accepting the same, (i) agrees to and shall be bound by such provisions, (ii) authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in the Indenture and (iii) appoints the Trustee as his attorney-in-fact for such purpose. Prior to July 1, 2003, the Securities will be redeemable, in whole but not in part, at a redemption price equal to the sum of (a) an amount equal to 100% of the principal amount thereof and (b) the Make-Whole Premium, together with accrued and unpaid interest to the date fixed for redemption. In no event will such redemption price ever be less than 100% of the principal amount of the Securities plus accrued interest to the date of redemption. On or after July 1, 2003, the Securities will be redeemable, in whole or in part, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest, if any, to the redemption date 40 (subject to the right of Holders of record on the relevant record date to receive interest due on an interest payment date that is on or prior to the redemption date), if redeemed during the 12-month period beginning on July 1 of the years indicated below: Year Price 2003 104.188% 2004 102.792% 2005 101.396% 2006 and thereafter 100.000% In addition, at any time and from time to time prior to July 1, 2001, the Company may, at its option, redeem in the aggregate up to 33 1/3% of the aggregate principal amount of the Securities originally issued under the Indenture with the proceeds of one or more Public Equity Offerings by the Company at a redemption price (expressed as a percentage of principal amount) of 108.375%, plus accrued and unpaid interest, if any, to the date of redemption (subject to the right of Holders on the relevant record date to receive interest due on the relevant interest payment date); provided, however, that at least 66 2/3% aggregate principal amount of the Securities must remain outstanding after each such redemption. In order to effect the foregoing redemption, the Company must mail notice of redemption no later than 60 days after the related Public Equity Offering and must consummate such redemption within 90 days of the closing of the Public Equity Offering. In the event that less than all of the Securities are to be redeemed at any time, selection of such Securities (or any portion thereof that is an integral multiple of $1,000) for redemption will be made by the Trustee from the outstanding Securities not previously called for redemption (or otherwise purchased by the Company) on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate; provided, however, that no Security with a principal amount of $1,000 or less shall be redeemed in part. Notice of redemption shall be mailed by first-class mail at least 30 but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at its registered address. If any Security is to be redeemed in part only, the notice of redemption that relates to such Security shall state the portion of the principal amount thereof to be redeemed. A new Security in a principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Security. On and after the redemption date, interest will cease to accrue on Securities or portions thereof called for redemption and accepted for payment. The Securities do not have the benefit of any sinking fund obligations. In the event of a Change of Control of the Company, and subject to certain conditions and limitations provided in the Indenture, the Company will be obligated to make an offer to purchase, on a Business Day not more than 70 or less than 30 days following the occurrence of a Change of Control of the Company, all of the then outstanding Securities at a purchase price equal to 101% of 41 the principal amount thereof, together with accrued and unpaid interest to the Change of Control Purchase Date, all as provided in the Indenture. In the event of Asset Sales, under certain circumstances, the Company will be obligated to make a Net Proceeds Offer to purchase all or a specified portion of each Holder's Securities at a purchase price equal to 100% of the principal amount of the Securities, together with accrued and unpaid interest to the Net Proceeds Payment Date. As set forth in the Indenture, an Event of Default is generally (i) failure to pay principal of or premium, if any, on any of the Securities upon maturity, redemption, acceleration or otherwise (including pursuant to a Change of Control Offer or a Net Proceeds Offer); (ii) default for 30 days in payment of interest on any of the Securities; (iii) default in the performance of certain provisions of the Indenture relating to mergers, consolidations and sales of all or substantially all assets or the failure to make or consummate a Change of Control Offer or a Net Proceeds Offer; (iv) failure for 30 days after notice to comply with any other covenants in the Indenture or the Securities; (v) certain payment defaults under, the acceleration prior to the maturity of, and the exercise of certain enforcement rights with respect to, certain Indebtedness of the Company or any Restricted Subsidiary in an aggregate principal amount in excess of the greater of $20,000,000 and 5% of Adjusted Consolidated Net Tangible Assets; (vi) the failure of any Subsidiary Guarantee to be in full force and effect or otherwise to be enforceable (except as permitted by the Indenture); (vii) certain final judgments against the Company or any Restricted Subsidiary in an aggregate amount that is more than the greater of $20,000,000 and 5% of Adjusted Consolidated Net Tangible Assets which remain unsatisfied and either become subject to commencement of enforcement proceedings or remain unstayed for a period of 60 days; and (viii) certain events of bankruptcy, insolvency or reorganization of the Company, any Subsidiary Guarantor or any Significant Subsidiary. If any Event of Default occurs and is continuing, the Trustee or the holders of at least 25% in aggregate principal amount of the Outstanding Securities may declare the principal amount of all the Securities to be due and payable immediately, except that (i) in the case of an Event of Default arising from certain events of bankruptcy, insolvency or reorganization, the principal amount of the Securities will become due and payable immediately without further action or notice, and (ii) in the case of an Event of Default which relates to certain payment defaults, acceleration or the exercise of certain enforcement rights with respect to certain Indebtedness, any acceleration of the Securities will be automatically rescinded if any such Indebtedness is repaid or if the default relating to such Indebtedness is cured or waived and if the holders thereof have accelerated such Indebtedness then such holders have rescinded their declaration of acceleration or if in certain circumstances the proceedings or enforcement action with respect to the Indebtedness that is the subject of such Event of Default is terminated or rescinded. No Holder may pursue any remedy under the Indenture unless the Trustee shall have failed to act after notice of an Event of Default and written request by Holders of at least 25% in principal amount of the Outstanding Securities, and the offer to the Trustee of indemnity reasonably satisfactory to it; however, such provision does not affect the right to sue for enforcement of any overdue payment on a Security by the Holder thereof. Subject to certain limitations, Holders of a majority in principal amount of the Outstanding Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any 42 continuing default (except default in payment of principal, premium or interest) if it determines in good faith that withholding the notice is in the interest of the Holders. The Company is required to file quarterly reports with the Trustee as to the absence or existence of defaults. The Indenture contains provisions for defeasance at any time of (i) the entire indebtedness of the Company on this Security and (ii) certain restrictive covenants and the related Defaults and Events of Default, upon compliance by the Company with certain conditions set forth therein, which provisions apply to this Security. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the Subsidiary Guarantors and the rights of the Holders under the Indenture at any time by the Company, the Subsidiary Guarantors and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Securities at the time Outstanding, on behalf of the Holders of all the Securities, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by or on behalf of the Holder of this Security shall be conclusive and binding upon such Holder and upon future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof whether or not notation of such consent or waiver is made upon this Security. Without the consent of any Holder, the Company, the Subsidiary Guarantors and the Trustee may amend or supplement the Indenture or the Securities to cure any ambiguity, defect or inconsistency, to provide for uncertificated Securities in addition to or in place of certificated Securities and to make certain other specified changes and other changes that do not adversely affect the rights of any Holder in any material respect. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any, on) and interest on this Security at the times, place, and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registerable on the Security Register of the Company, upon surrender of this Security for registration of transfer at the office or agency of the Company maintained for such purpose in The City of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Securities are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and subject to certain 43 limitations therein set forth, the Securities are exchangeable for a like aggregate principal amount of Securities of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. A director, officer, incorporator, employee, Affiliate or stockholder of the Company or any Subsidiary Guarantor, as such, shall not have any personal liability under this Security or the Indenture by reason of his or its status as such director, officer, incorporator or stockholder. Each Holder, by accepting this Security with the notation of Subsidiary Guarantee endorsed hereon, waives and releases all such liability. Such waiver and release are part of the consideration for the issuance of this Security with the notation of Subsidiary Guarantee endorsed hereon. Prior to the time of due presentment of this Security for registration of transfer, the Company, the Subsidiary Guarantors, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security is overdue, and neither the Company, the Subsidiary Guarantors, the Trustee nor any agent shall be affected by notice to the contrary. All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to the Company at 1201 Louisiana, Suite 1400, Houston, Texas 77002. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Securities as a convenience to the Holders thereof. No representation is made as to the accuracy of such numbers as printed on the Securities and reliance may be placed only on the other identifying information printed hereon. This Security shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflicts of law principles. 44 ASSIGNMENT FORM To assign this Security, fill in the form below: (I) or (we) assign and transfer this Security to ------------------------------------------------------ (Insert assignee's social security or tax I.D. number) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint ----------------------------------------------------- as agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. Date: Your Signature: ------------ ---------------------------- (Sign exactly as your name appears on the face of this Security) Signature Guarantee: ------------------------------------------------------ (Participant in a Recognized Signature Guaranty Medallion Program) 45 FORM OF OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Security purchased by the Company pursuant to Section 10.16 or Section 10.17 of the Indenture, check the appropriate box: Section 10.16 [_] Section 10.17 [_] If you want to have only part of this Security purchased by the Company pursuant to Section 10.16 or Section 10.17 of the Indenture, state the amount in integral multiples of $1,000: Date: Signature: ------------------- --------------------------------- (Sign exactly as your name appears on the other side of this Security) Signature Guarantee: ------------------------------------------------------ (Participant in a Recognized Signature Guaranty Medallion Program) 46 SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITY* The following exchanges of a part of this Global Security for Definitive Securities have been made:
Principal Amount Amount of Amount of of this Global Signature of decrease in increase in Security following authorized signatory Date of Principal Amount Principal Amount such decrease of Trustee or Exchange of this Global Security of this Global Security (or increase) Security Custodian - ------------------------------------------------------------------------------------------------------------
- --------------- * This should be included only if the Security is issued in global form. 47 Section 2.4 Form of Notation Relating to Subsidiary Guarantees. The form of notation to be set forth on each Security relating to the Subsidiary Guarantees shall be in substantially the following form: SUBSIDIARY GUARANTEE Subject to the limitations set forth in the Indenture, the Subsidiary Guarantors (as defined in the Indenture referred to in the Security upon which this notation is endorsed and each hereinafter referred to as a "Subsidiary Guarantor," which term includes any successor or additional Subsidiary Guarantor under the Indenture) have, jointly and severally, unconditionally guaranteed (a) the due and punctual payment of the principal (and premium, if any) of and interest on the Securities, whether at maturity, acceleration, redemption or otherwise, (b) the due and punctual payment of interest on the overdue principal of and interest on the Securities, if any, to the extent lawful, (c) the due and punctual performance of all other obligations of the Company to the Holders or the Trustee, all in accordance with the terms set forth in the Indenture, and (d) in case of any extension of time of payment or renewal of any Securities or any of such other obligations, the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at Stated Maturity, by acceleration or otherwise. Capitalized terms used herein shall have the meanings assigned to them in the Indenture unless otherwise indicated. The obligations of each Subsidiary Guarantor are limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities and after giving effect to any collections from or payments made by or on behalf of any other Subsidiary Guarantor in respect of the obligations of such other Subsidiary Guarantor under its Subsidiary Guarantee or pursuant to its contribution obligations under the Indenture, result in the obligations of such Subsidiary Guarantor under the Subsidiary Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal or state law. Each Subsidiary Guarantor that makes a payment or distribution under a Subsidiary Guarantee shall be entitled to a contribution from each other Subsidiary Guarantor in a pro rata amount based on the Adjusted Net Assets of each Subsidiary Guarantor. The obligations of the Subsidiary Guarantors to the Holders or the Trustee pursuant to the Subsidiary Guarantee and the Indenture are expressly subordinate to all Guarantor Senior Indebtedness to the extent set forth in Article XIII of the Indenture and reference is made to such Indenture for the precise terms of such subordination. No stockholder, officer, director or incorporator, as such, past, present or future, of the Subsidiary Guarantors shall have any personal liability under the Subsidiary Guarantee by reason of his or its status as such stockholder, officer, director or incorporator. Any Subsidiary Guarantor may be released from its Subsidiary Guarantee upon the terms and subject to the conditions provided in the Indenture. 48 All terms used in this notation of Subsidiary Guarantee which are defined in the Indenture referred to in this Security upon which this notation of Subsidiary Guarantee is endorsed shall have the meanings assigned to them in such Indenture. The Subsidiary Guarantee shall be binding upon each Subsidiary Guarantor and its successors and assigns and shall inure to the benefit of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges herein conferred upon that party shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof and in the Indenture. The Subsidiary Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Security upon which this Subsidiary Guarantee is noted shall have been executed by the Trustee under the Indenture by the manual signature of one of its authorized officers. OCEAN ENERGY, INC., a Louisiana corporation Attest: By: ------------------- ---------------------------- Secretary President Section 2.5 Form of Trustee's Certificate of Authentication. The Trustee's certificate of authentication shall be in substantially the following form: TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the 8 3/8% Series [A/B] Senior Subordinated Notes due 2008 referred to in the within-mentioned Indenture. Authenticated: Dated: ------------------ U.S. Bank Trust National Association Trustee By: --------------------------------------------- Authorized Officer 49 ARTICLE III THE SECURITIES -------------- Section 3.1 Title and Terms. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is limited to $250,000,000 except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities pursuant to Section 3.4, 3.5, 3.6, 3.8, 9.6, 10.16, 10.17 or 11.8 hereof. The Securities shall be known and designated as the "8 3/8% Series A Senior Subordinated Notes Due 2008" and the "8 3/8% Series B Senior Subordinated Notes due 2008"of the Company. Their Stated Maturity shall be July 1, 2008, and they shall bear interest at the rate of 8 3/8% per annum from July 8, 1998, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, payable semiannually on January 1 and July 1 in each year, commencing January 1, 1999, and at said Stated Maturity, until the principal thereof is paid or duly provided for. The principal of (and premium, if any, on) and interest on the Securities shall be payable at the office or agency of the Company maintained for such purpose in The City of New York, or at such other office or agency of the Company as may be maintained for such purpose pursuant to Section 10.2 hereof; provided, however, that, at the option of the Company, principal, premium, if any, and interest may be paid (i) by check mailed to addresses of the Persons entitled thereto as such addresses shall appear on the Security Register, or (ii) with respect to Securities held in book-entry form, by wire transfer to an account maintained by the Holder located in the United States, as specified in a written notice to the Trustee by any such Holder requesting payment by wire transfer and specifying the account to which transfer is requested. The Securities shall be redeemable as provided in Article XI hereof. The Securities shall be subject to defeasance at the option of the Company as provided in Article XII hereof. The Securities shall be guaranteed by the Subsidiary Guarantors as provided in Article XIII hereof. The Securities shall be subordinated in right of payment to Senior Indebtedness as provided in Article XIV hereof. Section 3.2 Denominations. The Securities shall be issuable only in registered form without coupons and only in denominations of $1,000 and any integral multiple thereof. Section 3.3 Execution, Authentication, Delivery and Dating. The Securities shall be executed on behalf of the Company by its Chairman, its President or a Vice President of the Company, under its corporate seal reproduced thereon and attested by its Secretary or an Assistant 50 Secretary or a Vice President of the Company. The signature of any of these officers on the Securities may be manual or facsimile signatures of the present or any future such authorized officer and may be imprinted or otherwise reproduced on the Securities. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities executed by the Company and having the notation of Subsidiary Guarantees executed by the Subsidiary Guarantors to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with such Company Order shall authenticate and deliver such Securities with the notation of Subsidiary Guarantees thereon as provided in this Indenture. Each Security shall be dated the date of its authentication. No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein duly executed by the Trustee by manual signature of an authorized officer, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture. In case the Company, pursuant to and in compliance with Article VIII hereof, shall be consolidated or merged with or into any other Person or shall convey, transfer, lease or otherwise dispose of its Properties substantially as an entirety to any Person, and the successor Person resulting from such consolidation, or surviving such merger, or into which the Company shall have been merged, or the Person which shall have received a conveyance, transfer, lease or other disposition as aforesaid, shall have executed an indenture supplemental hereto with the Trustee pursuant to Article VIII hereof, any of the Securities authenticated or delivered prior to such consolidation, merger, conveyance, transfer, lease or other disposition may, from time to time, at the request of the successor Person, be exchanged for other Securities executed in the name of the successor Person with such changes in phraseology and form as may be appropriate, but otherwise in substance of like tenor as the Securities surrendered for such exchange and of like principal amount; and the Trustee, upon Company Request of the successor Person, shall authenticate and deliver Securities as specified in such request for the purpose of such exchange. If Securities shall at any time be authenticated and delivered in any new name of a successor Person pursuant to this Section in exchange or substitution for or upon registration of transfer of any Securities, such successor Person, at the option of the Holders but without expense to them, shall provide for the exchange of all Securities at the time Outstanding for Securities authenticated and delivered in such new name. 51 Section 3.4 Temporary Securities. Pending the preparation of Definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the Definitive Securities in lieu of which they are issued and having the notations of Subsidiary Guarantees thereon and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities and notations of Subsidiary Guarantees may determine, as conclusively evidenced by their execution of such Securities and notations of Subsidiary Guarantees. If temporary Securities are issued, the Company will cause Definitive Securities to be prepared without unreasonable delay. After the preparation of Definitive Securities, the temporary Securities shall be exchangeable for Definitive Securities upon surrender of the temporary Securities at the office or agency of the Company designated for such purpose pursuant to Section 10.2 hereof, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of Definitive Securities of authorized denominations having notations of Subsidiary Guarantees thereon. Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as Definitive Securities. Section 3.5 Registration, Registration of Transfer and Exchange. The Company shall cause to be kept at the Corporate Trust Office a register (the register maintained in such office and in any other office or agency designated pursuant to Section 10.2 hereof being herein sometimes referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. The Security Register shall be in written form or any other form capable of being converted into written form within a reasonable time. At all reasonable times and during normal business hours, the Security Register shall be open to inspection by the Trustee. The Trustee is hereby initially appointed as security registrar (the "Security Registrar") for the purpose of registering Securities and transfers of Securities as herein provided. The Company initially appoints The Depository Trust Company to act as Depositary with respect to the Global Security. Section 3.6 Transfer and Exchange. (a) Transfer and Exchange of Definitive Securities. When Definitive Securities are presented to the Securities Registrar with the request: (x) to register the transfer of the Definitive Securities, or (y) to exchange such Definitive Securities for an equal principal amount of Definitive Securities of other authorized denominations, 52 the Securities Registrar shall register the transfer or make the exchange as requested if its requirement for such transactions are met; provided, however, that the Definitive Securities presented or surrendered for registration of transfer or exchange: (i) shall be duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Securities Registrar duly executed by the Holder thereof or by his attorney, duly authorized in writing; and (ii in the case of Transfer Restricted Securities that are Definitive Securities, shall be accompanied by the following additional information and documents, as applicable, upon which the Securities Registrar may conclusively rely: (A) if such Transfer Restricted Securities are being delivered to the Registrar by a Holder for registration in the name of such Holder, without transfer, a certification from such Holder to that effect (in substantially the form of Exhibit A hereto); or (B) if such Transfer Restricted Securities are being transferred (1) to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act) in accordance with Rule 144A under the Securities Act or (2) pursuant to an exemption from registration in accordance with Rule 144 under the Securities Act (and based upon an opinion of counsel if the Company or the Trustee so requests) or (3) pursuant to an effective registration statement under the Securities Act, a certification to that effect from such Holder (in substantially the form of Exhibit A hereto); or (C) if such Transfer Restricted Securities are being transferred to an institutional "accredited investor," within the meaning of Rule 501 (a)(1), (2), (3) or (7) under the Securities Act pursuant to a private placement exemption from the registration requirements of the Securities Act, a certification to that effect from such Holder (in substantially the form of Exhibit A hereto) and a certification from the applicable transferee (in substantially the form of Exhibit B hereto) and an opinion of counsel to that effect if the Company or the Trustee so requests; (D) if such Transfer Restricted Securities are being transferred pursuant to an exemption from registration in accordance with Rule 904 under the Securities Act, certifications to that effect from such Holder (in substantially the form of Exhibits A and C hereto) and an opinion of counsel to that effect if the Company or the Trustee so requests; or (E) if such Transfer Restricted Securities are being transferred in reliance on another exemption from the registration requirements of the Securities Act, a certification to that effect from such Holder (in substantially the form of Exhibit A 53 hereto) and an opinion of counsel to that effect if the Company or the Trustee so requests. (b) Restriction on Transfer of a Definitive Security for a Beneficial Interest in a Global Security. A Definitive Security may not be exchanged for a beneficial interest in a Global Security except upon satisfaction of the requirements set forth below. Upon receipt by the Trustee of a Definitive Security, duly endorsed or accompanied by appropriate instruments of transfer, in form satisfactory to the Trustee, together with the following additional information and documents, as applicable, upon which the Trustee may conclusively rely: (i) if such Definitive Security is a Transfer Restricted Security, certification, substantially in the form of Exhibit A hereto that such Definitive Security is being transferred to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act) in accordance with Rule 144A under the Securities Act; or (ii) if such Definitive Security is a Transfer Restricted Security and is being transferred pursuant to an exemption from registration in accordance with Rule 904 under the Securities Act, certifications to that effect from such Holder (in substantially the form of Exhibits A and C hereto) and an opinion of counsel to that effect if the Company or Trustee so requests; and (iii) whether or not such Definitive Security is a Transfer Restricted Security written instructions directing the Trustee to make, or direct the Security Custodian to make, an endorsement on the Global Security to reflect an increase in the aggregate principal amount of the Securities represented by the Global Security; then the Trustee shall cancel such Definitive Security in accordance with Section 3.11 hereof and cause, or direct the Security Custodian to cause, in accordance with the standing instructions and procedures existing between the Depositary and the Security Custodian, the aggregate principal amount of Securities represented by the Global Security to be increased accordingly. If no Global Securities are then outstanding, the Company shall issue and the Trustee shall authenticate a new Global Security in the appropriate principal amount. (c) Transfer and Exchange of Global Securities. The transfer and exchange of Global Securities or beneficial interests therein shall be effected through the Depositary, in accordance with this Indenture (including the restrictions on transfer set forth herein) and the procedures of the Depositary therefor, which shall include restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. (d) Transfer of a Beneficial Interest in a Global Security for a Definitive Security. (i) Any Person having a beneficial interest in a Global Security may upon request exchange such beneficial interest for a Definitive Security. Upon receipt by the Trustee of 54 written instructions or such other form of instructions as is customary for the Depositary, from the Depositary or its nominee on behalf of any Person having a beneficial interest in a Global Security, and in the case of a Transfer Restricted Security, the following additional information and documents (all of which may be submitted by facsimile), upon which the Trustee may conclusively rely: (A) if such beneficial interest is being transferred to the Person designated by the Depositary as being the beneficial owner, a certification from such Person to that effect (in substantially the form of Exhibit A hereto); or (B) if such beneficial interest is being transferred (1) to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act) in accordance with Rule 144A under the Securities Act or (2) pursuant to an exemption from registration in accordance with Rule 144 under the Securities Act (and based upon an opinion of counsel to that effect if the Company or the Trustee so requests) or (3) pursuant to an effective registration statement under the Securities Act, a certification to that effect from the transferor (in substantially the form of Exhibit A hereto); or (C) if such beneficial interest is being transferred to an institutional "accredited investor," within the meaning of Rule 501 (a)(1), (2), (3) or (7) under the Securities Act pursuant to a private placement exemption from the registration requirements of the Securities Act (and based upon an opinion of counsel to that effect if the Company or the Trustee so requests), a certification to that effect from such transferor (in substantially the form of Exhibit A hereto) and a certification from the applicable transferee (in substantially the form of Exhibit B hereto); or (D) if such beneficial interest is being transferred pursuant to an exemption from registration in accordance with Rule 904 under the Securities Act (and based upon an opinion to that effect of counsel if the Company or the Trustee so requests), certifications to that effect from such transferor (in substantially the form of Exhibits A and C hereto); or (E) if such beneficial interest is being transferred in reliance on another exemption from the registration requirements of the Securities Act (and based upon an opinion of counsel to that effect if the Company or the Trustee so requests), a certification to that effect from such transferor (in substantially the form of Exhibit A hereto); the Trustee or the Security Custodian, at the direction of the Trustee, shall, in accordance with the standing instructions and procedures existing between the Depositary and the Security Custodian, cause the aggregate principal amount of Global Securities to be reduced accordingly and, following such reduction, the Company shall execute and the Trustee shall authenticate and deliver to the transferee a Definitive Security in the appropriate principal amount. 55 (ii) Definitive Securities issued in exchange for a beneficial interest in a Global Security pursuant to this Section 3.6(d) shall be registered in such names and in such authorized denominations as the Depositary, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Definitive Securities to the Persons in whose names such Securities are so registered. (e) Restrictions on Transfer and Exchange of Global Securities. Notwithstanding any other provisions of this Indenture (other than the provisions set forth in subsection (f) of this Section 3.6), a Global Security may not be transferred as a whole except by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. (f) Authentication of Definitive Securities in Absence of Depositary. If at any time: (i) the Depositary for the Securities notifies the Company that the Depositary is unwilling or unable to continue as Depositary for the Global Securities and a successor Depositary for the Global Securities is not appointed by the Company within 90 days after delivery of such notice; (ii) an Event of Default has occurred and is continuing and the Security Registrar has received a request from the Depositary to issue Definitive Securities in lieu of all or a portion of the Global Security (in which case the Company shall deliver Definitive Securities within 30 days of such request); or (iii) the Company, at its sole discretion, notifies the Trustee in writing that it elects to cause the issuance of Definitive Securities under this Indenture, then the Company will execute, and the Trustee will authenticate and deliver Definitive Securities, in an aggregate principal amount equal to the principal amount of the Global Securities, in exchange for such Global Securities and registered in such names as the Depositary shall instruct the Trustee or the Company in writing. (g) Legends. (i) Except as permitted by the following paragraphs (ii) and (iii) immediately below, each Security certificate evidencing the Global Securities and the Definitive Securities (and all Securities issued in exchange therefor or substitution thereof) shall bear a legend in substantially the following form: THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ( THE "SECURITIES ACT"), OR ANY STATE 56 SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES (1) NOT TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO (X) THE DATE THAT IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(k) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF THIS SECURITY) AND THE LAST DAY ON WHICH OCEAN ENERGY, INC. (THE "COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAWS (THE "RESALE RESTRICTION TERMINATION DATE"), EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT IS ACQUIRING SUCH SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND (2) THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY, THE TRUSTEE, THE TRANSFER AGENT AND THE REGISTRAR SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A OR (2) A NON-U.S. PERSON AND IS ACQUIRING THE NOTE IN AN "OFFSHORE 57 TRANSACTION" PURSUANT TO RULE 904 OF REGULATION S UNDER THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. Each Security certificate evidencing the Global Securities also shall bear the paragraph referred to in the first footnote of the form of Security in Section 2.2 hereof. (ii) Upon any sale or transfer of a Transfer Restricted Security (including any Transfer Restricted Security represented by a Global Security) pursuant to Rule 144 under the Securities Act or an effective registration statement under the Securities Act, which shall be certified to the Trustee and Security Registrar upon which each may conclusively rely: (A) in the case of any Transfer Restricted Security that is a Definitive Security, the Security Registrar shall permit the Holder thereof to exchange such Transfer Restricted Security for a Definitive Security that does not bear the legend set forth in (i) above and rescind any restriction on the transfer of such Transfer Restricted Security; and (B) in the case of any Transfer Restricted Security represented by a Global Security, such Transfer Restricted Security shall not be required to bear the legend set forth in (i) above if all other interests in such Global Security have been or are concurrently being sold or transferred pursuant to Rule 144 under the Securities Act or pursuant to an effective registration statement under the Securities Act, but such Transfer Restricted Security shall continue to be subject to the provisions of Section 3.6(c) hereof; provided, however, that with respect to any request for an exchange of a Transfer Restricted Security that is represented by a Global Security for a Definitive Security that does not bear a legend set forth in (i) above, which request is made in reliance upon Rule 144 under the Securities Act, the Holder thereof shall certify in writing to the Security Registrar that such request is being made pursuant to Rule 144 under the Securities Act (such certification to be substantially in the form of Exhibit A hereto and upon which the Security Registrar may conclusively rely). (iii) Notwithstanding the foregoing, upon consummation of the Exchange Offer, the Company shall issue and, upon receipt of an authentication order in accordance with Section 3.3 hereof, the Trustee shall authenticate Series B Securities in exchange for Series A Securities accepted for exchange in the Exchange Offer, which Series B Securities shall not bear the legend set forth in (i) above, and the Security Registrar shall rescind any restriction on the transfer of such Securities, in each case unless the Holder of such Series A Securities is either (A) a broker-dealer, (B) a Person participating in the distribution of the Series A Securities or (C) a Person who is an affiliate (as defined in Rule 144 under the 58 Securities Act) of the Company. The Company shall identify to the Trustee such Holders of the Securities in a written certification signed by an Officer of the Company and, absent certification from the Company to such effect, the Trustee shall assume that there are no such Holders. (h) Cancellation and/or Adjustment of Global Security. At such time as all beneficial interests in a Global Security have either been exchanged for Definitive Securities, redeemed, repurchased or canceled, such Global Security shall be returned to or retained and canceled by the Trustee. At any time prior to such cancellation, if any beneficial interest in a Global Security is exchanged for Definitive Securities, redeemed, repurchased or canceled, the principal amount of Securities represented by such Global Security shall be reduced and an endorsement shall be made on such Global Security, by the Trustee or the Security Custodian, at the direction of the Trustee to reflect such reduction. (i) General Provisions with respect to Transfer and Exchanges. (i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Definitive Securities and Global Securities at the Security Registrar's request. (ii) No service charge shall be made to a Holder for any registration of transfer or exchange or redemption of Securities (except as otherwise permitted herein), but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than such transfer tax or similar governmental charge payable upon exchanges pursuant to the last paragraph of Section 3.3 or Sections 3.4, 9.6 or 11.8 hereof). (iii) The Trustee shall authenticate Definitive Securities and Global Securities in accordance with the provisions of Section 3.3 hereof. (iv) Notwithstanding any other provisions of this Indenture to the contrary, the Company shall not be required to register the transfer or exchange of a Security between a Regular Record Date and the next succeeding Interest Payment Date. (v) Neither the Company nor the Trustee will have any responsibility or liability for any aspect of the records relating to, or payments made on account of, Securities by the Depositary, or for maintaining, supervising or reviewing any records of the Depositary relating to such Securities. Neither the Company nor the Trustee shall be liable for any delay by the related Global Security Holder or the Depositary in identifying the beneficial owners of the related Securities and each such Person may conclusively rely on, and shall be protected in relying on, instructions from such Global Security Holder or the Depositary for all purposes (including with respect to the registration and delivery, and the respective principal amounts, of the Securities to be issued). 59 (vi) Neither the Trustee, the Security Registrar nor the Company shall be required (A) to issue, register the transfer of or exchange any Security during a period beginning at the opening of business 15 days before the mailing of a notice of redemption of Securities selected for redemption under Section 11.4 hereof and ending at the close of business on the day of such mailing of the relevant notice of redemption, or (B) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part. (vii) All Securities and the Subsidiaries Guarantees, if any, noted thereon issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company and the respective Subsidiary Guarantors, if any, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange. (viii) Each Holder of a Security agrees to indemnify the Company and the Trustee against any liability that may result from the transfer, exchange or assignment of such Holder's Security in violation of any provision of this Indenture and/or applicable federal or state securities law. (ix) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof. Section 3.7 Additional Provisions for Global Security. (a) The Global Security initially shall be registered in the name of the Depositary for such Global Security or the nominee of such Depositary and be delivered to the Trustee as custodian for, such Depositary. Members of or participants in, the Depositary ("Agent Members") shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depositary, or the Trustee as its custodian, or under the Global Security, and the Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee, from giving effect to any written certification, proxy or other authorization furnished by the Depositary or shall impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Security. 60 (b) The registered Holder of the Global Security may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Securities. Section 3.8 Mutilated, Destroyed, Lost and Stolen Securities. If (i) any mutilated Security is surrendered to the Trustee or (ii) the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Security, and there is delivered to the Company, the Subsidiary Guarantors and the Trustee such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute, the Subsidiary Guarantors shall execute the notations of Subsidiary Guarantees, and upon Company Order the Trustee shall authenticate and deliver, in exchange for any such mutilated Security or in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and principal amount, having the notations of Subsidiary Guarantees thereon bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security issued pursuant to this Section in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company and the respective Subsidiary Guarantors, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. Section 3.9 Payment of Interest; Interest Rights Preserved. Interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name such Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, or, in the case of interest payable at the Maturity of the principal of the Securities, to the Person to whom principal is paid, in each case at the office or agency of the Company maintained for such purpose pursuant to Section 10.2 hereof. 61 Any interest on any Security which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date shall forthwith cease to be payable to the Holder on the Regular Record Date by virtue of having been such Holder, and such defaulted interest and (to the extent lawful) interest on such defaulted interest at the rate borne by the Securities (such defaulted interest and interest thereon herein collectively called "Defaulted Interest") may be paid by the Company, at its election in each case, as provided in clause (a) or (b) below: (a) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered, at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited shall be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date, and in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be given in the manner provided for in Section 15.5 hereof, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so given, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (b). (b) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. Section 3.10 Persons Deemed Owners. Prior to the due presentment of a Security for registration of transfer, the Company, the Subsidiary Guarantors, the Security Registrar, the Trustee and any agent of the Company, the Subsidiary Guarantors or the Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving 62 payment of principal of (and premium, if any, on) and (subject to Section 3.9 hereof) interest on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and none of the Company, the Subsidiary Guarantors, the Security Registrar, the Trustee or any agent of the Company, the Subsidiary Guarantors or the Trustee shall be affected by notice to the contrary. Section 3.11 Cancellation. All Securities surrendered for payment, redemption, registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly canceled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section, except as expressly permitted by this Indenture. All canceled Securities held by the Trustee shall be destroyed and a certificate of their destruction delivered to the Company unless by a Company Order the Company shall direct that canceled Securities be returned to it. Section 3.12 Computation of Interest. Interest on the Securities shall be computed on the basis of a 360-day year comprised of twelve 30-day months. Section 3.13 CUSIP Numbers. The Company in issuing the Securities may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; provided, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee of any change in the CUSIP numbers. ARTICLE IV SATISFACTION AND DISCHARGE -------------------------- Section 4.1 Satisfaction and Discharge of Indenture. This Indenture shall upon Company Request be discharged and cease to be of further effect (except as to surviving rights of registration of transfer or exchange of Securities, as expressly provided for in this Indenture) as to all outstanding Securities, and the Trustee, at the expense of the Company, shall, upon payment of all amounts due the Trustee under Section 6.6 hereof, execute proper instruments acknowledging satisfaction and discharge of this Indenture when (a) either (i) all Securities theretofore authenticated and delivered (other than (1) Securities which have been mutilated, destroyed, lost or stolen and which have been replaced or paid 63 as provided in Section 3.8 hereof and (2) Securities for whose payment money or United States governmental obligations of the type described in clause (i) of the definition of Cash Equivalents has theretofore been deposited in trust with the Trustee or any Paying Agent or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 10.3 hereof) have been delivered to the Trustee for cancellation, or (i) all such Securities not theretofore delivered to the Trustee for cancellation (A) have become due and payable, or (B) will become due and payable at their Stated Maturity within one year, or (C) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company, in the case of (ii)(A), (ii)(B) or (ii)(C) above, has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose an amount sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal (and premium, if any) and interest to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be, together with instructions from the Company irrevocably directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be; (b) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (c) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel each satisfactory in form to the Trustee, which, taken together, state that all conditions precedent herein relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 6.6 hereof and, if money shall have been deposited with the Trustee pursuant to this Section, the obligations of the Trustee under Section 4.2 hereof and the last paragraph of Section 10.3 hereof shall survive. Section 4.2 Application of Trust Money. Subject to the provisions of the last paragraph of Section 10.3 hereof, all money deposited with the Trustee pursuant to Section 4.1 hereof shall be 64 held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee. ARTICLE V REMEDIES -------- Section 5.1 Events of Default. "Events of Default," wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (a) default in the payment of the principal of or premium, if any, on any of the Securities, whether such payment is due at maturity, upon redemption, upon repurchase pursuant to a Change of Control Offer or a Net Proceeds Offer, upon acceleration or otherwise; or (b) default in the payment of any installment of interest on any of the Securities, when it becomes due and payable, and the continuance of such default for a period of 30 days; or (c) default in the performance or breach of the provisions of Article VIII hereof, the failure to make or consummate a Change of Control Offer in accordance with the provisions of Section 10.16 or the failure to make or consummate a Net Proceeds Offer in accordance with the provisions of Section 10.17; or (d) the Company or any Subsidiary Guarantor shall fail to perform or observe any other term, covenant or agreement contained in the Securities, any Subsidiary Guarantee or this Indenture (other than a default specified in (a), (b) or (c) above) for a period of 30 days after written notice of such failure stating that it is a "notice of default" hereunder and requiring the Company or such Subsidiary Guarantor to remedy the same shall have been given (i) to the Company by the Trustee or (ii) to the Company and the Trustee by the holders of at least 25% in aggregate principal amount of the Securities then Outstanding; or (e) the occurrence and continuation beyond any applicable grace period of any default in the payment of the principal of (or premium, if any, on) or interest on any Indebtedness of the Company (other than the Securities) or any Subsidiary Guarantor or any other Restricted Subsidiary for money borrowed when due, or any other default causing acceleration of any Indebtedness of the Company or any Subsidiary Guarantor or any other Restricted Subsidiary for money borrowed, provided that the aggregate principal amount of such Indebtedness shall exceed the greater of (i) $20 million and (ii) 5% of Adjusted Consolidated Net Tangible Assets; provided further that if any such default is cured or waived or any such acceleration rescinded, or such debt 65 is repaid, within a period of 10 days from the continuation of such default beyond the applicable grace period or the occurrence of such acceleration, as the case may be, such Event of Default under this Indenture and any consequential acceleration of the Securities shall be automatically rescinded, so long as such rescission does not conflict with any judgment or decree; or (f) the commencement of proceedings, or the taking of any enforcement action (including by way of set-off), by any holder of at least the greater of (i) $20 million and (ii) 5% of Adjusted Consolidated Net Tangible Assets in aggregate principal amount of Indebtedness of the Company or any Subsidiary Guarantor or any other Restricted Subsidiary, after a default under such Indebtedness, to retain in satisfaction of such Indebtedness or to collect or seize, dispose of or apply in satisfaction of such Indebtedness, Property or assets of the Company or any Subsidiary Guarantor or any other Restricted Subsidiary having a Fair Market Value (as determined by the Board of Directors of the Company and evidenced by a Board Resolution) in excess of the greater of (i) $20 million and (ii) 5% of Adjusted Consolidated Net Tangible Assets individually or in the aggregate, provided that if any such proceedings or actions are terminated or rescinded, or such Indebtedness is repaid, such Event of Default under this Indenture and any consequential acceleration of the Securities shall be automatically rescinded, so long as (x) such rescission does not conflict with any judgment or decree and (y) the holder of such Indebtedness shall not have applied any such property or assets in satisfaction of such Indebtedness; or (g) any Subsidiary Guarantee shall for any reason cease to be, or be asserted by the Company or any Subsidiary Guarantor, as applicable, not to be, in full force and effect, enforceable in accordance with its terms (except pursuant to the release of any such Subsidiary Guarantee in accordance with this Indenture); or (h) final judgments or orders rendered against the Company or any Subsidiary Guarantor or any other Restricted Subsidiary that are unsatisfied and that require the payment in money, either individually or in an aggregate amount, that is more than the greater of (i) $20 million and (ii) 5% of Adjusted Consolidated Net Tangible Assets over the coverage under applicable insurance policies and either (x) commencement by any creditor of an enforcement proceeding upon such judgment (other than a judgment that is stayed by reason of pending appeal or otherwise) or (y) the occurrence of a 60-day period during which a stay of such judgment or order, by reason of pending appeal or otherwise, was not in effect; or (i) the entry of a decree or order by a court having jurisdiction in the premises (i) for relief in respect of the Company, any Subsidiary Guarantor or any Significant Subsidiary in an involuntary case or proceeding under the Federal Bankruptcy Code or any other applicable federal or state bankruptcy, insolvency, reorganization or other similar law or (ii) adjudging the Company, any Subsidiary Guarantor or any Significant Subsidiary bankrupt or insolvent, or approving a petition seeking reorganization, arrangement, adjustment or composition of the Company, any Subsidiary Guarantor or any Significant Subsidiary under the Federal Bankruptcy Code or any other applicable federal or state law, or appointing under any such law a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company, any Subsidiary Guarantor 66 or any Significant Subsidiary or of a substantial part of their consolidated assets, or ordering the winding up or liquidation of their affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or (j) the commencement by the Company, any Subsidiary Guarantor or any Significant Subsidiary of a voluntary case or proceeding under the Federal Bankruptcy Code or any other applicable federal or state bankruptcy, insolvency, reorganization or other similar law or any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by the Company, any Subsidiary Guarantor or any Significant Subsidiary to the entry of a decree or order for relief in respect thereof in an involuntary case or proceeding under the Federal Bankruptcy Code or any other applicable federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by the Company, any Subsidiary Guarantor or any Significant Subsidiary of a petition or consent seeking reorganization or relief under any applicable federal or state law, or the consent by it under any such law to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or other similar official) of any of the Company, any Subsidiary Guarantor or any Significant Subsidiary or of any substantial part of their consolidated assets, or the making by it of an assignment for the benefit of creditors under any such law, or the admission by it in writing of its inability to pay its debts generally as they become due or taking of corporate action by the Company, any Subsidiary Guarantor or any Significant Subsidiary in furtherance of any such action. Section 5.2 Acceleration of Maturity; Rescission and Annulment. If an Event of Default (other than an Event of Default specified in clause (i) or (j) of Section 5.1 hereof) shall occur and be continuing, the Trustee, by written notice to the Company, or the holders of at least 25% in aggregate principal amount of the Securities then Outstanding, by notice to the Trustee and the Company, may declare the principal of, premium, if any, and accrued interest on all of the Outstanding Securities due and payable immediately, upon which declaration all amounts payable in respect of the Securities shall be immediately due and payable. If an Event of Default specified in Section 5.1(i) or (j) hereof occurs and is continuing, then the principal of, premium, if any, and accrued interest on all of the Outstanding Securities shall ipso facto become and be immediately due and payable without any declaration, notice or other act on the part of the Trustee or any Holder of Securities. After a declaration of acceleration has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee, the Holders of a majority in aggregate principal amount of the Securities Outstanding, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if (a) the Company or any Subsidiary Guarantor has paid or deposited with the Trustee a sum sufficient to pay (i) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, (ii) all overdue interest on all Securities, (iii) the principal of and premium, if any, on any Securities which have become due otherwise than by such declaration of acceleration and interest thereon at the rate borne by the Securities, and (iv) to the 67 extent that payment of such interest is lawful, interest upon overdue interest and overdue principal at the rate borne by the Securities which has become due otherwise than by such declaration of acceleration; (b) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction; and (c) all Events of Default, other than the nonpayment of principal of, premium, if any, and interest on the Securities that has become due solely by such declaration of acceleration, have been cured or waived. The Holders of not less than a majority in aggregate principal amount of the outstanding Securities may on behalf of the holders of all the Securities waive any past defaults under this Indenture, except (i) a default in the payment of the principal of, premium, if any, or interest on any Security, (ii) a default in respect of a covenant or provision which under this Indenture cannot be modified or amended without the consent of the Holder of each Security Outstanding, and (iii) as limited by Section 10.21 hereof. Section 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee. The Company covenants that if (a) default is made in the payment of any installment of interest on any Security when such interest becomes due and payable and such default continues for a period of 30 days, or (b) default is made in the payment of the principal of (or premium, if any, on) any Security at the Maturity thereof or with respect to any Security required to have been purchased by the Company on the Change of Control Purchase Date or the Net Proceeds Payment Date pursuant to a Change of Control Offer or a Net Proceeds Offer, as applicable, the Company will, upon demand of the Trustee, pay to the Trustee for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal (and premium, if any) and interest, and interest on any overdue principal (and premium, if any) and, to the extent that payment of such interest shall be legally enforceable, upon any overdue installment of interest, at the rate borne by the Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon the Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the Property of the Company or any other obligor upon the Securities, wherever situated. If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether 68 for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. Section 5.4 Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company, the Subsidiary Guarantors or any other obligor upon the Securities or the Property of the Company, the Subsidiary Guarantors or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company, the Subsidiary Guarantors or such other obligor for the payment of overdue principal, premium, if any, or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, (a) to file and prove a claim for the whole amount of principal (and premium, if any) and interest owing and unpaid in respect of the Securities and to file such other papers or documents and take any other actions including participation as a full member of any creditor or other committee as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding, and (b) to collect and receive any moneys or other Property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 6.6 hereof. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the Subsidiary Guarantees or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. Section 5.5 Trustee May Enforce Claims Without Possession of Securities. All rights of action and claims under this Indenture or the Securities or the Subsidiary Guarantees may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name and as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, 69 disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered. Section 5.6 Application of Money Collected. Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in the case of the distribution of such money on account of principal (or premium, if any) or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee under Section 6.6 hereof, SECOND: To the payment of the amounts then due and unpaid for principal of (and premium, if any, on,) and interest on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal (and premium, if any) and interest, respectively; and THIRD: The balance, if any, to the Company. Section 5.7 Limitation on Suits. No Holder of any Securities shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (a) such Holder has previously given written notice to the Trustee of a continuing Event of Default; (b) the Holders of not less than 25% in aggregate principal amount of the Outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (c) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (d) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (e) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority or more in aggregate principal amount of the Outstanding Securities; it being understood and intended that no one or more Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders, or to obtain or to seek to obtain priority or preference over any other 70 Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders. Section 5.8 Unconditional Right of Holders to Receive Principal, Premium and Interest. Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment, as provided herein (including, if applicable, Article XII hereof) and in such Security of the principal of (and premium, if any, on) and (subject to Section 3.9 hereof) interest on, such Security on the respective Stated Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder. Section 5.9 Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Subsidiary Guarantors, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereunder and all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. Section 5.10 Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 3.8 hereof, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 5.11 Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. Section 5.12 Control by Holders. The Holders of not less than a majority in principal amount of the Outstanding Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, provided that (a) such direction shall not be in conflict with any rule of law or with this Indenture, 71 (b) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction, and (c) the Trustee need not take any action which might involve it in personal liability or be unduly prejudicial to the Holders not joining therein. Section 5.13 Waiver of Past Defaults. The Holders of not less than a majority in principal amount of the Outstanding Securities may on behalf of the Holders of all the Securities waive any existing Default or Event of Default hereunder and its consequences, except a Default or Event of Default (a) in respect of the payment of the principal of (or premium, if any, on) or interest on any Security, or (b) in respect of a covenant or provision hereof which under Article IX hereof cannot be modified or amended without the consent of the Holder of each Outstanding Security affected. Upon any such waiver, such Default or Event of Default shall cease to exist for every purpose under this Indenture, but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. Section 5.14 Waiver of Stay, Extension or Usury Laws. Each of the Company and the Subsidiary Guarantors covenants (to the extent that each may lawfully do so) that it will not at any time insist upon, plead or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension, or usury law or other law, which would prohibit or forgive the Company or any Subsidiary Guarantor from paying all or any portion of the principal of (premium, if any, on) and/or interest on the Securities as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture; and (to the extent that it may lawfully do so) each of the Company and the Subsidiary Guarantors hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE VI THE TRUSTEE ----------- Section 6.1 Notice of Defaults. Within 60 days after the occurrence of any Default hereunder, the Trustee shall transmit in the manner and to the extent provided in TIA Section 313(c), notice of such Default hereunder known to the Trustee, unless such Default shall have been cured or waived; provided, however, that, except in the case of a Default in the payment of the principal 72 of (or premium, if any, on) or interest on any Security, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interest of the Holders; and provided, further, that in the case of any Default of the character specified in Section 5.1(e) hereof, no such notice to Holders shall be given until at least 60 days after the occurrence thereof. Section 6.2 Certain Rights and Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent Person would exercise or use under the circumstances in the conduct of his or her own affairs. (b) Except during the continuance of an Event of Default: (i) The Trustee need perform only those duties that are specifically set forth in this Indenture and the TIA and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee. To the extent of any conflict between the duties of the Trustee hereunder and under the TIA, the TIA shall control. (ii) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein). (c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) this paragraph does not limit the effect of paragraph (b) of this Section; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 5.12 hereof. 73 (d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section. (e) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. (f) Subject to the provisions of TIA Sections 315(a) through 315(d): (i) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (ii) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; (iii) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (iv) the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (v) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (vi) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; 74 (vii) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; and (viii) the Trustee shall not be liable for any action taken, suffered or omitted by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture. (g) The Trustee shall not be required to advance, expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Section 6.3 Trustee Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Securities and the notations of Subsidiary Guarantees thereon, except for the Trustee's certificates of authentication, shall be taken as the statements of the Company or the Subsidiary Guarantors, as the case may be, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities, except that the Trustee represents that it is duly authorized to execute and deliver this Indenture, authenticate the Securities and perform its obligations hereunder, and that the statements made by it in a Statement of Eligibility and Qualification on Form T-1 supplied to the Company are true and accurate, subject to the qualifications set forth herein. The Trustee shall not be accountable for the use or application by the Company of Securities or the proceeds thereof. Section 6.4 May Hold Securities. The Trustee, any Paying Agent, any Security Register or any other agent of the Company, any Subsidiary Guarantor or of the Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to TIA Sections 310(b) and 311, may otherwise deal with the Company and the Subsidiary Guarantors with the same rights it would have if it were not the Trustee, Paying Agent, Security Registrar or such other agent. Section 6.5 Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Company or any Subsidiary Guarantor. Section 6.6 Compensation and Reimbursement. The Company agrees: (a) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); 75 (b) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel, except any such expense, disbursement or advance as may be attributable to the Trustee's negligence or bad faith); and (c) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder or in connection with enforcing this indemnification provision. The obligations of the Company under this Section 6.6 to compensate the Trustee, to pay or reimburse the Trustee for expenses, disbursements and advances and to indemnify and hold harmless the Trustee shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture or any other termination under any Insolvency or Liquidation Proceeding. As security for the performance of such obligations of the Company, the Trustee shall have a claim and lien prior to the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for payment of principal of (and premium, if any, on) or interest on particular Securities. Such lien shall survive the satisfaction and discharge of this Indenture or any other termination under any Insolvency or Liquidation Proceeding. When the Trustee incurs expenses or renders services after the occurrence of an Event of Default specified in paragraphs (i) or (j) of Section 5.1 of this Indenture, such expenses and the compensation for such services are intended to constitute expenses of administration under any Insolvency or Liquidation Proceeding. Section 6.7 Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder which shall be eligible to act as Trustee under TIA Section 310(a)(1) and shall have a combined capital and surplus of at least $50,000,000. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of federal, state, territorial or District of Columbia supervising or examining authority, then for the purposes of this Section 6.7, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. Section 6.8 Conflicting Interests. The Trustee shall comply with the provisions of Section 310(b) of the Trust Indenture Act. 76 Section 6.9 Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 6.10 hereof. (b) The Trustee may resign at any time by giving written notice thereof to the Company. If the instrument of acceptance by a successor Trustee required by Section 6.10 hereof shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (c) The Trustee may be removed at any time by Act of the Holders of not less than a majority in principal amount of the Outstanding Securities, delivered to the Trustee and to the Company. (d) If at any time: (i) the Trustee shall fail to comply with the provisions of TIA Section 310(b) after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months, or (ii) the Trustee shall cease to be eligible under Section 6.7 hereof and shall fail to resign after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months, or (iii) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (i) the Company, by a Board Resolution, may remove the Trustee, or (ii) subject to TIA Section 315(e), any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Trustee. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed by 77 the Company. If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment in the manner hereinafter provided, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. The evidence of such successorship may, but need not be, evidenced by a supplemental indenture. (f) The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to the Holders of Securities in the manner provided for in Section 15.5 hereof. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. Section 6.10 Acceptance of Appointment by Successor. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee, but, on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of all amounts due it under Section 6.6 hereof, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. Section 6.11 Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities; and in case at that time any of the Securities shall not have been authenticated, any successor Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor Trustee; provided, however, that the right to adopt the certificate of authentication of any predecessor Trustee or to authenticate Securities in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation. 78 Section 6.12 Preferential Collection of Claims Against Company. If and when the Trustee shall be or become a creditor of the Company (or any other obligor under the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company or any such other obligor. ARTICLE VII HOLDERS' LISTS AND REPORTS BY TRUSTEE ------------------------------------- Section 7.1 Disclosure of Names and Addresses of Holders. Every Holder of Securities, by receiving and holding the same, agrees with the Company, the Subsidiary Guarantors, the Security Registrar and the Trustee that none of the Company, the Subsidiary Guarantors, the Security Registrar or the Trustee, or any agent of any of them, shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders in accordance with TIA Section 312, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under TIA Section 312(b). Section 7.2 Reports By Trustee. Within 60 days after May 15 of each year commencing with May 15, 1999, the Trustee shall transmit by mail to the Holders, as their names and addresses appear in the Security Register, a brief report dated as of such May 15 in accordance with and to the extent required under TIA Section 313(a). The Trustee shall also comply with TIA Sections 313(b) and 313(c). The Company shall promptly notify the Trustee in writing if the Securities become listed on any stock exchange or automatic quotation system. A copy of each Trustee's report, at the time of its mailing to Holders of Securities, shall be mailed to the Company and filed with the Commission and each stock exchange, if any, on which the Securities are listed. ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE ---------------------------------------------------- Section 8.1 Company May Consolidate, etc., Only on Certain Terms. The Company (A) will not, in any single transaction or series of related transactions, merge or consolidate with or into any other Person, or sell, assign, convey, transfer, lease or otherwise dispose of all or substantially all of its Properties and assets to any Person or group of Affiliated Persons, and (B) shall not permit any of its Restricted Subsidiaries to enter into any such transaction or series of transactions if such transaction or series of transactions by Restricted Subsidiaries, in the aggregate, would result in a 79 sale, assignment, conveyance, transfer, lease or other disposition of all or substantially all of the Properties and assets of the Company and its Restricted Subsidiaries on a consolidated basis to any other Person or group of Affiliated Persons, unless at the time and after giving effect thereto (i) either (a) if the transaction or transactions is a merger or consolidation, the Company or a Restricted Subsidiary, as the case may be, shall be the surviving Person of such merger or consolidation, or (b) the Person (if other than the Company or a Restricted Subsidiary, as the case may be) formed by such consolidation or into which the Company or such Restricted Subsidiary is merged or to which the Properties and assets of the Company or such Restricted Subsidiary, as the case may be, are sold, assigned, conveyed, transferred, leased or otherwise disposed of (any such surviving Person or transferee Person being the "Surviving Entity") shall be a corporation organized and existing under the laws of the United States of America, any state thereof or the District of Columbia and shall, in either case, expressly assume by a supplemental indenture to this Indenture executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of the Company for the due and punctual payment of the principal of (and premium, if any, on) and interest on all the Securities and the performance and observance of every covenant of this Indenture on the part of the Company, to be performed or observed, and this Indenture shall remain in full force and effect; (ii) immediately before and immediately after giving effect to such transaction or series of transactions on a pro forma basis (and treating any Indebtedness not previously an obligation of the Company or any of its Restricted Subsidiaries which becomes the obligation of the Company or any of its Restricted Subsidiaries in connection with or as a result of such transaction or transactions as having been incurred at the time of such transaction or transactions), no Default or Event of Default shall have occurred and be continuing; (iii) except in the case of the consolidation or merger of any Restricted Subsidiary with or into the Company, immediately after giving effect to such transaction or transactions on a pro forma basis, the Consolidated Net Worth of the Company (or the Surviving Entity if the Company is not the continuing obligor under this Indenture) is at least equal to the Consolidated Net Worth of the Company immediately before such transaction or transactions; (iv) except in the case of the consolidation or merger of any Restricted Subsidiary with or into the Company or any Wholly Owned Restricted Subsidiary, immediately before and immediately after giving effect to such transaction or transactions on a pro forma basis (on the assumption that the transaction or transactions occurred on the first day of the period of four full fiscal quarters ending immediately prior to the consummation of such transaction or transactions, with the appropriate adjustments with respect to the transaction or transactions being included in such pro forma calculation), the Company (or the Surviving Entity if the Company is not the continuing obligor under this Indenture) could incur $1.00 of additional Indebtedness (excluding Permitted Indebtedness) pursuant to Section 10.12 hereof; (v) if the Company is not the Surviving Entity, each Subsidiary Guarantor, unless it is the other party to the transactions described above, shall have by supplemental indenture to this Indenture confirmed that its Subsidiary Guarantee shall apply to such Person's obligations under this Indenture and the Securities; and (vi) if any of the Properties or assets of the Company or any of its Restricted Subsidiaries would upon such transaction or series of related transactions become subject to any Lien (other than a Permitted Lien), the creation and imposition of such Lien shall have been in compliance with Section 10.15 hereof. 80 In connection with any consolidation, merger, sale, assignment, conveyance, transfer, lease or other disposition contemplated hereby, the Company shall deliver, or cause to be delivered, to the Trustee, in form and substance reasonably satisfactory to the Trustee, an Officers' Certificate stating that such consolidation, merger, sale, assignment, conveyance, transfer, lease or other disposition and any supplemental indenture in respect thereto comply with the requirements under this Indenture and an Opinion of Counsel stating that the requirements of clause (i) of the preceding paragraph have been complied with. Section 8.2 Successor Substituted. Upon any consolidation of the Company with or merger of the Company with or into any other Person or any sale, assignment, conveyance, transfer, lease or other disposition of all or substantially all of the Properties of the Company to any Person in accordance with Section 8.1 hereof, the successor Person formed by such consolidation or into which the Company is merged or to which such sale, assignment, conveyance. transfer or other disposition (other than by lease) is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and in the event of any such sale, assignment, lease, conveyance, transfer or other disposition, the Company (which term shall for this purpose mean the Person named as the "Company" in the first paragraph of this Indenture or any successor Person which shall theretofore become such in the manner described in Section 8.1 hereof), except in the case of a lease, shall be discharged of all obligations and covenants under this Indenture and the Securities and the Company may be dissolved and liquidated and such dissolution and liquidation shall not cause a Change of Control under clause (e) of the definition thereof to occur unless the merger, or the sale, assignment, lease, conveyance, transfer or other disposition of all or substantially all of the Properties of the Company to any Person otherwise results in a Change of Control. ARTICLE IX SUPPLEMENTAL INDENTURES ----------------------- Section 9.1 Supplemental Indentures Without Consent of Holders. Without the consent of any Holders, the Company, the Subsidiary Guarantors and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (a) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company contained herein and in the Securities; or (b) to add to the covenants of the Company for the benefit of the Holders or to surrender any right or power herein conferred upon the Company; or (c) to add any additional Events of Default; or 81 (d) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee pursuant to the requirements of Sections 6.9 and 6.10 hereof; or (e) to cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein; or (f) to secure the Securities pursuant to the requirements of Section 10.15 hereof or otherwise; or (g) to add any Person as a Subsidiary Guarantor as provided in Sections 10.13 and 13.1 hereof or as contemplated by the definition of "Permitted Subsidiary Indebtedness" or to evidence the succession of another Person to any Guarantor and the assumption by any such successor of the covenants and agreements of such Subsidiary Guarantor contained herein, in the Securities and in the Subsidiary Guarantee; or (h) to release a Subsidiary Guarantor from its Guarantee pursuant to Sections 10.13 and 13.3 hereof; or (i) to provide for uncertificated Securities in addition to or in place of certificated Securities; or (j) to make any other provisions with respect to matters or questions arising under this Indenture; provided that such action shall not adversely affect the interests of the Holders in any material respect. Section 9.2 Supplemental Indenture with Consent of Holders. With the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, the Subsidiary Guarantors, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby: (a) change the Stated Maturity of the principal of, or any installment of interest on, any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof, or change the place, coin or currency in which any Security or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date); or 82 (b) reduce the percentage of aggregate principal amount of the Outstanding Securities, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences provided for in this Indenture; or (c) modify any of the provisions of this Section or Sections 5.13 and 10.21 hereof, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby; or (d) modify Section 10.13(a) hereof or any provisions of this Indenture relating to the Subsidiary Guarantees in a manner adverse to the Holders thereof; or (e) amend, change or modify the obligation of the Company to make and consummate a Change of Control Offer in the event of a Change of Control, or to make and consummate a Net Proceeds Offer with respect to any Asset Sale or modify any of the provisions or definitions with respect thereto. It shall not be necessary for any Act of the Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. Section 9.3 Execution of Supplemental Indentures. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Section 9.4 Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes, and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Section 9.5 Conformity With Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. Section 9.6 Reference in Securities to Supplemental Indentures. Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities so 83 modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company, with the notations of Subsidiary Guarantees thereon executed by the Subsidiary Guarantors, and authenticated and delivered by the Trustee in exchange for Outstanding Securities. Section 9.7 Notice of Supplemental Indentures. Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to the provisions of Section 9.2 hereof, the Company shall give notice thereof to the Holders of each Outstanding Security affected, in the manner provided for in Section 15.5 hereof, setting forth in general terms the substance of such supplemental indenture. ARTICLE X COVENANTS --------- Section 10.1 Payment of Principal, Premium, if any, and Interest. The Company covenants and agrees for the benefit of the Holders that it will duly and punctually pay the principal of (and premium, if any, on) and interest on the Securities in accordance with the terms of the Securities and this Indenture. Section 10.2 Maintenance of Office or Agency. The Company shall maintain in the Borough of Manhattan, The City of New York, an office or agency where Securities may be presented or surrendered for payment, where Securities may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities, the Subsidiary Guarantees and this Indenture may be served. The office of U.S. Bank Trust National Association located at 100 Wall Street, Suite 1600, New York, NY 10005, Attn: Corporate Trust Department, shall be such office or agency of the Company, unless the Company shall designate and maintain some other office or agency for one or more of such purposes. The Company will give prompt written notice to the Trustee of any change in the location of any such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the aforementioned office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. The Company may also from time to time designate one or more other offices or agencies (in or outside of The City of New York) where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind any such designation; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and any change in the location of any such other office or agency. 84 Section 10.3 Money for Security Payments to Be Held in Trust. If the Company shall at any time act as its own Paying Agent, it shall, on or before each due date of the principal of (and premium, if any, on) or interest on any of the Securities, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act. Whenever the Company shall have one or more Paying Agents for the Securities, it will, on or before 12:00 noon on each due date of the principal of (and premium, if any, on), or interest on, any Securities, deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Company shall promptly notify the Trustee of such action or any failure so to act. The Company shall cause each Paying Agent (other than the Trustee) to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will: (a) hold all sums held by it for the payment of the principal of (and premium, if any, on) or interest on Securities in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (b) give the Trustee notice of any default by the Company (or any other obligor upon the Securities) in the making of any payment of principal (and premium, if any) or interest; and (c) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such sums. Subject to applicable escheat and abandoned property laws, any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (and premium, if any, on) or interest on any Security and remaining unclaimed for two years after such principal (and premium, if any) or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon 85 cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company. Section 10.4 Corporate Existence. Except as expressly permitted by Article VIII hereof, Section 10.16 hereof or other provisions of this Indenture, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect the corporate existence, rights (charter and statutory) and franchises of the Company and each Restricted Subsidiary; provided, however, that the Company shall not be required to preserve any such existence of its Restricted Subsidiaries, rights or franchises, if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Restricted Subsidiaries, taken as a whole and that the loss thereof is not disadvantageous in any material respect to the Holders. Section 10.5 Payment of Taxes and Other Claims. The Company shall pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (a) all taxes, assessments and governmental charges levied or imposed upon the Company or any Restricted Subsidiary or upon the income, profits or Property of the Company or any Restricted Subsidiary and (b) all lawful claims for labor, materials and supplies, which, if unpaid, might by law become a Lien upon the Property of the Company or any Restricted Subsidiary; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings and for which appropriate provision has been made in accordance with GAAP. Section 10.6 Maintenance of Properties. The Company shall cause all material Properties owned by the Company or any Restricted Subsidiary and used or held for use in the conduct of its business or the business of any Restricted Subsidiary to be maintained and kept in good condition, repair and working order (ordinary wear and tear excepted), all as in the judgment of the Company may be necessary so that its business may be properly and advantageously conducted at all times; provided, however, that nothing in this Section shall prevent the Company from discontinuing the maintenance of any of such Properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business or the business of the Company and its Restricted Subsidiaries taken as a whole and not disadvantageous in any material respect to the Holders. Notwithstanding the foregoing, nothing contained in this Section 10.6 shall limit or impair in any way the right of the Company and its Restricted Subsidiaries to sell, divest and otherwise to engage in transactions that are otherwise permitted by this Indenture. 86 Section 10.7 Insurance. The Company shall at all times keep all of its and its Restricted Subsidiaries' Properties which are of an insurable nature insured with insurers, believed by the Company to be responsible, against loss or damage to the extent that property of similar character is usually so insured by corporations similarly situated and owning like properties. The Company may adopt such other plan or method of protection, in lieu of or supplemental to insurance with insurers, whether by the establishment of an insurance fund or reserve to be held and applied to make good losses from casualties, or otherwise, conforming to the systems of self-insurance maintained by corporations similarly situated and owning like properties, as may be determined by the Board of Directors. Section 10.8 Statement by Officers as to Default. (a) The Company shall deliver to the Trustee, within 90 days after the end of each fiscal year of the Company and within 45 days of the end of each of the first, second and third quarters of each fiscal year of the Company, an Officers' Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal quarter or fiscal year, as applicable, has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of such Officer's knowledge the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions hereof (or, if a Default or Event of Default shall have occurred and be continuing, describing all such Defaults or Events of Default of which such Officer may have knowledge and what action the Company is taking or proposes to take with respect thereto). Such Officers' Certificate shall comply with TIA Section 314(a)(4). For purposes of this Section 10.8(a), such compliance shall be determined without regard to any period of grace or requirement of notice under this Indenture. (b) The Company and the Subsidiary Guarantors shall, so long as any of the Securities are outstanding, deliver to the Trustee forthwith upon any Officer becoming aware of any Default or Event of Default or default in the performance of any covenant, agreement or condition contained in this Indenture, an Officers' Certificate specifying such Default or Event of Default and what action the Company or any Subsidiary Guarantor proposes to take with respect thereto within 10 days of its occurrence. Section 10.9 Provision of Financial Information. The Company and the Subsidiary Guarantors shall file with the Trustee (with exhibits) and deliver to each Holder (without exhibits), without cost to such Holder, within 15 days after it files them with the Commission (or would have been required to file them with the Commission if such filing were required), copies of the annual and quarterly reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may by rules and regulations prescribe) which each of the Company and the Subsidiary Guarantors is required to file with the Commission pursuant to 87 Section 13 or 15(d) of the Exchange Act. If the Company is not subject to the requirements of Section 13 or 15(d) of the Exchange Act, the Company shall nonetheless file with the Commission (to the extent such filings are accepted by the Commission) and the Trustee, and deliver to each Holder (without exhibits), without cost to such Holder, copies of such annual reports and such information, documents and other reports as it would file if it were subject to the requirements of Section 13 or 15(d) of the Exchange Act. If filing such reports and documents with the Commission is not accepted by the Commission or is prohibited under the Exchange Act, the Company shall supply at the Company's cost copies of such reports and documents to any Holder of Securities promptly upon written request. The Company is obligated to make available, upon request, to any Holder of Securities the information required by Rule 144A(d)(4) under the Securities Act, during any period in which the Company is not subject to Section 13 or 15(d) of the Exchange Act. So long as any Transfer Restricted Securities remain outstanding during any period in which the Company is not subject to Section 13 or 15(d) of the Exchange Act, the Company shall furnish to all Holders and prospective purchasers of the Securities designated by the Holders of Transfer Restricted Securities, promptly upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) of the Securities Act. The Company and each Subsidiary Guarantor also shall comply with the other provisions of TIA Section 314(a). Section 10.10 Limitation on Other Senior Subordinated Indebtedness. The Company will not incur, directly or indirectly, any Indebtedness which is expressly subordinate or junior in right of payment in any respect to Senior Indebtedness unless such Indebtedness (i) ranks pari passu in right of payment with the Securities pursuant to subordination provisions substantially similar to those contained in Article XIV hereof, or (ii) is expressly subordinated in right of payment to the Securities. Section 10.11 Limitation on Restricted Payments. (a) The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, take the following actions: (i) declare or pay any dividend on, or make any distribution to holders of, any shares of the Company's Capital Stock (other than dividends or distributions payable solely in shares of Qualified Capital Stock of the Company or in options, warrants or other rights to purchase Qualified Capital Stock of the Company); (ii) purchase, redeem or otherwise acquire or retire for value any Capital Stock of the Company or any Affiliate thereof (other than any Wholly Owned Restricted Subsidiary of the Company) or any options, warrants or other rights to acquire such Capital Stock (other than with respect to any such Capital Stock or other interests held by the Company or any Wholly Owned Restricted Subsidiary of the Company); (iii) make any principal payment on or repurchase, redeem, defease or otherwise acquire or retire for value, prior to any scheduled principal payment, scheduled sinking fund 88 payment or maturity, any Subordinated Indebtedness, except in any case out of a Net Proceeds Deficiency pursuant to the terms of this Indenture and except upon the occurrence of a Change of Control to the extent (and only to the extent) required by the indenture or other agreement or instrument pursuant to which such Subordinated Indebtedness was issued, provided that the Company is then in compliance with its obligations under Section 10.16 hereof; (iv) declare or pay any dividend on, or make any distribution to the holders of, any shares of Capital Stock of any Restricted Subsidiary of the Company (other than to the Company or any of its Wholly Owned Restricted Subsidiaries) or purchase, redeem or otherwise acquire or retire for value any Capital Stock of any Restricted Subsidiary or any options, warrants or other rights to acquire any such Capital Stock (other than with respect to any such Capital Stock or other interests held by the Company or any Wholly Owned Restricted Subsidiary of the Company); or (v) make any Investment (other than any Permitted Investment); (such payments or other actions described in (but not excluded from) clauses (i) through (v) are collectively referred to as "Restricted Payments") , unless at the time of and after giving effect to the proposed Restricted Payment (the amount of any such Restricted Payment, if other than cash, shall be the amount determined by the Board of Directors of the Company, whose determination shall be conclusive and evidenced by a Board Resolution), (A) no Default or Event of Default shall have occurred and be continuing, (B) the Company could incur $1.00 of additional Indebtedness (excluding Permitted Indebtedness) in accordance with Section 10.12 hereof, and (C) the aggregate amount of all Restricted Payments declared or made after the Issue Date shall not exceed the sum (without duplication) of the following: (1) 50% of the aggregate cumulative Consolidated Net Income of the Company (including, without limitation, notwithstanding clause (d) of the definition of "Consolidated Net Income," the Consolidated Net Income of each of Ocean Energy, Inc. and United Meridian Corporation prior to their merger) accrued on a cumulative basis during the period beginning June 1, 1997 and ending on the last day of the Company's last fiscal quarter ending prior to the date of such proposed Restricted Payment (or, if such aggregate cumulative Consolidated Net Income shall be a loss, minus 100% of such loss), plus (2) the aggregate net cash proceeds received after June 1, 1997 by the Company as capital contributions to the Company (other than from any Restricted Subsidiary), plus (3) the aggregate net cash proceeds received after June 1, 1997, by the Company from the issuance or sale (other than to any of its Restricted Subsidiaries) of shares of Qualified Capital Stock of the Company or any options, warrants or rights to purchase such shares of Qualified Capital Stock of the Company, plus 89 (4) the aggregate net cash proceeds received after June 1, 1997 by the Company (other than from any of its Restricted Subsidiaries) upon the exercise of any options, warrants or rights to purchase shares of Qualified Capital Stock of the Company, plus (5) the aggregate net cash proceeds received after June 1, 1997 by the Company from the issuance or sale (other than to any of its Restricted Subsidiaries) of debt securities or shares of Redeemable Capital Stock that have been converted into or exchanged for Qualified Capital Stock of the Company to the extent such debt securities were originally sold for cash, together with the aggregate cash received by the Company at the time of such conversion or exchange, plus (6) the aggregate net cash proceeds received after June 1, 1997 by the Company or its Restricted Subsidiaries, computed on a consolidated basis, constituting a return of capital on an Investment (other than a Permitted Investment) made by the Company or any Restricted Subsidiary after June 1, 1997, including, without limitation, from the redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary (valued in each case as provided in the definition of Investment), not to exceed in the case of any Unrestricted Subsidiary the total amount of Investments (other than Permitted Investments) in such Unrestricted Subsidiary made by the Company and its Restricted Subsidiaries in such Unrestricted Subsidiary after June 1, 1997, plus (7) $50,000,000. (b) Notwithstanding paragraph (a) above, the Company and its Restricted Subsidiaries may take the following actions so long as (in the case of clauses (ii), (iii) and (iv) below) no Default or Event of Default shall have occurred and be continuing: (i) the payment of any dividend within 60 days after the date of declaration thereof, if at such declaration date such declaration complied with the provisions of paragraph (a) above (and such payment shall be deemed to have been paid on such date of declaration for purposes of any calculation required by the provisions of paragraph (a) above); (ii) the repurchase, redemption or other acquisition or retirement of any shares of any class of Capital Stock of the Company or any Restricted Subsidiary, in exchange for, or out of the aggregate net cash proceeds of, a substantially concurrent issue and sale (other than to a Restricted Subsidiary) of shares of Qualified Capital Stock of the Company; (iii) the purchase, redemption, repayment, defeasance or other acquisition or retirement for value of any Subordinated Indebtedness (other than Redeemable Capital Stock) in exchange for or out of the aggregate net cash proceeds of a substantially concurrent issue and sale (other than to a Restricted Subsidiary) of shares of Qualified Capital Stock of the Company; and 90 (iv) the purchase, redemption, repayment, defeasance or other acquisition or retirement for value of Subordinated Indebtedness (other than Redeemable Capital Stock) in exchange for, or out of the aggregate net cash proceeds of a substantially concurrent incurrence (other than to a Restricted Subsidiary) of, Subordinated Indebtedness of the Company so long as (A) the principal amount of such new Indebtedness does not exceed the principal amount (or, if such Subordinated Indebtedness being refinanced provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration thereof, such lesser amount as of the date of determination) of the Subordinated Indebtedness being so purchased, redeemed, repaid, defeased, acquired or retired, plus the amount of any premium required to be paid in connection with such refinancing pursuant to the terms of the Subordinated Indebtedness refinanced or the amount of any premium reasonably determined by the Company as necessary to accomplish such refinancing, plus the amount of expenses of the Company incurred in connection with such refinancing, (B) such new Subordinated Indebtedness is subordinated to the Securities at least to the same extent as such Subordinated Indebtedness so purchased, redeemed, repaid, defeased, acquired or retired, and (C) such new Subordinated Indebtedness has an Average Life to Stated Maturity that is longer than the Average Life to Stated Maturity of the Securities and such new Subordinated Indebtedness has a Stated Maturity for its final scheduled principal payment that is at least 91 days later than the Stated Maturity for the final scheduled principal payment of the Securities. The actions described in clauses (i), (ii) and (iii) of this paragraph (b) shall be Restricted Payments that shall be permitted to be taken in accordance with this paragraph (b) but shall reduce the amount that would otherwise be available for Restricted Payments under clause (C) of paragraph (a) (provided that any dividend paid pursuant to clause (i) of this paragraph (b) shall reduce the amount that would otherwise be available under clause (C) of paragraph (a) when declared, but not also when subsequently paid pursuant to such clause (i)), and the actions described in clause (iv) of this paragraph (b) shall be Restricted Payments that shall be permitted to be taken in accordance with this paragraph and shall not reduce the amount that would otherwise be available for Restricted Payments under clause (C) of paragraph (a). (c) In computing Consolidated Net Income of the Company under paragraph (a) above, (1) the Company shall use audited financial statements for the portions of the relevant period for which audited financial statements are available on the date of determination and unaudited financial statements and other current financial data based on the books and records of the Company for the remaining portion of such period and (2) the Company shall be permitted to rely in good faith on the financial statements and other financial data derived from the books and records of the Company that are available on the date of determination. If the Company makes a Restricted Payment which, at the time of the making of such Restricted Payment would in the good faith determination of the Company be permitted under the requirements of this Indenture, such Restricted Payment shall be deemed to have been made in compliance with this Indenture notwithstanding any subsequent adjustments made in good faith to the Company's financial statements affecting Consolidated Net Income of the Company for any period. 91 Section 10.12 Limitation on Indebtedness. The Company shall not, and shall not permit any Restricted Subsidiary to create, incur, issue, assume, guarantee or in any manner become directly or indirectly liable for the payment of (collectively "incur") any Indebtedness (including any Acquired Indebtedness), other than Permitted Indebtedness and Permitted Subsidiary Indebtedness, as the case may be; provided, however, that the Company and its Restricted Subsidiaries that are either Subsidiary Guarantors or Foreign Subsidiaries may incur Indebtedness (and Restricted Subsidiaries that are not Subsidiary Guarantors or Foreign Subsidiaries may incur Acquired Indebtedness) if (x) the Company's Consolidated Fixed Charge Coverage Ratio for the four full fiscal quarters immediately preceding the incurrence of such Indebtedness (and for which financial statements are available), taken as one period (at the time of such incurrence, after giving pro forma effect to: (i) the incurrence of such Indebtedness and (if applicable) the application of the net proceeds therefrom, including to refinance other Indebtedness, as if such Indebtedness was incurred and the application of such proceeds occurred at the beginning of such four-quarter period; (ii) the incurrence, repayment or retirement of any other Indebtedness (including Permitted Indebtedness) by the Company or its Restricted Subsidiaries since the first day of such four-quarter period (including any other Indebtedness to be incurred concurrent with the incurrence of such Indebtedness) as if such Indebtedness was incurred, repaid or retired at the beginning of such four-quarter period; and (iii) notwithstanding clause (d) of the definition of Consolidated Net Income, the acquisition (whether by purchase, merger or otherwise) or disposition (whether by sale, merger or otherwise) of any Person (or any properties outside of the ordinary course of business) acquired or disposed of by the Company or its Restricted Subsidiaries, as the case may be, since the first day of such four-quarter period, as if such acquisition or disposition occurred at the beginning of such four-quarter period), would have been equal to at least 2.5 to 1.0. The incurrence of certain guarantees by certain Restricted Subsidiaries is further limited by Section 10.13 hereof. Section 10.13 Limitation on Guarantees of Indebtedness by Subsidiaries; Additional Subsidiary Guarantors. (a) The Company shall not permit any Restricted Subsidiary that is not a Subsidiary Guarantor to guarantee the payment of any Indebtedness of the Company unless (i) (A) such Restricted Subsidiary simultaneously executes and delivers a supplemental indenture to this Indenture providing for a Subsidiary Guarantee of the Securities by such Restricted Subsidiary which Subsidiary Guarantee will be subordinated to Guarantor Senior Indebtedness (but no other Indebtedness) to the same extent that the Securities are subordinated to Senior Indebtedness and (B) with respect to any guarantee of Subordinated Indebtedness by a Restricted Subsidiary, any such guarantee shall be subordinated to such Restricted Subsidiary's Subsidiary Guarantee at least to the same extent as such Subordinated Indebtedness is subordinated to the Securities; (ii) except to the extent contemplated by Section 13.5 hereof, such Restricted Subsidiary waives and will not in any manner whatsoever claim or take the benefit or advantage of, any rights of reimbursement, indemnity or subrogation or any other rights against the Company or any other Restricted Subsidiary as a result of any payment by such Restricted Subsidiary under its Subsidiary Guarantee until such time as the obligations guaranteed thereby are paid in full; and (iii) such Restricted Subsidiary shall deliver to the Trustee an Opinion of Counsel to the effect that such Subsidiary Guarantee has been 92 duly executed and authorized and constitutes a valid, binding and enforceable obligation of such Restricted Subsidiary, except insofar as enforcement thereof may be limited by bankruptcy, insolvency or similar laws (including, without limitation, all laws relating to fraudulent transfers) and except insofar as enforcement thereof is subject to general principles of equity; provided that this paragraph (a) shall not be applicable to any guarantee of any Restricted Subsidiary that (x) existed at the time such Person became a Restricted Subsidiary of the Company and (y) was not incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary of the Company. (b) The Company may from time to time, at its option, nominate any Restricted Subsidiary as an additional Subsidiary Guarantor. Any such Restricted Subsidiary shall execute and deliver a supplemental indenture to this Indenture agreeing to guarantee the Securities. At the election of the Company, such Subsidiary Guarantee may contain such release provisions as the Company may deem appropriate (including, without limitation, release provisions of the type in paragraph (c) below). (c) Notwithstanding the foregoing paragraph (a) and the other provisions of this Indenture, any Subsidiary Guarantee incurred by a Restricted Subsidiary pursuant to this Section 10.13 may, at the election of the Company, provide by its terms that it shall be automatically and unconditionally released and discharged upon (i) any sale, exchange or transfer, to any Person that is not an Affiliate of the Company, of all of the Company's Capital Stock in, or all or substantially all the Property of, such Restricted Subsidiary (which sale, exchange or transfer is not prohibited by this Indenture), (ii) the merger of such Restricted Subsidiary into the Company or any other Restricted Subsidiary (provided the surviving Restricted Subsidiary assumes the Subsidiary Guarantee) or the liquidation and dissolution of such Restricted Subsidiary (in each case to the extent not prohibited by this Indenture), or (iii) the release or discharge of the guarantee which resulted in the creation of such Subsidiary Guarantee, except a discharge or release by or as a result of payment under such guarantee. (d) Unless specified to the contrary in a supplemental indenture hereto, any Subsidiary Guarantee incurred by a Restricted Subsidiary pursuant to this Section 10.13 shall be deemed to provide for the release and discharge thereof as contemplated by Sections 10.13(c) and 13.3 hereof. Section 10.14 Limitation on Issuances and Sale of Capital Stock by Restricted Subsidiaries. The Company (a) shall not permit any Restricted Subsidiary to issue any Capital Stock (other than to the Company or a Wholly Owned Restricted Subsidiary) and (b) shall not permit any Person (other than the Company or a Wholly Owned Restricted Subsidiary) to own any Capital Stock of any Restricted Subsidiary, except, in each case, for (i) directors' qualifying shares, (ii) Capital Stock of a Restricted Subsidiary organized in a foreign jurisdiction required to be issued to, or owned by, the government of such foreign jurisdiction or individual or corporate citizens of such foreign jurisdiction in order for such Restricted Subsidiary to transact business in such foreign jurisdiction, (iii) a sale of all or substantially all the Capital Stock of a Restricted Subsidiary effected in 93 accordance with Section 10.17 hereof, (iv) the Capital Stock of a Restricted Subsidiary owned by a Person at the time such Restricted Subsidiary became a Restricted Subsidiary or acquired by such Person in connection with the formation of the Restricted Subsidiary and (v) Capital Stock of Havre Pipeline Company, LLC and Capital Stock of Big Sky Gas Marketing L.L.C.; provided, however, that any Capital Stock retained by the Company or a Restricted Subsidiary shall be treated as an Investment for purposes of Section 10.11 hereof if the amount of such Capital Stock represents less than a majority of the Voting Stock of such Restricted Subsidiary. Section 10.15 Limitation on Liens. The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create, incur, assume, affirm or suffer to exist or become effective any Lien of any kind except for Permitted Liens, on or with respect to any of its Property or assets (including any intercompany notes), whether owned at the Issue Date or thereafter acquired, or any income, profits or proceeds therefrom, or assign or otherwise convey any right to receive income thereon, unless (x) in the case of any Lien securing Subordinated Indebtedness, the Securities are secured by a Lien on such Property, assets or proceeds that is senior in priority to such Lien and (y) in the case of any other Lien, the Securities are directly secured equally and ratably with the obligation or liability secured by such Lien. Section 10.16 Purchase of Securities Upon Change of Control. (a) Upon the occurrence of a Change of Control, the Company shall be obligated to make an offer to purchase all of the then outstanding Securities (a "Change of Control Offer"), and shall purchase, on a business day (the "Change of Control Purchase Date") not more than 70 nor less than 30 days following the Change of Control, all of the then outstanding Securities validly tendered pursuant to such Change of Control Offer, at a purchase price (the "Change of Control Purchase Price") equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the Change of Control Purchase Date. (b) The Change of Control Offer is required to remain open for at least 20 Business Days and until the close of business on the Change of Control Purchase Date. The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer at the same purchase price, at the same times and otherwise in substantial compliance with the requirements applicable to a Change of Control Offer made by the Company and purchases all Securities validly tendered and not withdrawn under such Change of Control Offer. (c) Not later than the 30th day following any Change of Control, the Company shall give to the Trustee in the manner provided in Section 15.4 and each Holder of the Securities in the manner provided in Section 15.5, a notice (the "Change of Control Notice") stating: (1) that a Change of Control has occurred and that such Holder has the right to require the Company to repurchase such Holder's Securities, or portion thereof, at the Change of Control Purchase Price; 94 (2) any information regarding such Change of Control required to be furnished pursuant to Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder; (3) the Change of Control Purchase Date which shall be on a Business Day and no earlier than 30 days nor later than 70 days from the date the Change of Control occurred; (4) that any Security, or portion thereof, not tendered or accepted for payment will continue to accrue interest; (5) that unless the Company defaults in depositing money with the Paying Agent in accordance with the last paragraph of clause (d) of this Section 10.16, or payment is otherwise prevented, any Security, or portion thereof, accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Purchase Date; and (6) the instructions a Holder must follow in order to have its Securities repurchased in accordance with paragraph (d) of this Section. (d) Holders electing to have Securities purchased will be required to surrender such Securities to the Company at the address specified in the Change of Control Notice at least five Business Days prior to the Change of Control Purchase Date. Holders will be entitled to withdraw their election if the Company receives, not later than three Business Days prior to the Change of Control Purchase Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the certificate number(s) and principal amount of the Securities delivered for purchase by the Holder as to which his election is to be withdrawn and a statement that such Holder is withdrawing his election to have such Securities purchased. Holders whose Securities are purchased only in part will be issued new Securities equal in principal amount to the unpurchased portion of the Securities surrendered. On the Change of Control Purchase Date, the Company shall (i) accept for payment Securities or portions thereof tendered pursuant to a Change of Control Offer, (ii) deposit with the Paying Agent money sufficient to pay the purchase price of all Securities or portions thereof so tendered, and (iii) deliver or cause to be delivered to the Trustee the Securities so accepted. The Paying Agent shall promptly mail or deliver to Holders of the Securities so tendered payment in an amount equal to the purchase price for the Securities, and the Company will promptly execute and the Trustee will promptly authenticate and mail or make available for delivery to such Holders a new Security equal in principal amount to any unpurchased portion of the Security which any such Holder did not surrender for purchase. The Company shall announce the results of a Change of Control Offer on or as soon as practicable after the Change of Control Purchase Date. For purposes of this Section 10.16, the Trustee will act as the Paying Agent. 95 (e) The Company shall comply with Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable, in the event that a Change of Control occurs and the Company is required to purchase Securities as described above. Section 10.17 Disposition of Proceeds of Asset Sales. (a) The Company will not, and will not permit any Restricted Subsidiary to, engage in any Asset Sale unless (i) the Company or such Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the assets and Properties sold or otherwise disposed of pursuant to the Asset Sale (as determined by the Board of Directors of the Company, whose determination shall be conclusive and evidenced by a Board Resolution) and (ii) at least 70% of the consideration received by the Company or the Restricted Subsidiary, as the case may be, in respect of such Asset Sale consists of cash, Cash Equivalents or the assumption by the purchaser of liabilities of the Company (other than liabilities of the Company that are by their terms subordinated to the Securities) or any Restricted Subsidiary as a result of which the Company and its remaining Restricted Subsidiaries are no longer liable. (b) If the Company or any Restricted Subsidiary engages in an Asset Sale the Company may either (x) apply the Net Cash Proceeds thereof to permanently reduce Senior Indebtedness or to permanently reduce Guarantor Senior Indebtedness, or (y) invest all or any part of the Net Cash Proceeds thereof, within 365 days after such Asset Sale, in Properties and assets which replace the Properties and assets that were the subject of the Asset Sale or in Properties and assets that will be used in the business of the Company or its Restricted Subsidiaries, as the case may be ("Replacement Assets"). The amount of such Net Cash Proceeds not applied or invested as provided in this paragraph constitutes "Excess Proceeds." (c) When the aggregate amount of Excess Proceeds equals or exceeds $20,000,000 (the "Trigger Date"), the Company shall make an offer to purchase, from all Holders of the Securities and holders of any then outstanding Pari Passu Indebtedness required to be repurchased or repaid on a permanent basis in connection with an Asset Sale, an aggregate principal amount of Securities and any such Pari Passu Indebtedness equal to such Excess Proceeds as follows: (i) (A) not later than the 30th day following the Trigger Date, the Company shall give to the Trustee in the manner provided in Section 15.4 hereof and each Holder of the Securities in the manner provided in Section 15.5 hereof, a notice (a "Purchase Notice") offering to purchase (a "Net Proceeds Offer") from all Holders of the Securities in accordance with the procedures set forth herein the maximum principal amount (expressed as a multiple of $1,000) of Securities that may be purchased out of an amount (the "Payment Amount") equal to the product of such Excess Proceeds multiplied by a fraction, the numerator of which is the outstanding principal amount of the Securities and the denominator of which is the sum of the outstanding principal amount of the Securities and 96 such Pari Passu Indebtedness, if any (subject to proration in the event such amount is less than the aggregate Offered Price (as hereinafter defined) of all Securities tendered), and (B) to the extent required by such Pari Passu Indebtedness and provided there is a permanent reduction in the principal amount of such Pari Passu Indebtedness, the Company shall make an offer to purchase Pari Passu Indebtedness (a "Pari Passu Offer") in an amount (the "Pari Passu Indebtedness Amount") equal to the excess of the Excess Proceeds over the Payment Amount. (ii) The offer price for the Securities shall be payable in cash in an amount equal to 100% of the principal amount of the Securities tendered pursuant to a Net Proceeds Offer, plus accrued and unpaid interest, if any, to the date such Net Proceeds Offer is consummated (the "Offered Price"), in accordance with the procedures set forth herein. To the extent that the aggregate Offered Price of the Securities tendered pursuant to a Net Proceeds Offer is less than the Payment Amount relating thereto or the aggregate amount of the Pari Passu Indebtedness that is purchased or repaid pursuant to the Pari Passu Offer is less than the Pari Passu Indebtedness Amount (such shortfall constituting a "Net Proceeds Deficiency"), the Company may use such Net Proceeds Deficiency, or a portion thereof, for general corporate purposes, subject to the limitations of Section 10.11 hereof. (iii) If the aggregate Offered Price of Securities validly tendered and not withdrawn by Holders thereof exceeds the Payment Amount, Securities to be purchased will be selected on a pro rata basis by the Trustee based on the principal amount of Securities so tendered. Upon completion of such Net Proceeds Offer and Pari Passu Offer, the amount of Excess Proceeds shall be reset to zero. (iv) The Purchase Notice shall set forth a purchase date (the "Net Proceeds Payment Date"), which shall be on a Business Day no earlier than 30 days nor later than 70 days from the Trigger Date. The Purchase Notice shall also state (i) that a Trigger Date with respect to one or more Asset Sales has occurred and that such Holder has the right to require the Company to repurchase such Holders, Securities at the Offered Price, subject to the limitations described in this Section, (ii) any information regarding such Net Proceeds Offer required to be furnished pursuant to Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder, (iii) that any Security, or portion thereof, not tendered or accepted for payment will continue to accrue interest, (iv) that, unless the Company defaults in depositing money with the Paying Agent in accordance with the last paragraph of clause (d) of this Section 10.17, or payment is otherwise prevented, any Security, or portion thereof, accepted for payment pursuant to the Net Proceeds Offer shall cease to accrue interest after the Net Proceeds Payment Date, and (v) the instructions a Holder must follow in order to have its Securities repurchased in accordance with paragraph (d) of this Section. (d) Holders electing to have Securities purchased will be required to surrender such Securities to the Company at the address specified in the Purchase Notice at least five Business 97 Days prior to the Net Proceeds Payment Date. Holders will be entitled to withdraw their election if the Company receives, not later than three Business Days prior to the Net Proceeds Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the certificate number(s) and principal amount of the Securities delivered for purchase by the Holder as to which his election is to be withdrawn and a statement that such Holder is withdrawing his election to have such Securities purchased. Holders whose Securities are purchased only in part will be issued new Securities equal in principal amount to the unpurchased portion of the Securities surrendered. On the Net Proceeds Payment Date, the Company shall (i) accept for payment Securities or portions thereof tendered pursuant to a Net Proceeds Offer in an aggregate principal amount equal to the Payment Amount or such lesser amount of Securities as has been tendered, (ii) deposit with the Paying Agent money sufficient to pay the purchase price of all Securities or portions thereof so tendered in an aggregate principal amount equal to the Payment Amount or such lesser amount and (iii) deliver or cause to be delivered to the Trustee the Securities so accepted. The Paying Agent shall promptly mail or deliver to Holders of the Securities so accepted payment in an amount equal to the purchase price, and the Company shall execute and the Trustee will promptly authenticate and mail or make available for delivery to such Holders a new Security equal in principal amount to any unpurchased portion of the Security which any such Holder did not surrender for purchase. Any Securities not so accepted will be promptly mailed or delivered to the Holder thereof. The Company shall announce the results of a Net Proceeds Offer on or as soon as practicable after the Net Proceeds Payment Date. For purposes of this Section 10.17, the Trustee will act as the Paying Agent. The Company shall not permit any Subsidiary (except a Foreign Subsidiary) to enter into or suffer to exist any agreement that would place any restriction of any kind (other than pursuant to law or regulation) on the ability of the Company to make a Net Proceeds Offer following any Asset Sale. The Company intends to comply with Rule l4e-1 under the Exchange Act, and any other securities laws and regulations thereunder, if applicable, in the event that an Asset Sale occurs and the Company is required to purchase Securities as described above. Section 10.18 Limitation on Transactions with Affiliates. The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, enter into or suffer to exist any transaction or series of related transactions (including, without limitation, the sale, purchase, exchange or lease of assets, Property or the rendering of any services) with, or for the benefit of, any Affiliate of the Company, unless (i) such transaction or series of transactions are on terms that are no less favorable to the Company or such Restricted Subsidiary, as the case may be, than those that would be available in a comparable arm's length transaction with unrelated third parties who are not Affiliates, (ii) with respect to any one transaction or series of transactions involving aggregate payments in excess of $10,000,000, the Company delivers an Officers' Certificate to the Trustee certifying that such transaction or series of transactions complies with clause (i) above and such transaction or series of transactions have been approved by a Board Resolution of the Board of Directors of the Company, and (iii) with respect to any one transaction or series of transactions involving aggregate payments in excess of $20,000,000, the Officers' Certificate referred to in 98 clause (ii) above also certifies that such transaction or series of transactions have been approved by a majority of the Disinterested Directors (or, in the event there are no such Disinterested Directors, that the Company has obtained a written opinion from an independent nationally recognized investment banking firm or appraisal firm, in either case specializing or having a specialty in the type and subject matter of the transaction or series of transactions at issue, which opinion shall be to the effect set forth in clause (i) above or shall state that such transaction or series of transactions are fair from a financial point of view to the Company or such Restricted Subsidiary); provided, however, that this Section 10.18 shall not apply to (1) the payment of reasonable and customary regular compensation and fees to directors of the Company who are not employees of the Company or any Restricted Subsidiary, (2) the payment of dividends on, or making distributions with respect to, shares of Capital Stock of the Company on a pro rata basis to the extent permitted by Section 10.11 hereof, (3) transactions between or among the Company and/or any of its Wholly Owned Restricted Subsidiaries, (4) Restricted Payments permitted by the provisions of Section 10.11 hereof, (5) loans or advances to officers, directors and employees of the Company or any Restricted Subsidiary made in the ordinary course of business and consistent with past practices of the Company and its Restricted Subsidiaries in an aggregate amount not to exceed $1,000,000 outstanding at any one time, (6) any transaction or series of related transactions entered into prior to the Issue Date or (7) the Company's employee compensation and other benefit arrangements. Section 10.19 Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries. The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any Restricted Subsidiary (except a Foreign Subsidiary) to (a) pay dividends, in cash or otherwise, or make any other distributions on or in respect of its Capital Stock to the Company or any other Restricted Subsidiary, (b) pay any Indebtedness owed to the Company or any other Restricted Subsidiary, (c) make an Investment in the Company or any other Restricted Subsidiary or (d) transfer any of its Properties or assets to the Company or any other Restricted Subsidiary, except for such encumbrances or restrictions (i) pursuant to this Indenture, the Existing Indentures, the Credit Agreement or any agreement in effect or entered into on the Issue Date, (ii) any agreement or other instrument of a Person acquired by the Company or any Restricted Subsidiary in existence at the time of such acquisition (but not created in contemplation thereof), which encumbrance or restriction is not applicable to any other Person, or the Properties or assets of any other Person, other than the Person, or the Property or assets of the Person, so acquired, (iii) that constitute customary restrictions in leases and licenses relating to the Property covered thereby and entered into in the ordinary course of business, (iv) contained in agreements governing Indebtedness permitted to be incurred in accordance with this Indenture provided that the restrictions are not materially more restrictive in the aggregate than the restrictions contained in this Indenture, or (v) existing under any agreement that extends, renews, refinances or replaces (in whole or in part, and whether or not such prior agreements remain outstanding) the agreements containing the restrictions in the foregoing clauses (i), (ii), (iii) and (iv) provided that the terms and conditions of any such restrictions are not materially less favorable to the Holders of the Securities than those under or pursuant to the agreement evidencing the Indebtedness so extended, renewed, refinanced or replaced. 99 Section 10.20 Limitation on Restrictive Covenants. Notwithstanding any other provision of this Indenture, the restrictive covenants set forth in this Indenture, including, without limitation, those set forth in Sections 8.1, 10.11 and 10.18, shall be and shall be deemed limited to the extent necessary so that the creation, existence and effectiveness of such restrictive covenants shall not result in a breach of the covenant of any of the Existing Indentures entitled "Limitation on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries." Section 10.21 Waiver of Certain Covenants. Subject to Section 5.2 hereof, the Company may omit in any particular instance to comply with any term, provision or condition set forth in Sections 10.04 through 10.12 and Sections 10.14, 10.15, 10.18 and 10.19 hereof if, before or after the time for such compliance, the Holders of at least a majority in principal amount of the Outstanding Securities and the Subsidiary Guarantors, by Act of such Holders and written agreement of the Subsidiary Guarantors, waive such compliance in such instance with such term, provision or condition, but no such waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such term, provision or condition shall remain in full force and effect. Section 10.22 Suspension of Certain Covenants. The covenants set forth in this Indenture will be applicable to the Company, except that during any period of time that (i) the ratings assigned to the Securities by both S&P and Moody's (collectively, the "Rating Agencies") are equal to or higher than BBB- and Baa3, or the equivalents thereof, respectively (the "Investment Grade Ratings"), except subsequent to a Change of Control of the Company, and (ii) no Default or Event of Default shall have occurred and be continuing, the Company and its Subsidiaries shall not be subject to the provisions of Sections 10.10, 10.11, 10.12, 10.14, 10.17, 10.18 and 10.19 hereof and clauses (iii) and (iv) of Section 8.1 hereof (collectively, the "Suspended Covenants"). In the event that the Company is not subject to the Suspended Covenants for any period of time as a result of the preceding sentence (a "Suspension Period") and, subsequently, one or both Rating Agencies withdraws its ratings or downgrades the ratings assigned to the Securities below the required Investment Grade Ratings, then, from and after the date of such withdrawal or downgrade, the Company and its Subsidiaries will again be subject to the Suspended Covenants and compliance with the Suspended Covenants with respect to Restricted Payments made after the time of such withdrawal or downgrade will be calculated in accordance with the terms of Section 10.11 hereof as if such covenant had been in effect during the entire period of time from the Issue Date. Notwithstanding any other provision of this Indenture, the continued existence, after the date of such withdrawal or downgrade, of facts and circumstances that were incurred or otherwise, came into being during a Suspension Period shall not constitute a breach of any covenant set forth in this Indenture or a Default or Event of Default hereunder. 100 ARTICLE XI REDEMPTION OF SECURITIES ------------------------- Section 11.1 Right of Redemption. Prior to July 1, 2003 (the "Five-Year Date"), the Securities will be redeemable, in whole but not in part, at a Redemption Price equal to the sum of (a) an amount equal to 100% of the principal amount thereof and (b) the Make-Whole Premium, together with accrued and unpaid interest to the Redemption Date. In no event will such redemption price ever be less than 100% of the principal amount of the Securities plus accrued interest to the Redemption Date. On or after July 1, 2003, the Securities will be redeemable, in whole or in part, at the Redemption Prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest, if any, to the Redemption Date (subject to the right of Holders of record on the relevant record date to receive interest due on an Interest Payment Date that is on or prior to the redemption date), if redeemed during the 12-month period beginning on July 1 of the years indicated below: Year Price 2003 104.188% 2004 102.792% 2005 101.396% 2006 and thereafter 100.000% In addition, at any time and from time to time prior to July 1, 2001, the Company may, at its option, redeem in the aggregate up to 33 1/3% of the aggregate principal amount of the Securities originally issued under this Indenture with the proceeds of one or more Public Equity Offerings by the Company at a redemption price (expressed as a percentage of principal amount) of 108.375%, plus accrued and unpaid interest, if any, to the date of redemption (subject to the right of Holders on the relevant record date to receive interest due on the relevant Interest Payment Date); provided, however, that at least 66-2/3% aggregate principal amount of the Securities originally issued under this Indenture must remain outstanding after each such redemption. In order to effect the foregoing redemption, the Company must mail notice of redemption no later than 60 days after the related Public Equity Offering and must consummate such redemption within 90 days of the closing of the Public Equity Offering. Section 11.2 Applicability of Article. Redemption of Securities at the election of the Company or otherwise, as permitted or required by any provision of this Indenture, shall be made in accordance with such provision and this Article. Section 11.3 Election to Redeem; Notice to Trustee. The election of the Company to redeem any Securities pursuant to Section 11.1 hereof shall be evidenced by a Board Resolution. In case of any redemption at the election of the Company, the Company shall, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Securities to 101 be redeemed and shall deliver to the Trustee such documentation and records as shall enable the Trustee to select the Securities to be redeemed pursuant to Section 11.4 hereof. Any election to redeem Securities shall be revocable until the Company gives a notice of redemption pursuant to Section 11.5 hereof to the Holders of Securities to be redeemed. Section 11.4 Selection by Trustee of Securities to Be Redeemed. In the event that less than all of the Securities are to be redeemed at any time, selection of such Securities (or any portion thereof that is an integral multiple of $1,000) for redemption will be made by the Trustee from the Outstanding Securities not previously called for redemption (or otherwise purchased by the Company) on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate; provided, however, that no Security with a principal amount of $1,000 or less shall be redeemed in part. Section 11.5 Notice of Redemption. Notice of redemption shall be given in the manner provided for in Section 15.5 hereof not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed. All notices of redemption shall state: (a) the Redemption Date; (b) the Redemption Price; (c) if less than all Outstanding Securities are to be redeemed, the identification (and in the case of a partial redemption, the principal amounts) of the particular Securities to be redeemed; (d) that on the Redemption Date the Redemption Price (together with accrued interest, if any, to the Redemption Date payable as provided in Section 11.7 hereof) will become due and payable upon each such Security, or the portion thereof, to be redeemed, and that, unless the Company shall default in the payment of the Redemption Price and any applicable accrued interest, interest thereon will cease to accrue on and after said date; and (e) the place or places where such Securities are to be surrendered for payment of the Redemption Price. Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. Failure to give such notice by mailing to any Holder of Securities or any defect therein shall not affect the validity of any proceedings for the redemption of other Securities. Section 11.6 Deposit of Redemption Price. On or before 12:00 noon on any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is 102 acting as its own Paying Agent, segregate and hold in trust as provided in Section 10.3 hereof) an amount of money sufficient to pay the Redemption Price of, and accrued and unpaid interest on, all the Securities which are to be redeemed on such Redemption Date. Section 11.7 Securities Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified (together with accrued and unpaid interest, if any, to the Redemption Date), and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued and unpaid interest) such Securities shall cease to bear interest. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price, together with accrued and unpaid interest, if any, to the Redemption Date; provided, however, that installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 3.9 hereof. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate borne by the Securities. Section 11.8 Securities Redeemed in Part. Any Security which is to be redeemed only in part shall be surrendered at the office or agency of the Company maintained for such purpose pursuant to Section 10.2 hereof (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder's attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal amount of the Security so surrendered. ARTICLE XII DEFEASANCE AND COVENANT DEFEASANCE ---------------------------------- Section 12.1 Company's Option to Effect Defeasance or Covenant Defeasance. The Company may, at its option by Board Resolution, at any time, with respect to the Securities, elect to have either Section 12.2 or Section 12.3 hereof be applied to all Outstanding Securities upon compliance with the conditions set forth below in this Article XII. Section 12.2 Defeasance and Discharge. Upon the Company's exercise under Section 12.1 hereof of the option applicable to this Section 12.2, the Company and the Subsidiary Guarantors shall be deemed to have been discharged from their obligations with respect to all Outstanding 103 Securities on the date the conditions set forth in Section 12.4 hereof are satisfied (hereinafter, "legal defeasance"). For this purpose, such legal defeasance means that the Company and the Subsidiary Guarantors shall be deemed (i) to have paid and discharged their respective obligations under the Outstanding Securities; provided, however that the Securities shall continue to be deemed to be "Outstanding" for purposes of Section 12.6 hereof and the other Sections of this Indenture referred to in clauses (A) and (B) below, and (ii) to have satisfied all their other obligations under such Securities and this Indenture insofar as such Securities are concerned (and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following which shall survive until otherwise terminated or discharged hereunder: (A) the rights of Holders of Outstanding Securities to receive, solely from the trust fund described in Section 12.4 hereof and as more fully set forth in such Section, payments in respect of the principal of (and premium, if any, on) and interest on such Securities when such payments are due (or at such time as the Securities would be subject to redemption at the option of the Company in accordance with this Indenture), (B) the obligations of the Company under Sections 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 5.8, 5.14, 6.6, 6.9, 6.10 and 10.2 hereof, (C) the rights, powers, trusts, duties and immunities of the Trustee hereunder, and (D) the obligations of the Company under this Article XII. Subject to compliance with this Article XII, the Company may exercise its option under this Section 12.2 notwithstanding the prior exercise of its option under Section 12.3 hereof with respect to the Securities. Section 12.3 Covenant Defeasance. Upon the Company's exercise under Section 12.1 hereof of the option applicable to this Section 12.3, the Company and the Subsidiary Guarantors shall be released from their obligations under any covenant contained in Articles VIII and XIII and in Sections 10.5 through 10.19 hereof and the Defaults and Events of Default contained in Sections 5.1(e), (f), (g) and (h) hereof with respect to the Outstanding Securities on and after the date the conditions set forth below are satisfied (hereinafter, "covenant defeasance"), and the Securities shall thereafter be deemed not to be "Outstanding" for the purposes of any direction, waiver, consent or declaration or Act of Holders (and the consequences of any thereof) in connection with such covenants, Defaults and Events of Default, but shall continue to be deemed "Outstanding" for all other purposes hereunder. For this purpose, such covenant defeasance means that, with respect to the Outstanding Securities, the Company and the Subsidiary Guarantors may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, Default or Event of Default, whether directly or indirectly, by reason of any reference elsewhere herein to any such provision or by reason of any reference in any such provision to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Sections 5.1 (c), (d), (e), (f), (g) and (h) hereof, but, except as specified above, the remainder of this Indenture and such Securities shall be unaffected thereby. Section 12.4 Conditions to Legal Defeasance or Covenant Defeasance. The following shall be the conditions to application of either Section 12.2 or Section 12.3 hereof to the Outstanding Securities: (a) The Company or any Subsidiary Guarantor shall irrevocably have deposited or caused to be deposited with the Trustee (or another trustee satisfying the requirements of Section 104 6.7 hereof who shall agree to comply with the provisions of this Article XII applicable to it) as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of such Securities, (A) cash in U.S. Dollars in an amount, or (B) U.S. Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, money in an amount, or (C) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee (or other qualifying trustee) to pay and discharge, the principal of (and premium, if any, on) and interest on the Outstanding Securities on the Stated Maturity (or Redemption Date, if applicable) of such principal (and premium, if any) or installment of interest; provided that the Trustee shall have been irrevocably instructed in writing by the Company to apply such money or the proceeds of such U.S. Government Obligations to said payments with respect to the Securities. Before such a deposit, the Company may give to the Trustee, in accordance with Section 11.3 hereof, a notice of its election to redeem all of the Outstanding Securities at a future date in accordance with Article XI hereof, which notice shall be irrevocable. Such irrevocable redemption notice, if given, shall be given effect in applying the foregoing. For this purpose, "U.S. Government Obligations" means securities that are (x) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged or (y) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act of 1933, as amended), as custodian with respect to any such U.S. Government Obligation or a specific payment of principal of or interest on any such U.S. Government Obligation held by such custodian for the account of the holder of such depository receipt, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of principal of or interest on the U.S. Government Obligation evidenced by such depository receipt. (b) No Default or Event of Default with respect to the Securities shall have occurred and be continuing on the date of such deposit. (c) Such legal defeasance or covenant defeasance shall not cause the Trustee to have a conflicting interest under this Indenture or the Trust Indenture Act with respect to any securities of the Company or any Subsidiary Guarantor. (d) Such legal defeasance or covenant defeasance shall not result in a breach or violation of, or constitute a default under any other material agreement or instrument to which the Company or any Subsidiary Guarantor is a party or by which it is bound, as evidenced to the Trustee in an Officers' Certificate delivered to the Trustee concurrently with such deposit. 105 (e) In the case of an election under Section 12.2 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (i) the Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the Issue Date there has been a change in the applicable Federal income tax laws; in either case providing that the Holders of the Outstanding Securities will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred (it being understood that (x) such Opinion of Counsel shall also state that such ruling or applicable law is consistent with the conclusions reached in such Opinion of Counsel and (y) the Trustee shall be under no obligation to investigate the basis of correctness of such ruling). (f) In the case of an election under Section 12.3 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders of the Outstanding Securities will not recognize income, gain or loss for Federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred. (g) The Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, which, taken together, state that all conditions precedent provided for relating to either the legal defeasance under Section 12.2 hereof or the covenant defeasance under Section 12.3 (as the case may be) have been complied with and that no violations under agreements governing any other outstanding Indebtedness would result therefrom. Section 12.5 Deposited Money and U.S. Government Obligations to Be Held in Trust; Other Miscellaneous Provisions. Subject to the provisions of the last paragraph of Section 10.3 hereof, all money and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee--collectively for purposes of this Section 12.5, the "Trustee") pursuant to Section 12.4 hereof in respect of the Outstanding Securities shall be held in trust and applied by the Trustee, in accordance with the provisions of such Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Holders of such Securities of all sums due and to become due thereon in respect of principal (and premium, if any) and interest, but such money need not be segregated from other funds except to the extent required by law. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government Obligations deposited pursuant to Section 12.4 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the Outstanding Securities. Anything in this Article XII to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon Company Request any money or U.S. Government 106 Obligations held by it as provided in Section 12.4 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof which would then be required to be deposited to effect an equivalent legal defeasance or covenant defeasance, as applicable, in accordance with this Article. Section 12.6 Reinstatement. If the Trustee or any Paying Agent is unable to apply any money in accordance with Section 12.5 hereof by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's and the Subsidiary Guarantors' obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to Section 12.2 or 12.3 hereof, as the case may be, until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 12.5 hereof; provided, however, that if the Company or any Subsidiary Guarantor makes any payment of principal of (or premium, if any, on) or interest on any Security following the reinstatement of its obligations, the Company or such Subsidiary Guarantor shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money held by the Trustee or Paying Agent. ARTICLE XIII GUARANTEES ---------- Section 13.1 Unconditional Guarantee. Each Subsidiary Guarantor hereby unconditionally, jointly and severally, guarantees (each such guarantee to be referred to herein as a "Subsidiary Guarantee," with all such guarantees being referred to herein as the "Subsidiary Guarantees") to each Holder of Securities authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, the full and prompt performance of the Company's obligations under this Indenture and the Securities and that: (a) the principal of (premium, if any, on) and interest on the Securities will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Securities, if any, to the extent lawful, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Securities or of any such other obligations, the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at Stated Maturity, by acceleration or otherwise; subject, however, in the case of clauses (a) and (b) above, to the limitations set forth in Section 13.4 hereof. 107 Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Subsidiary Guarantors will be jointly and severally obligated to pay the same immediately. Each Subsidiary Guarantor hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Securities or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Securities with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. Each Subsidiary Guarantor hereby waives diligence, presentment, demand of payment, notice of acceleration, notice of intent to accelerate, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that its Subsidiary Guarantee will not be discharged except by complete performance of the obligations contained in the Securities, this Indenture and in this Subsidiary Guarantee. If any Holder or the Trustee is required by any court or otherwise to return to the Company, any Subsidiary Guarantor, or any custodian, trustee, liquidator or other similar official acting in relation to the Company or any Subsidiary Guarantor, any amount paid by the Company or any Subsidiary Guarantor to the Trustee or such Holder, this Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. Each Subsidiary Guarantor agrees it shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. Each Subsidiary Guarantor further agrees that, as between each Subsidiary Guarantor, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article V hereof for the purposes of this Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any acceleration of such obligations as provided in Article V hereof, such obligations (whether or not due and payable) shall forthwith become due and payable by each Subsidiary Guarantor for the purpose of this Subsidiary Guarantee. Section 13.2 Subsidiary Guarantors May Consolidate, etc., on Certain Terms. (a) Except as set forth in Articles VIII and X hereof, nothing contained in this Indenture or in any of the Securities shall prevent any consolidation or merger of a Subsidiary Guarantor with or into the Company or another Subsidiary Guarantor or shall prevent any sale or conveyance of the assets of a Subsidiary Guarantor as an entirety or substantially as an entirety, to the Company or another Subsidiary Guarantor. (b) Except as set forth in Articles VIII and X hereof, nothing contained in this Indenture or in any of the Securities shall prevent any consolidation or merger of a Subsidiary Guarantor with or into a Person other than the Company or a Subsidiary Guarantor (whether or not affiliated with the Subsidiary Guarantor), or successive consolidations or mergers in which a Subsidiary Guarantor or its successor or successors shall be a party or parties, or shall prevent any sale or conveyance of the Properties of a Subsidiary Guarantor as an entirety or substantially as an 108 entirety, to a Person other than the Company or another Subsidiary Guarantor (whether or not Affiliated with the Subsidiary Guarantor) authorized to acquire and operate the same; provided, however, that, subject to Sections 13.2(a) and 13.3 hereof, (i) immediately after such transaction, and giving effect thereto, no Default or Event of Default shall have occurred as a result of such transaction and be continuing, (ii) such transaction shall not violate any of the covenants in Sections 10.10 through 10.19 hereof, and (iii) each Subsidiary Guarantor hereby covenants and agrees that, upon any such consolidation, merger, sale or conveyance, such Subsidiary Guarantor's Subsidiary Guarantee set forth in this Article XIII and in a notation to the Securities, and the due and punctual performance and observance of all of the covenants and conditions of this Indenture to be performed by such Subsidiary Guarantor, shall be expressly assumed (in the event that the Subsidiary Guarantor is not the surviving corporation in the merger), by supplemental indenture satisfactory in form to the Trustee, executed and delivered to the Trustee, by such Person formed by such consolidation, or into which the Subsidiary Guarantor shall have merged, or by the Person that shall have acquired such Property (except to the extent the following Section 13.3 would result in the release of such Subsidiary Guarantee in which case such surviving Person does not have to execute any such supplemental indenture). In the case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental indenture executed and delivered to the Trustee and satisfactory in form to the Trustee of the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Subsidiary Guarantor, such successor Person shall succeed to and be substituted for the Subsidiary Guarantor with the same effect as if it had been named herein as a Subsidiary Guarantor. Section 13.3 Release of a Subsidiary Guarantor. The Subsidiary Guarantee of a Subsidiary Guarantor shall be automatically and unconditionally released and discharged upon (i) any sale, exchange or transfer, to any Person that is not an Affiliate of the Company, of all of the Company's Capital Stock in, or all or substantially all the assets of such Subsidiary Guarantor (which sale, exchange or transfer is not prohibited by this Indenture), (ii) the merger of such Subsidiary Guarantor into the Company or any other Restricted Subsidiary (provided the surviving Restricted Subsidiary assumes the Subsidiary Guarantee) or the liquidation and dissolution of such Subsidiary Guarantor (in each case to the extent not prohibited by this Indenture), or (iii) if applicable, the release or discharge of the guarantee which resulted in the creation of such Subsidiary Guarantee under Section 10.13 hereof, except a discharge or release by or as a result of payment under such guarantee. If, at any time while any of the Securities remain outstanding, none of the Company's then outstanding Indebtedness (other than the Securities) is guaranteed by a Subsidiary Guarantor, such Subsidiary Guarantor shall be automatically and unconditionally released, discharged and relieved of any obligations under its Subsidiary Guarantee (which shall be terminated and cease to have any force and effect). Each Subsidiary Guarantor that is designated as an Unrestricted Subsidiary in accordance with the provisions of this Indenture shall be released from its Subsidiary Guarantee and related obligations set forth in this Indenture for so long as it remains an Unrestricted Subsidiary. The Trustee shall deliver an appropriate instrument evidencing such release upon receipt of a Company Request accompanied by an Officers' Certificate and an Opinion of Counsel certifying that such sale or other disposition was made by the Company in accordance with the provisions of this Indenture. Any Subsidiary Guarantor not so released remains liable for the full 109 amount of principal of (and premium, if any, on) and interest on the Securities as provided in this Article XIII. Section 13.4 Limitation of Subsidiary Guarantor's Liability. Each Subsidiary Guarantor, and by its acceptance hereof each Holder, hereby confirms that it is the intention of all such parties that the Guarantee by such Subsidiary Guarantor pursuant to its Subsidiary Guarantee not constitute a fraudulent transfer or fraudulent conveyance for purposes of any federal, state or foreign law. To effectuate the foregoing intention, the Holders and each Subsidiary Guarantor hereby irrevocably agree that the obligations of each Subsidiary Guarantor under its Subsidiary Guarantee shall be limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities (including, but not limited to, Guarantor Senior Indebtedness) of such Subsidiary Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Subsidiary Guarantor in respect of the obligations of such other Subsidiary Guarantor under its Subsidiary Guarantee or pursuant to Section 13.5 hereof, result in the obligations of such Subsidiary Guarantor under its Subsidiary Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal, state or foreign law. This Section 13.4 is for the benefit of the creditors of each Subsidiary Guarantor. Section 13.5 Contribution. In order to provide for just and equitable contribution among the Subsidiary Guarantors, the Subsidiary Guarantors agree, inter se, that in the event any payment or distribution is made by any Subsidiary Guarantor (a "Funding Guarantor") under its Subsidiary Guarantee, such Funding Guarantor shall be entitled to a contribution from each other Subsidiary Guarantor (if any) in a pro rata amount based on the Adjusted Net Assets of each Subsidiary Guarantor (including the Funding Guarantor) for all payments, damages and expenses incurred by that Funding Guarantor in discharging the Company's obligations with respect to the Securities or any other Subsidiary Guarantor's obligations with respect to its Subsidiary Guarantee. Section 13.6 Execution and Delivery of Notation of Subsidiary Guarantee. To evidence its Subsidiary Guarantee set forth in Section 13.1 hereof, each Subsidiary Guarantor hereby agrees to execute the notation of Subsidiary Guarantee in substantially the form set forth in Section 2.4 hereof to be endorsed on each Security ordered to be authenticated and delivered by the Trustee, and each Subsidiary Guarantor agrees that this Indenture shall be executed on behalf of each Subsidiary Guarantor by its President or one of its Vice Presidents and attested to by one of its Secretaries or Assistant Secretaries. Each Subsidiary Guarantor hereby agrees that its Subsidiary Guarantee set forth in Section 13.1 hereof shall remain in full force and effect notwithstanding any failure to endorse on each Security a notation of such Subsidiary Guarantee. Each such notation of Subsidiary Guarantee shall be signed on behalf of each Subsidiary Guarantor by two Officers, or an Officer and an Assistant Secretary or one Officer shall sign and one Officer or an Assistant Secretary (each of whom shall, in each case, have been duly authorized by all requisite corporate actions) shall attest to such notation of Subsidiary Guarantee prior to the authentication of the Security on which it is endorsed, and the delivery of such Security by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the notation of Subsidiary Guarantee set forth in this Indenture on behalf of the Subsidiary Guarantors. Such signatures upon the notation of Subsidiary Guarantee may 110 be by manual or facsimile signature of such officers and may be imprinted or otherwise reproduced on the Subsidiary Guarantee, and in case any such officer who shall have signed the notation of Subsidiary Guarantee shall cease to be such officer before the Security on which such notation of Subsidiary Guarantee is endorsed shall have been authenticated and delivered by the Trustee or disposed of by the Company, such Security nevertheless may be authenticated and delivered or disposed of as though the person who signed the notation of Subsidiary Guarantee had not ceased to be such officer of the Subsidiary Guarantor. Section 13.7 Severability. In case any provision of this Subsidiary Guarantee shall be invalid, illegal or unenforceable, that portion of such provision that is not invalid, illegal or unenforceable shall remain in effect, and the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 13.8 Subsidiary Guarantees Subordinated to Guarantor Senior Indebtedness. Each Subsidiary Guarantor covenants and agrees, and each Holder of a Security, by his acceptance of the Subsidiary Guarantees, likewise covenants and agrees, for the benefit of the holders, from time to time, of Guarantor Senior Indebtedness, that the payments by such Subsidiary Guarantor in respect of its Subsidiary Guarantee are subordinated and subject in right of payment, to the extent and in the manner provided in this Article XIII, to the prior payment in full of all Guarantor Senior Indebtedness of such Subsidiary Guarantor, whether outstanding on the Issue Date or thereafter created, incurred, assumed or guaranteed; provided, however, that the Subsidiary Guarantee of such Subsidiary Guarantor, the Indebtedness represented thereby and the payment of the principal of (and premium, if any, on) and the interest on the Securities pursuant to such Subsidiary Guarantee in all respects shall rank pari passu with, or prior to, all existing and future unsecured indebtedness (including, without limitation, Indebtedness) of such Subsidiary Guarantor that is subordinated to its Guarantor Senior Indebtedness. This Article XIII shall constitute a continuing offer to all Persons who, in reliance upon such provisions, become holders of, or continue to hold, Guarantor Senior Indebtedness, and such provisions are made for the benefit of the holders of Guarantor Senior Indebtedness, and such holders are made obligees hereunder and any of them may enforce such provisions. Section 13.9 Subsidiary Guarantors Not to Make Payments with Respect to Subsidiary Guarantees in Certain Circumstances. (a) No payment or distribution of any Property of any Subsidiary Guarantor of any kind or character (other than Permitted Guarantor Junior Securities) may be made by such Subsidiary Guarantor in respect of its Subsidiary Guarantee upon the happening of any default in respect of the payment or required prepayment of any of its Guarantor Senior Indebtedness when the same becomes due and payable (a "Subsidiary Guarantor Payment Default"), unless and until such Subsidiary Guarantor Payment Default shall have been cured or waived in writing or shall have ceased to exist or such Guarantor Senior Indebtedness shall have been paid in full or otherwise 111 discharged, after which such Subsidiary Guarantor shall resume making any and all required payments in respect of its Subsidiary Guarantee, including any missed payments. (b) Upon the happening of any event (other than a Subsidiary Guarantor Payment Default) the occurrence of which entitles one or more Persons to accelerate the maturity of any Designated Guarantor Senior Indebtedness (a "Subsidiary Guarantor Non-payment Default"), and receipt by the applicable Subsidiary Guarantor and a Responsible Officer of the Trustee, on behalf of the Trustee, of written notice thereof from one or more of the holders of such Designated Guarantor Senior Indebtedness or their representative (a "Subsidiary Guarantor Payment Notice"), then, unless and until such Subsidiary Guarantor Non-payment Default shall have been cured or waived in writing or shall have ceased to exist or such Designated Guarantor Senior Indebtedness is paid in full or otherwise discharged or the holders (or a representative of the holders) of such Designated Guarantor Senior Indebtedness give their written approval, no payment or distribution shall be made by such Subsidiary Guarantor in respect of its Subsidiary Guarantee (other than Permitted Guarantor Junior Securities); provided, however, that these provisions will not prevent the making of any payment for more than 179 days after a Subsidiary Guarantor Payment Notice shall have been given after which, subject to Section 13.9(a), such Subsidiary Guarantor will resume making any and all required payments in respect of its Subsidiary Guarantee, including any missed payments. Notwithstanding any other provision of this Indenture, only one Subsidiary Guarantor Payment Notice shall be given with respect to any Subsidiary Guarantee within any 360 consecutive day period. No Subsidiary Guarantor Non-payment Default with respect to Designated Guarantor Senior Indebtedness that existed or was continuing on the date of any Subsidiary Guarantor Payment Notice with respect to the Designated Guarantor Senior Indebtedness initiating such Subsidiary Guarantor Payment Notice shall be, or can be, made the basis for the commencement of a subsequent Subsidiary Guarantor Payment Notice with respect to such Subsidiary Guarantee, whether or not within a period of 360 consecutive days, unless such default shall have been cured or waived for a period of not less than 90 consecutive days (it being acknowledged that any subsequent action, or any breach of any financial covenant for a period commencing after the date of commencement of such Subsidiary Guarantor Payment Notice, that, in either case, would give rise to a Subsidiary Guarantor Non-payment Default pursuant to any provision under which a Subsidiary Guarantor Non-payment Default previously existed or was continuing shall constitute a new Subsidiary Guarantor Non-payment Default for this purpose; provided that, in the case of a breach of a particular financial covenant, such Subsidiary Guarantor shall have been in compliance for at least one full 90 consecutive day period commencing after the date of commencement of such Subsidiary Guarantor Payment Notice). In no event shall a Subsidiary Guarantor Payment Notice extend beyond 179 days from the date of its receipt and there must be a 181 consecutive day period in any 360 consecutive day period during which no Subsidiary Guarantor Payment Notice is in effect with respect to such Subsidiary Guarantee. (c) In the event that, notwithstanding the foregoing, a Subsidiary Guarantor shall make any payment in respect of its Subsidiary Guarantee to the Trustee or the Holder of any Security prohibited by the foregoing provisions of this Section 13.9, then and in such event such payment shall be paid over and delivered forthwith to the Company. In the event that a Subsidiary Guarantor 112 shall make any payment in respect of its Subsidiary Guarantee to the Trustee and a Responsible Officer of the Trustee, on behalf of the Trustee, shall receive written notice of a Subsidiary Guarantor Payment Default or a Subsidiary Guarantor Non-payment Default from one or more of the holders of Guarantor Senior Indebtedness (or their representative) prior to making any payment to Holders in respect of the Subsidiary Guarantee and prior to 11:00 a.m. Eastern Time on the date which is two Business Days prior to the date upon which by the terms hereof any money may become payable for any purpose, such payments shall be paid over by the Trustee and delivered forthwith to the Company. Each Subsidiary Guarantor shall give prompt written notice to the Trustee of any default under any of its Guarantor Senior Indebtedness or under any agreement pursuant to which its Guarantor Senior Indebtedness may have been issued. Section 13.10 Subsidiary Guarantees Subordinated to Prior Payment of All Guarantor Senior Indebtedness upon Dissolution, etc. Upon any distribution of Properties of any Subsidiary Guarantor or payment on behalf of a Subsidiary Guarantor in the event of any Insolvency or Liquidation Proceeding with respect to such Subsidiary Guarantor: (a) the holders of such Subsidiary Guarantor's Guarantor Senior Indebtedness shall be entitled to receive payment in full of such Guarantor Senior Indebtedness, or provision must be made for such payment, before the Holders are entitled to receive any direct or indirect payment or distribution of any kind or character, whether in cash, property or securities (other than Permitted Guarantor Junior Securities), on account of any payment in respect of such Subsidiary Guarantor's Subsidiary Guarantee; (b) any direct or indirect payment or distribution of Properties of such Subsidiary Guarantor of any kind or character, whether in cash, property or securities (other than a payment or distribution in the form of Permitted Guarantor Junior Securities), by set-off or otherwise, to which the Holders or the Trustee, on behalf of the Holders, would be entitled except for the provisions of this Article XIII, shall be paid by the Subsidiary Guarantor or by any liquidating trustee or agent or other Person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly to the holders of such Guarantor Senior Indebtedness or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any of such Guarantor Senior Indebtedness may have been issued, ratably according to the aggregate amounts remaining unpaid on account of such Guarantor Senior Indebtedness held or represented by each, to the extent necessary to make payment in full of all such Guarantor Senior Indebtedness, after giving effect to any concurrent payment or distribution to the holders of such Guarantor Senior Indebtedness; and (c) in the event that, notwithstanding the foregoing provisions of this Section 13.10, any direct or indirect payment or distribution of Properties of such Subsidiary Guarantor of any kind or character, whether in cash, property or securities (other than a payment or distribution in the form of Permitted Guarantor Junior Securities), shall be received by the Trustee or the Holders before all such Guarantor Senior Indebtedness is paid in full or otherwise discharged, such Properties shall be received and held in trust for and shall be paid over to the holders of such 113 Guarantor Senior Indebtedness remaining unpaid or their representatives, for application to the payment of such Guarantor Senior Indebtedness until all such Guarantor Senior Indebtedness shall have been paid or provided for in full, after giving effect to any concurrent payment or distribution to the holders of such Guarantor Senior Indebtedness. The Company or a Subsidiary Guarantor shall give prompt written notice to a Responsible Officer of the Trustee, on behalf of the Trustee, of the occurrence of any Insolvency or Liquidation Proceeding with respect to such Subsidiary Guarantor. Section 13.11 Holders to be Subrogated to Rights of Holders of Guarantor Senior Indebtedness. After the payment in full of all Guarantor Senior Indebtedness of a Subsidiary Guarantor, the Holders shall be subrogated (equally and ratably with the holders of all other Indebtedness of such Subsidiary Guarantor which by its express terms is subordinated to such Guarantor Senior Indebtedness to substantially the same extent as such Subsidiary Guarantee is so subordinated and which is entitled to like rights of subrogation as a result of payments made to the holders of such Guarantor Senior Indebtedness) to the rights of the holders of such Guarantor Senior Indebtedness to receive payments or distributions of cash, property and securities of such Subsidiary Guarantor applicable to such Guarantor Senior Indebtedness until all amounts owing on the Securities shall be paid in full, and for the purpose of such subrogation no payments or distributions to the holders of such Guarantor Senior Indebtedness by or on behalf of such Subsidiary Guarantor or by or on behalf of the Holders by virtue of this Article XIII which otherwise would have been made to the Holders shall, as between such Subsidiary Guarantor, its creditors other than the holders of Guarantor Senior Indebtedness, and the Holders of the Securities, be deemed to be a payment or distribution by such Subsidiary Guarantor to or on account of such Guarantor Senior Indebtedness, it being understood that the subordination provisions of this Article XIII are, and are intended solely for the purpose of defining the relative rights of the Holders, on the one hand, and the holders of Guarantor Senior Indebtedness, on the other hand. Section 13.12 Obligations of the Subsidiary Guarantors Unconditional. Nothing contained in this Article XIII or elsewhere in this Indenture or in any Security is intended to or shall impair, as between Subsidiary Guarantors and the Holders, the obligation of the Subsidiary Guarantors under the Subsidiary Guarantees, or is intended to or shall affect the relative rights of the Holders and creditors of the Subsidiary Guarantors other than the holders of Guarantor Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or any Holder from exercising all remedies otherwise permitted by applicable law upon Default under this Indenture subject to the rights, if any, under this Article XIII of the holders of Guarantor Senior Indebtedness in respect of cash, property or securities of any Subsidiary Guarantor received upon the exercise of any such remedy. Upon any distribution of Properties of a Subsidiary Guarantor referred to in this Article XIII, the Trustee, subject to the provisions of Section 6.2 hereof, and the Holders of the Securities shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which such dissolution, winding up, liquidation or reorganization proceedings are pending, or a certificate of a trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, or agent or other Person making any distribution to the Trustee or to the Holders of the Securities, for the 114 purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the related Guarantor Senior Indebtedness and other indebtedness of such Subsidiary Guarantor, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XIII. Section 13.13 Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice. The Trustee shall not at any time be charged with knowledge of the existence of any facts that would prohibit the making of any payment to or by the Trustee, unless a Responsible Officer of the Trustee, on behalf of the Trustee, shall have received at the Corporate Trust Office written notice thereof from a Subsidiary Guarantor or from one or more holders of Guarantor Senior Indebtedness or Designated Guarantor Senior Indebtedness, in the case of a Subsidiary Guarantor Non-payment Default, or from any representative thereof; and, prior to the receipt of any such written notice, the Trustee, subject to TIA Sections 315(a) through 315(d), shall be entitled to assume conclusively that no such facts exist. The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself to be a holder of Guarantor Senior Indebtedness or Designated Guarantor Senior Indebtedness, in the case of a Subsidiary Guarantor Non-payment Default (or a representative on behalf of such holder), to establish that such notice has been given by a holder of Guarantor Senior Indebtedness or Designated Guarantor Senior Indebtedness, in the case of a Subsidiary Guarantor Non-payment Default, or a representative on behalf of any such holder or holders. Section 13.14 Application by Trustee of Money Deposited with it. Except as provided in Article XIV, any deposit of money by a Subsidiary Guarantor with the Trustee or any Paying Agent (whether or not in trust) for any payment in respect of the related Subsidiary Guarantee shall be subject to the provisions of Sections 13.8, 13.9, 13.10 and 13.11 hereof except that, if prior to 11:00 a.m. Eastern time on the date which is two Business Days prior to the date on which by the terms of this Indenture any such money may become payable for any purpose, the Trustee or, in the case of any such deposit of money with a Paying Agent, the Paying Agent shall not have received with respect to such money the notice provided for in Section 13.13 hereof, then the Trustee or such Paying Agent, as the case may be, shall have full power and authority to receive such money and to apply the same to the purpose for which it was received, and shall not be affected by any notice to the contrary which may be received by it on or after 11:00 a.m., Eastern time, two Business Days prior to such payment date. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Guarantor Senior Indebtedness to participate in any payment or distribution pursuant to this Article XIII, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Guarantor Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article XIII, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. 115 The Trustee, however, shall not be deemed to owe any fiduciary duty to the holders of Guarantor Senior Indebtedness but shall have only such obligations to such holders as are expressly set forth in this Article XIII. Section 13.15 Subordination Rights Not Impaired by Acts of Omissions of Subsidiary Guarantors or Holders of Guarantor Senior Indebtedness. No right of any present or future holders of any Guarantor Senior Indebtedness of a Subsidiary Guarantor to enforce subordination as provided herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of such Subsidiary Guarantor or by any act or failure to act by any such holder, or by any noncompliance by such Subsidiary Guarantor with the terms of this Indenture, regardless of any knowledge thereof which any such holder may have or be otherwise charged with. Without in any way limiting the generality of the preceding paragraph of this Section, the holders of Guarantor Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders of the Securities, without incurring responsibility to the Holders of the Securities and without impairing or releasing the subordination or other benefits provided in this Article, or the obligations hereunder of the Holders of the Securities to the holders of Guarantor Senior Indebtedness, do any one or more of the following: (1) change the manner, place or terms of payment or extend the time of payment of, or renew, exchange, amend, increase or alter, Guarantor Senior Indebtedness or the term of any instrument evidencing the same or any agreement under which Guarantor Senior Indebtedness is outstanding or any liability of any obligor thereon (unless such change, extension or alteration results in such Indebtedness no longer being Guarantor Senior Indebtedness as defined in this Indenture); (2) sell, exchange, release or otherwise deal with any Property pledged, mortgaged or otherwise securing Guarantor Senior Indebtedness; (3) settle or compromise any Guarantor Senior Indebtedness or any liability of any obligor thereon or release any Person liable in any manner for the collection of Guarantor Senior Indebtedness; and (4) exercise or refrain from exercising any rights against the Company and any other Person. Section 13.16 Holders Authorize Trustee to Effectuate Subordination of Subsidiary Guarantees. Each Holder, by his acceptance thereof, authorizes and expressly directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article XIII and appoints the Trustee as his attorney-in-fact for such purpose, including, in the event of any Insolvency or Liquidation Proceeding with respect to any Subsidiary Guarantor, the immediate filing of a claim for the unpaid balance of his Securities pursuant to the related Subsidiary Guarantee in the form required in said proceedings and the causing of said claim to be approved. Section 13.17 Right of Trustee to Hold Guarantor Senior Indebtedness. The Trustee shall be entitled to all of the rights set forth in this Article XIII in respect of any Guarantor Senior Indebtedness at any time held by it to the same extent as any other holder of Guarantor Senior Indebtedness, and nothing in this Indenture shall be construed to deprive the Trustee of any of its rights as such holder. 116 Section 13.18 Article XIII Not to Prevent Events of Default. The failure to make a payment on account of the Subsidiary Guarantees by reason of any provision in this Article XIII shall not be construed as preventing the occurrence of an Event of Default under this Indenture. Section 13.19 Payment. For purposes of this Article XIII, a payment with respect to any Subsidiary Guarantee or with respect to principal of or interest on any Security or any Subsidiary Guarantee shall include, without limitation, payment of principal of and interest on any Security, any depositing of funds under Article IV hereof, any payment on account of any repurchase or redemption of any Security and any payment or recovery on any claim (whether for rescission or damages and whether based on contract, tort, duty imposed by law, or any other theory of liability) relating to or arising out of the offer, sale or purchase of any Security. ARTICLE XIV SUBORDINATION OF SECURITIES --------------------------- Section 14.1 Securities Subordinate to Senior Indebtedness. The Company covenants and agrees, and each Holder of a Security, by his acceptance thereof, likewise covenants and agrees for the benefit of the holders, from time to time, of Senior Indebtedness, that, to the extent and in the manner hereinafter set forth in this Article XIV, the Indebtedness represented by the Securities and the payment of and distributions of or with respect to the Obligations are hereby expressly made subordinate and subject in right of payment as provided in this Article to the prior payment in full in cash or cash equivalents of all amounts payable under all existing and future Senior Indebtedness. This Article XIV shall constitute a continuing offer to all Persons who, in reliance upon such provisions, become holders of, or continue to hold Senior Indebtedness; and such provisions are made for the benefit of the holders of Senior Indebtedness; and such holders are made obligees hereunder and they or each of them may enforce such provisions. Section 14.2 Payment Over of Proceeds upon Dissolution, etc. In the event of an Insolvency or Liquidation Proceeding with respect to the Company: (1) the holders of all Senior Indebtedness shall be entitled to receive payment in full in cash or cash equivalents of all Senior Indebtedness before the Holders of the Securities are entitled to receive any direct or indirect payment or distribution of any kind or character (excluding Permitted Junior Securities of the Company) on account of Obligations; and (2) any direct or indirect payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities (excluding Permitted Junior Securities of the Company), by set-off or otherwise, to which the Holders or the Trustee would be entitled but for the provisions of this Article shall be paid by the liquidating trustee or agent or other Person making such payment or distribution, whether a trustee in 117 bankruptcy, a receiver or liquidating trustee or otherwise, directly to the holders of Senior Indebtedness or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness may have been issued, ratably according to the aggregate amounts remaining unpaid on account of the Senior Indebtedness held or represented by each, to the extent necessary to make payment in full in cash or cash equivalents of all Senior Indebtedness remaining unpaid, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness; and (3) in the event that, notwithstanding the foregoing provisions of this Section 14.2, the Trustee or the Holder of any Security shall have received any payment or distribution of properties or assets of the Company of any kind or character, whether in cash, property or securities, by set off or otherwise, in respect of any Obligations before all Senior Indebtedness is paid or provided for in full, then and in such event such payment or distribution (excluding Permitted Junior Securities of the Company) shall be paid over or delivered forthwith to the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other Person making payment or distribution of assets of the Company for application to the payment of all Senior Indebtedness remaining unpaid, to the extent necessary to pay all Senior Indebtedness in full, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness. The consolidation of the Company with, or the merger of the Company with or into, another Person or the liquidation or dissolution of the Company following the conveyance, transfer or lease of its properties and assets substantially as an entirety to another Person upon the terms and conditions set forth in Article VIII hereof shall not be deemed a dissolution, winding-up, liquidation, reorganization, assignment for the benefit of creditors or marshalling of assets and liabilities of the Company for the purposes of this Article if the Person formed by such consolidation or the surviving entity of such merger or the Person which acquires by conveyance, transfer or lease such properties and assets substantially as an entirety, as the case may be, shall, as a part of such consolidation, merger, conveyance, transfer or lease, comply with the conditions set forth in such Article VIII hereof to the extent applicable. Section 14.3 Suspension of Payment When Senior Indebtedness in Default. (a) Unless Section 14.2 hereof shall be applicable, upon the occurrence of a Payment Default, no direct or indirect payment or distribution of any assets of the Company of any kind or character shall be made by or on behalf of the Company on account of the Obligations or on account of the purchase or redemption or other acquisition of any Obligations unless and until such Payment Default shall have been cured or waived or shall have ceased to exist or such Designated Senior Indebtedness shall have been discharged or paid in full in cash or Cash Equivalents, after which, subject to Section 14.2 hereof (if applicable), the Company shall resume making any and all required payments in respect of the Securities, and the other Obligations, including any missed payments. 118 (b) Unless Section 14.2 hereof shall be applicable, upon (1) the occurrence of a Non-payment Default and (2) receipt by the Trustee from a Senior Representative of written notice (a "Payment Blockage Notice") of such occurrence stating that such notice is a Payment Blockage Notice pursuant to this Section 14.3(b) of this Indenture, no payment or distribution of any assets of the Company of any kind or character shall be made by or on behalf of the Company on account of any Obligations or on account of the purchase or redemption or other acquisition of Obligations for a period ("Payment Blockage Period") commencing on the date of receipt by the Trustee of such notice unless and until the earlier to occur of the following events (subject to any blockage of payments that may then be in effect under Section 14.2 hereof or subsection (a) of this Section 14.3 hereof): (w) 179 days shall have elapsed since receipt of such written notice by the Trustee, (x) the date, as set forth in a written notice to the Company or the Trustee from the Senior Representative initiating such Payment Blockage Period, on which such Non-payment Default shall have been cured or waived or shall have ceased to exist (provided that no other Payment Default or Non-payment Default has occurred and is then continuing after giving effect to such cure or waiver), (y) such Designated Senior Indebtedness shall have been discharged or paid in full in cash or cash equivalents or (z) such Payment Blockage Period shall have been terminated by written notice to the Company or the Trustee from the Senior Representative initiating such Payment Blockage Period, after which, subject to Sections 14.2 and 14.3(a) hereof (if applicable), the Company shall promptly resume making any and all required payments in respect of the Obligations, including any missed payments. Notwithstanding any other provision of this Indenture, only one Payment Blockage Period may be commenced within any 360 consecutive day period. No Non-payment Default with respect to Designated Senior Indebtedness that existed or was continuing on the date of the commencement of any Payment Blockage Period with respect to the Designated Senior Indebtedness initiating such Payment Blockage Period shall be, or can be, made the basis for the commencement of a second Payment Blockage Period, whether or not within a period of 360 consecutive days, unless such default shall have been cured or waived for a period of not less than 90 consecutive days (it being acknowledged that any subsequent action, or any breach of any financial covenant for a period commencing after the date of commencement of such Payment Blockage Period, that, in either case, would give rise to a Non-payment Default pursuant to any provision under which a Non- payment Default previously existed or was continuing shall constitute a new Non- payment Default for this purpose; provided that, in the case of a breach of a particular financial covenant, the Company shall have been in compliance for at least one full 90 consecutive day period commencing after the date of commencement of such Payment Blockage Period). In no event shall a Payment Blockage Period extend beyond 179 days from the date of the receipt of the notice referred to in clause (2) hereof and there must be a 181 consecutive day period in any 360 consecutive day period during which no Payment Blockage Period is in effect pursuant to this Section 14.3(b). (c) In the event that, notwithstanding the foregoing, the Trustee or the Holder of any Security shall have received any payment or distribution prohibited by the foregoing provisions of this Section 14.3, then and in such event such payment or distribution shall be paid over and delivered forthwith to the Senior Representatives or as a court of competent jurisdiction shall direct for application to the payment of any due and unpaid Senior Indebtedness, to the extent necessary 119 to pay all such due and unpaid Senior Indebtedness in cash or cash equivalents, after giving effect to any concurrent payment to or for the holders of Senior Indebtedness. Section 14.4 Trustee's Relation to Senior Indebtedness. With respect to the holders of Senior Indebtedness, notwithstanding any other provisions of this Indenture, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article XIV, and no implied covenants or obligations with respect to the holders of Senior Indebtedness shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and the Trustee shall not be liable to any holder of Senior Indebtedness if it shall mistakenly pay over or deliver to Holders, the Company or any other Person moneys or assets to which any holder of Senior Indebtedness shall be entitled by virtue of this Article XIV or otherwise. Section 14.5 Subrogation to Rights of Holders of Senior Indebtedness. Upon the payment in full in cash or Cash Equivalents of all Senior Indebtedness, the Holders of the Securities shall be subrogated (equally and ratably with the holders of all Indebtedness of the Company which by its express terms is subordinated to Senior Indebtedness to substantially the same extent as the Securities are so subordinated and which is entitled to like rights of subrogation as a result of the payments made to the holders of Senior Indebtedness) to the rights of the holders of such Senior Indebtedness to receive payments and distributions of cash, property and securities applicable to the Senior Indebtedness until the principal of, premium, if any, and interest on the Securities shall be paid in full in cash or cash equivalents. For purposes of such subrogation, no payments or distributions to the holders of Senior Indebtedness of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article XIV, and no payments over pursuant to the provisions of this Article XIV to the holders of Senior Indebtedness by Holders of the Securities or the Trustee shall, as among the Company, its creditors other than holders of Senior Indebtedness, and the Holders of the Securities, be deemed to be payment or distribution by the Company to or on account of the Senior Indebtedness. If any payment or distribution to which the Holders would otherwise have been entitled but for the provisions of this Article XIV shall have been applied, pursuant to the provisions of this Article XIV, to the payment of all amounts payable under the Senior Indebtedness of the Company and such payments or distributions received by such holders of such Senior Indebtedness shall be in excess of the amount sufficient to pay all amounts payable under or in respect of such Senior Indebtedness in full in cash or cash equivalents, then and in such case the Holders shall be entitled to receive the amount of such excess from the Company upon and to the extent of any return of such excess by the holders of such Senior Indebtedness. Section 14.6 Provisions Solely To Define Relative Rights. The provisions of this Article XIV are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities on the one hand and the holders of Senior Indebtedness on the other hand. Nothing contained in this Article XIV or elsewhere in this Indenture or in the Securities is intended to or shall (a) impair, as among the Company, its creditors other than holders of Senior Indebtedness and the 120 Holders of the Securities, the obligation of the Company, which is absolute and unconditional, to pay to the Holders of the Securities the principal of, premium, if any, and interest on the Securities as and when the same shall become due and payable in accordance with their terms; or (b) affect the relative rights against the Company of the Holders of the Securities and creditors of the Company other than the holders of the Senior Indebtedness; or (c) prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon a Default or an Event of Default under this Indenture, subject to the rights, if any, under this Article XIV of the holders of Senior Indebtedness. The failure to make a payment on account of any Obligations by reason of any provision of this Article XIV shall not be construed as preventing the occurrence of a Default or an Event of Default hereunder. Section 14.7 Trustee To Effectuate Subordination. Each Holder of a Security by his acceptance thereof authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article XIV and appoints the Trustee his attorney-in-fact for any and all such purposes, including, in the event of any dissolution, winding-up, liquidation or reorganization of the Company whether in bankruptcy, insolvency, receivership proceedings, or otherwise, the timely filing of a claim for the unpaid balance of the Indebtedness of the Company owing to such Holder in the form required in such proceedings and the causing of such claim to be approved. If the Trustee does not file such a claim prior to 30 days before the expiration of the time to file such a claim, the holders of Senior Indebtedness, or any Senior Representative, may file such a claim on behalf of Holders of the Securities. Section 14.8 Waiver of Subordination Provision. (a) No right of any present or future holder of any Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any non-compliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof any such holder may have or be otherwise charged with. (b) Without limiting the generality of subsection (a) of this Section 14.8, the holders of Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders of the Securities, without incurring responsibility to the Holders of the Securities and without impairing or releasing the subordination provided in this Article XIV or the obligations hereunder of the Holders of the Securities to the holders of Senior Indebtedness, do any one or more of the following: (1) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Indebtedness or any instrument evidencing the same or any agreement under which Senior Indebtedness is outstanding or any liability of any obligor thereon (unless such change, extension or alteration results in such Indebtedness no longer being 121 Senior Indebtedness as defined in this Indenture); (2) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Indebtedness; (3) settle or compromise any Senior Indebtedness or any liability of any obligor thereon or release any Person liable in any manner for the collection or payment of Senior Indebtedness; and (4) exercise or refrain from exercising any rights against the Company and any other Person; provided, however, that in no event shall any such actions limit the right of the Holders of the Securities to take any action to accelerate the maturity of the Securities pursuant to Article V hereof or to pursue any rights or remedies hereunder or under applicable laws if the taking of such action does not otherwise violate the terms of this Indenture. Section 14.9 Notice to Trustee. (a) The Company shall give prompt written notice to the Trustee of any fact known to the Company which would prohibit the making of any payment to or by the Trustee in respect of the Securities. Notwithstanding the provisions of this Article XIV or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment to or by the Trustee in respect of the Securities, unless and until a Responsible Officer of the Trustee, on behalf of the Trustee, shall have received written notice thereof from the Company or a holder of Senior Indebtedness or from any trustee, fiduciary or agent therefor; and, prior to the receipt of any such written notice, the Trustee, subject to the provisions of this Section 14.9, shall be entitled in all respects to assume that no such facts exist; provided, however, that if the Trustee shall not have received the notice provided for in this Section 14.9 at least two Business Days prior to the date upon which by the terms hereof any money may become payable for any purpose under this Indenture (including, without limitation, the payment of the principal of, premium, if any, or interest on any Security), then, anything herein contained to the contrary notwithstanding but without limiting the rights and remedies of the holders of Senior Indebtedness or any trustee, fiduciary or agent thereof, the Trustee shall have full power and authority to receive such money and to apply the same to the purpose for which such money was received and shall not be affected by any notice to the contrary which may be received by it within two Business Days prior to such date; nor shall the Trustee be charged with knowledge of the curing of any such default or the elimination of the act or condition preventing any such payment unless and until the Trustee shall have received an Officers' Certificate to such effect. (b) Subject to TIA Sections 315(a) through 315(d), the Trustee shall be entitled to rely on the delivery to it of a written notice to a Responsible Officer of the Trustee, on behalf of the Trustee, by a Person representing himself to be a holder of Senior Indebtedness (or a trustee, fiduciary or agent therefor) to establish that such notice has been given by a holder of Senior Indebtedness (or a trustee, fiduciary or agent therefor). In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article XIV, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such 122 Person under this Article XIV, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. Section 14.10 Reliance on Judicial Order or Certificate of Liquidating Agent. Upon any payment or distribution of assets of the Company referred to in this Article XIV, the Trustee, subject to TIA Sections 315(a) through 315(d), and the Holders, shall be entitled to rely upon any order or decree entered by any court of competent jurisdiction in which such insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution, winding-up or similar case or proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of Senior Indebtedness and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XIV. Section 14.11 Rights of Trustee as Holder of Senior Indebtedness; Preservation of Trustee's Rights. The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article XIV with respect to any Senior Indebtedness which may at any time be held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. Nothing in this Article XIV shall apply to claims of, or payments to, the Trustee under or pursuant to Section 6.6 hereof. Section 14.12 Article Applicable to Paying Agents. In case at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article XIV shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article XIV in addition to or in place of the Trustee; provided, however, that Section 14.11 hereof shall not apply to the Company or any Affiliate of the Company if it or such Affiliate acts as Paying Agent. Section 14.13 No Suspension of Remedies. Nothing contained in this Article XIV shall limit the right of the Trustee or the Holders of Securities to take any action to accelerate the maturity of the Securities pursuant to Article V hereof or to pursue any rights or remedies hereunder or under applicable law, subject to the rights, if any, under this Article XIV of the holders, from time to time, of Senior Indebtedness. 123 ARTICLE XV MISCELLANEOUS ------------- Section 15.1 Compliance Certificates and Opinions. Upon any application or request by the Company and/or any Subsidiary Guarantor to the Trustee to take any action under any provision of this Indenture, the Company and/or such Subsidiary Guarantor, as the case may be, shall furnish to the Trustee such certificates and opinions as may be required under the Trust Indenture Act or this Indenture. Each such certificate and each such opinion shall be in the form of an Officers' Certificate or an Opinion of Counsel, as applicable, and shall comply with the requirements of this Indenture. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. The certificates and opinions provided pursuant to this Section 15.1 and the statements required by this Section 15.1 shall comply in all respects with TIA Sections 314(c) and (e). Section 15.2 Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an Officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are 124 erroneous. Any such Opinion of Counsel may be based, insofar as it relates to factual matters, upon an Officers' Certificate of an Officer or Officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate with respect to such matters is erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. Section 15.3 Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agents duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient. (c) The ownership, principal amount and serial numbers of Securities held by any Person, and the date of holding the same, shall be proved by the Security Register. (d) If the Company shall solicit from the Holders of Securities any request, demand, authorization, direction, notice, consent, waiver or other Act, the Company may, at its option, by or pursuant to a Board Resolution, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act, but the Company shall have no obligation to do so. Notwithstanding TIA Section 316(c), such record date shall be the record date specified in or pursuant to such Board Resolution, which shall be a date not earlier than the date 30 days prior to the first solicitation of Holders generally in connection therewith and not later than the date such solicitation is completed. If such a record date 125 is fixed, such request, demand, authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of record at the close of business on such record date shall be deemed to be Holders for the purposes of determining whether Holders of the requisite proportion of Outstanding Securities have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, wavier or other Act, and for that purpose the Outstanding Securities shall be computed as of such record date; provided that no such authorization, agreement or consent by the Holders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than eleven months after the record date. (e) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security. Section 15.4 Notices, etc. to Trustee, Company and Subsidiary Guarantors. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (1) the Trustee by any Holder or by the Company or any Subsidiary Guarantor shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing and delivered in person or mailed by certified or registered mail (return receipt requested) to the Trustee at its Corporate Trust Office; or (2) the Company or any Subsidiary Guarantor by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and delivered in person or mailed by certified or registered mail (return receipt requested) to the Company addressed to it or a Subsidiary Guarantor, as applicable, at the Company's principal office located at 1201 Louisiana, Suite 1400, Houston, Texas 77002, or at any other address otherwise furnished in writing to the Trustee by the Company. Section 15.5 Notice to Holders; Waiver. Where this Indenture provides for notice of any event to Holders by the Company or the Trustee, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at his address as it appears in the Security Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Any notice mailed to a Holder in the manner herein prescribed shall be conclusively deemed to have been received by such Holder, whether or not such Holder actually receives such notice. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and 126 such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case by reason of the suspension of or irregularities in regular mail service or by reason of any other cause, it shall be impracticable to mail notice of any event to Holders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice for every purpose hereunder. Section 15.6 Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 15.7 Successors and Assigns. All covenants and agreements in this Indenture by the Company and the Subsidiary Guarantors shall bind their respective successors and assigns, whether so expressed or not. All agreements of the Trustee in this Indenture shall bind its successor. Section 15.8 Separability Clause. In case any provision in this Indenture or in the Securities or the Subsidiary Guarantees shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby, and a Holder shall have no claim therefore against any party hereto. Section 15.9 Benefits of Indenture. Nothing in this Indenture or in the Securities, express or implied, shall give to any Person (other than the parties hereto, any Paying Agent, any Securities Registrar and their successors hereunder, the Holders, the holders of Senior Indebtedness, the holders of Guarantor Senior Indebtedness and, to the extent set forth in Section 13.4 hereof, creditors of Subsidiary Guarantors) any benefit or any legal or equitable right, remedy or claim under this Indenture. Section 15.10 Governing Law; Trust Indenture Act Controls. (a) THIS INDENTURE, INCLUDING THE SUBSIDIARY GUARANTEES CONTAINED HEREIN, AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. THE COMPANY AND EACH SUBSIDIARY GUARANTOR IRREVOCABLY SUBMITS TO THE NON- EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN, THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE SECURITIES, AND THE COMPANY AND EACH SUBSIDIARY GUARANTOR IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH 127 ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED BY ANY SUCH COURT. (b) This Indenture is subject to the provisions of the Trust Indenture Act of 1939, as amended, that are required to be part of this Indenture and shall, to the extent applicable, be governed by such provisions. If and to the extent that any provision of this Indenture limits, qualifies or conflicts with the duties imposed by Sections 310 and 318, inclusive, of the Trust Indenture Act, or conflicts with any provision (an "incorporated provision") required by or deemed to be included in this Indenture by operation of such Trust Indenture Act sections, such imposed duties or incorporated provision shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or excluded, as the case may be. Section 15.11 Legal Holidays. In any case where any Interest Payment Date, Redemption Date, or Stated Maturity or Maturity of any Security shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Securities) payment of interest or principal (and premium, if any) need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date, Redemption Date or at the Stated Maturity or Maturity; provided that no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date, Stated Maturity or Maturity, as the case may be. Section 15.12 No Recourse Against Others. A director, officer, incorporator, employee, Affiliate or stockholder of the Company or any Subsidiary Guarantor, as such, shall not have any personal liability under the Securities or this Indenture by reason of his or its status as such director, officer, incorporator or stockholder. Each Holder, by accepting a Security with the notation of Subsidiary Guarantee endorsed thereon, waives and releases all such liability. Such waiver and release are part of the consideration for the issuance of the Securities with the notation of Subsidiary Guarantee endorsed thereon. Section 15.13 Duplicate Originals. The parties may sign any number of copies or counterparts of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. Section 15.14 No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or any of its Subsidiaries. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. * * * (Signature Page Follows) 128 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written. ISSUER: OCEAN ENERGY, INC., a Delaware corporation By:______________________________________ Name:_________________________________ Title:________________________________ SUBSIDIARY GUARANTOR: OCEAN ENERGY, INC., a Louisiana corporation By:______________________________________ Name:_________________________________ Title:________________________________ TRUSTEE: U.S. BANK TRUST, NATIONAL ASSOCIATION, as Trustee By:______________________________________ Name:_________________________________ Title:________________________________ EXHIBIT A CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF SECURITIES Re: 8-3/8% Series [A/B] Senior Subordinated Notes due 2008 of Ocean Energy, Inc. (the "Company") This Certificate relates to $____________ principal amount of Securities held in *__________ book-entry or *_______________ definitive form by ________________________________________ (the "Transferor"). The Transferor*: [ ] has requested the Trustee by written order to deliver in exchange for its beneficial interest in the Global Securities held by the Depositary, a Security or Securities in definitive registered form equal to its beneficial interest in such Global Securities (or the portion thereof indicated above); or [ ] has requested the Trustee by written order to exchange or register the transfer of a Security or Securities. In connection with such request and in respect of each such Security, the Transferor does hereby certify that the Transferor is familiar with the Indenture relative to the above captioned Securities and that the transfer of this Security does not require registration under the Securities Act (as defined below) because:* [ ] Such Security is being acquired for the Transferor's own account without transfer. [ ] Such Security is being transferred (i) to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act of 1933, as amended (the "Securities Act")), in reliance on Rule 144A under the Securities Act or (ii) pursuant to an exemption from registration in accordance with Rule 904 under the Securities Act (and in the case of clause (ii), based on an opinion of counsel if the Company so requests and together with a certification in substantially the form of Exhibit C to the Indenture). [ ] Such Security is being transferred (i) in accordance with Rule 144 under the Securities Act (and based on an opinion of counsel if the Company so requests) or (ii) pursuant to an effective registration statement under the Securities Act. __________________ * Check appropriate box. A-1 [ ] Such Security is being transferred to an institutional "accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act pursuant to a private placement exemption from the registration requirements of the Securities Act (and based on an opinion of counsel if the Company so requests) together with a certification in substantially the form of Exhibit B to the Indenture and, to the knowledge of the Transferor, such institutional accredited investor to whom such Security is to be transferred is not an "affiliate" (as defined in Rule 144 under the Securities Act) of the Company. [ ] Such Security is being transferred in reliance on and in compliance with another exemption from the registration requirements of the Securities Act (and based on an opinion of counsel if the Company so requests). ------------------------------------ [INSERT NAME OF TRANSFEROR] By:__________________________________ Name:____________________________ Title:___________________________ Address:_________________________ Date:_____________________ A-2 EXHIBIT B TRANSFEREE LETTER OF REPRESENTATIONS Ocean Energy Inc. 1201 Louisiana Suite 1400 Houston, Texas 77002 Dear Sirs and Madams: In connection with our proposed purchase of $ million aggregate principal amount of 8-3/8% Senior Subordinated Notes due 2008 (the "Securities") of Ocean Energy, Inc., a Delaware corporation (the "Company"): 1. We understand that the Securities have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or under any other applicable securities laws, and may not be sold except as permitted in the following sentence. We agree on our own behalf and on behalf of any investor account for which we are purchasing the Securities to offer, sell or otherwise transfer such Securities prior to the date which is two years after the later of the date of original issue and the last date on which the Company or any affiliate of the Company was the owner of such Securities, or any predecessor, thereto (the "Resale Restriction Termination Date") only (a) to the Company, (b) pursuant to a registration statement that has been declared effective by the Securities and Exchange Commission (the "SEC"), (c) for so long as the Securities are eligible for resale pursuant to Rule 144A under the Securities Act, to a person we reasonably believe is a qualified institutional buyer under Rule 144A (a "QIB") that purchases for its own account or for the account of a QIB to whom notice is given that the transfer is being made in reliance on Rule 144A, (d) pursuant to offers and sales to non-U.S. persons that occur outside the United States pursuant to Regulation S under the Securities Act, (e) to an institutional "accredited investor" within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities Act (an "Institutional Accredited Investor") that is acquiring the Securities for its own account or for the account of another Institutional Accredited Investor for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of the regulations of the Securities Act and any other applicable securities laws or (f) pursuant to any other available exemption from the registration requirements of the Securities Act, subject in each of the foregoing cases to any requirement of law that the disposition of our property and the property of such investor account or accounts be at all times within our or their control. The foregoing restrictions on resale will not apply subsequent to the Resale Restriction Termination Date. If any resale or other transfer of the Securities is proposed to be made pursuant to clause (e) above prior to the Resale Restriction Termination Date, the transferor shall deliver a letter from the transferee substantially in the B-1 form of this letter to the Trustee, which shall provide, among other things, that the transferee is an Institutional Accredited Investor and that it is acquiring such Securities for investment purposes and not for distribution in violation of the Securities Act. We acknowledge that the Company and the Trustee reserve the right prior to any offer, sale or other transfer pursuant to clauses (e) or (f) prior to the Resale Restriction Termination Date of the Securities to require the delivery of an opinion of counsel, certifications and/or other information satisfactory to the Company and the Trustee. 2. We are an Institutional Accredited Investor purchasing for our own account or for the account of another Institutional Accredited Investor. 3. We are acquiring the Securities purchased by us for our own account, or for one or more accounts as to each of which we exercise sole investment discretion, for investment purposes and not with a view to, or for offer or sale in connection with any distribution in violation of, the Securities Act. We have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of investment in the Securities, we invest in securities similar to the Securities in the normal course of our business and we, and all accounts for which we are acting, are able to bear the economic risk of investment in the Securities. 4. You are entitled to rely upon this letter and you are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby. Very truly yours, By:___________________________________ (Name of Purchaser) Upon transfer, the Securities should be registered in the name of the new beneficial owner as follows: Name:_______________________________ Address:____________________________ ____________________________ ____________________________ ____________________________ Taxpayer ID Number:_________________ B-2 EXHIBIT C FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS PURSUANT TO REGULATION S ______________ U.S. Bank Trust National Association Attention: Corporate Trust Administration Ladies and Gentlemen: In connection with our proposed sale of certain 8-3/8% Series [A/B] Senior Subordinated Notes due 2008 (the "Securities") of Ocean Energy, Inc., a Delaware corporation (the "Company"), we represent that: (i) the offer of the Securities was not made to a person in the United States; (ii) at the time the buy order was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States; (iii) no directed selling efforts have been made by us in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the U.S. Securities Act of 1933, as applicable; and (iv) the transaction is not part of a plan or scheme to evade the registration requirements of the U.S. Securities Act of 1933. You and the Company are entitled to rely upon this letter and you are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S under the U.S. Securities Act of 1933. Very truly yours, _____________________________________ [Name] By:__________________________________ Name:__________________________ Title:_________________________ Address:_______________________ C-1 EX-10.23 9 07/08/1998 INDENTURE - NORWEST BANK MINNESOTA Exhibit 10.23 ================================================================================ OCEAN ENERGY, INC. And SUBSIDIARY GUARANTORS Parties Hereto 7 5/8% SENIOR NOTES DUE 2005 INDENTURE Dated as of July 8, 1998 Norwest Bank Minnesota, National Association Trustee ================================================================================ CROSS-REFERENCE TABLE/1/ TRUST INDENTURE ACT SECTION INDENTURE SECTION 310 (a)(1)..................................................................7.10 (a)(2)..................................................................7.10 (a)(3)..................................................................N.A. (a)(4)..................................................................N.A. (a)(5)..................................................................7.10 (b).....................................................................7.10 (c).....................................................................N.A. 311 (a).....................................................................7.11 (b).....................................................................7.11 (c).....................................................................N.A. 312 (a).....................................................................2.05 (b)....................................................................11.03 (c)....................................................................11.03 313 (a).....................................................................7.06 (b)(2)............................................................7.06, 7.07 (c)..............................................................7.06, 11.02 (d).....................................................................7.06 314 (a).....................................................................4.03 (a)(4).................................................................11.04 (c)(1)..................................................................N.A. (c)(2)..................................................................N.A. (c)(3)..................................................................N.A. (e)....................................................................11.05 (f).....................................................................N.A. 315 (a).....................................................................7.01 (b).....................................................................7.05 (c).....................................................................7.01 (d).....................................................................7.01 (e).....................................................................6.11 316 (a)(last sentence)......................................................2.09 (a)(1)(A)...............................................................6.05 (a)(1)(B)...............................................................6.04 (a)(2)..................................................................N.A. (b).....................................................................6.07 (c).....................................................................2.12 317 (a)(1)..................................................................6.09 (a)(2)..................................................................6.09 (b).....................................................................2.04 318 (a)....................................................................11.01 (b)....................................................................11.01 (c)....................................................................11.01 N.A. means not applicable. - ----------------- /1/ This Cross-Reference Table is not part of this Indenture. TABLE OF CONTENTS ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01 Definitions..................................................... 1 Section 1.02 Other Definitions...............................................12 Section 1.03 Incorporation by Reference of Trust Indenture Act...............12 Section 1.04 Rules of Construction...........................................12 ARTICLE II THE NOTES Section 2.01 Form and Dating.................................................13 Section 2.02 Execution and Authentication....................................14 Section 2.03 Registrar and Paying Agent......................................15 Section 2.04 Paying Agent to Hold Money in Trust.............................15 Section 2.05 Holder Lists....................................................15 Section 2.06 Transfer and Exchange...........................................16 Section 2.07 Replacement Notes...............................................29 Section 2.08 Outstanding Notes...............................................29 Section 2.09 Treasury Notes..................................................30 Section 2.10 Temporary Notes.................................................30 Section 2.11 Cancellation....................................................30 Section 2.12 Defaulted Interest..............................................30 Section 2.13 CUSIP Numbers...................................................31 ARTICLE III REDEMPTION AND PREPAYMENT Section 3.01 Notices to Trustee..............................................31 Section 3.02 Notice of Redemption............................................31 Section 3.03 Effect of Notice of Redemption..................................32 Section 3.04 Deposit of Redemption Price.....................................32 Section 3.05 Optional Redemption.............................................32 i ARTICLE IV COVENANTS Section 4.01 Payment of Principal, Premium, if any, and Interest.............33 Section 4.02 Maintenance of Office or Agency.................................33 Section 4.03 Compliance Certificate..........................................34 Section 4.04 Liens...........................................................34 Section 4.05 Sale/Leaseback Transactions.....................................36 Section 4.06 Purchase of Notes Upon Change of Control........................37 Section 4.07 Additional Subsidiary Guarantors................................39 ARTICLE V SUCCESSORS Section 5.01 Consolidation, Merger and Sale of Assets........................40 Section 5.02 Successor Substituted...........................................40 ARTICLE VI DEFAULTS AND REMEDIES Section 6.01 Events of Default...............................................40 Section 6.02 Acceleration; Rescission........................................42 Section 6.03 Other Remedies..................................................43 Section 6.04 Waiver of Past Defaults.........................................43 Section 6.05 Control by Majority.............................................43 Section 6.06 Limitation on Suits.............................................44 Section 6.07 Rights of Holders of Notes to Receive Payment...................45 Section 6.08 Collection Suit by Trustee......................................45 Section 6.09 Trustee May File Proofs of Claim................................45 Section 6.10 Priorities......................................................46 Section 6.11 Undertaking for Costs...........................................46 ARTICLE VII TRUSTEE Section 7.01 Duties of Trustee...............................................46 Section 7.02 Rights of Trustee...............................................48 Section 7.03 Individual Rights of Trustee....................................48 Section 7.04 Trustee's Disclaimer............................................48 ii Section 7.05 Notice of Defaults..............................................49 Section 7.06 Reports by Trustee to Holders of the Notes......................49 Section 7.07 Compensation and Indemnity......................................49 Section 7.08 Replacement of Trustee..........................................50 Section 7.09 Successor Trustee by Merger, Etc................................51 Section 7.10 Eligibility; Disqualification...................................51 Section 7.11 Preferential Collection of Claims Against Company...............51 ARTICLE VIII DEFEASANCE AND DISCHARGE Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance........52 Section 8.02 Legal Defeasance and Discharge..................................52 Section 8.03 Covenant Defeasance.............................................52 Section 8.04 Conditions to Legal or Covenant Defeasance......................53 Section 8.05 Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions...........................54 Section 8.06 Repayment to Company............................................55 Section 8.07 Reinstatement...................................................55 Section 8.08 Discharge.......................................................56 ARTICLE IX AMENDMENT, SUPPLEMENT AND WAIVER Section 9.01 Without Consent of Holders of Notes.............................56 Section 9.02 With Consent of Holders of Notes................................57 Section 9.03 Compliance with Trust Indenture Act.............................58 Section 9.04 Revocation and Effect of Consents...............................58 Section 9.05 Notation on or Exchange of Notes................................58 Section 9.06 Trustee to Sign Amendments, Etc.................................58 ARTICLE X GUARANTEES Section 10.01 Subsidiary Guarantees...........................................59 Section 10.02 Execution and Delivery of Subsidiary Guarantee..................60 Section 10.03 Subsidiary Guarantors May Consolidate, Etc., on Certain Terms...................................................60 Section 10.04 Releases of Subsidiary Guarantees...............................61 Section 10.05 Limitation on Subsidiary Guarantor Liability; Contribution......61 iii Section 10.06 Trustee to Include Paying Agent 62 ARTICLE XI MISCELLANEOUS Section 11.01 Trust Indenture Act Controls....................................62 Section 11.02 Notices.........................................................62 Section 11.03 Communication by Holders of Notes with Other Holders of Notes........................................................63 Section 11.04 Certificate and Opinion as to Conditions Precedent..............64 Section 11.05 Statements Required in Certificate or Opinion...................64 Section 11.06 Rules by Trustee and Agents.....................................64 Section 11.07 No Personal Liability of Directors, Officers, Employees and Stockholders....................................................65 Section 11.08 Governing Law...................................................65 Section 11.09 No Adverse Interpretation of Other Agreements...................65 Section 11.10 Successors......................................................65 Section 11.11 Severability....................................................65 Section 11.12 Counterpart Originals...........................................65 Section 11.13 Table of Contents, Headings, Etc................................66 EXHIBITS EXHIBIT A Form of Note...................................................A-1 EXHIBIT B Form of Certificate of Transfer................................B-1 EXHIBIT C Form of Certificate of Exchange................................C-1 EXHIBIT D Form of Supplemental Indenture.................................D-1 iv INDENTURE dated as of July 8, 1998 among Ocean Energy, Inc., a Delaware corporation (the "Company"), the Subsidiary Guarantors (as defined herein) and Norwest Bank Minnesota, National Association, as trustee (the "Trustee"). The Company and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the 7 5/8 % Senior Notes due 2005, Series A (the "Initial Notes"), and the 7 5/8 % Senior Notes due 2005, Series B, issued in the Exchange Offer (the "Exchange Notes" and, together with the Initial Notes, the "Notes"): ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01 Definitions. "Adjusted Net Assets" of a Subsidiary Guarantor at any date shall mean the amount by which the fair value of the properties and assets of such Subsidiary Guarantor exceeds the total amount of liabilities, including, without limitation, contingent liabilities (after giving effect to all other fixed and contingent liabilities incurred or assumed on such date), but excluding liabilities under the Subsidiary Guarantee, of such Subsidiary Guarantor at such date. "Affiliate" means, with respect to any specified Person, 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 Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. For purposes of this definition, beneficial ownership of 10% or more of the voting common equity (on a fully diluted basis) or options or warrants to purchase such equity (but only if exercisable at the date of determination or within 60 days thereof) of a Person shall be deemed to constitute control of such Person. "Agent" means any Registrar, Paying Agent or co-registrar. "Applicable Procedures" means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and CEDEL that apply to such transfer or exchange. "Attributable Indebtedness," when used with respect to any Sale/Leaseback Transaction, means, as at the time of determination, the present value (discounted at a rate equivalent to the Company's current weighted average cost of funds for borrowed money as at the time of determination, compounded on a semiannual basis) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended). "Bankruptcy Code" means Title 11, U.S. Code, as amended, or any similar federal or state law for the relief of debtors. "Board of Directors" means the Board of Directors of the Company or any authorized committee of such Board, and, with respect to any Restricted Subsidiary, the Board of Directors of such Restricted Subsidiary or any authorized committee of such Board. "Business Day" means any day other than a Legal Holiday. "Capital Stock" of any Person means and includes any and all shares, interests, rights to purchase, warrants or options (whether or not currently exercisable), participations or other equivalents of or interests (however designated) in the equity (which includes, but is not limited to, common stock, preferred stock and partnership and joint venture interests) of such Person (excluding any debt securities that are convertible into, or exchangeable for such equity). "Capitalized Lease Obligation" of any Person means any obligation of such Person to pay rent or other amounts under a lease of property, real or personal, that is required to be capitalized for financial reporting purposes in accordance with GAAP; and the amount of such obligation shall be the capitalized amount thereof determined in accordance with GAAP. "CEDEL" means Cedel Bank, societe anonyme. "Change of Control" means the occurrence of any of the following events: (a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 50% of the total Voting Stock of the Company; (b) the Company is merged with or into or consolidated with another Person and, immediately after giving effect to the merger or consolidation, (A) less than 50% of the total voting power of the outstanding Voting Stock of the surviving or resulting Person is then "beneficially owned" (within the meaning of Rule 13d-3 under the Exchange Act) in the aggregate by (x) the stockholders of the Company immediately prior to such merger or consolidation, or (y) if a record date has been set to determine the stockholders of the Company entitled to vote with respect to such merger or consolidation, the stockholders of the Company as of such record date and (B) any "person" or "group" (as defined in Section 13(d)(3) or 14(d)(2) of the Exchange Act, has become the direct or indirect "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of the total voting power of the Voting Stock of the surviving or resulting Person; (c) during any consecutive two-year period, individuals who at the beginning of such period constituted the Board of Directors of the Company (together with any new directors whose election by such Board of Directors or whose nomination for election by the stockholders of the Company was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for 2 election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Company then in office; or (d) the liquidation or dissolution of the Company. "Common Equity" of any Person means and includes all Capital Stock of such Person that is generally entitled to (i) if such Person is a corporation, vote in the election of directors of such Person or (ii) if such Person is not a corporation, vote or otherwise participate in the selection of the governing body, partners, managers or others that will control the management and policies of such Person. "Company" means the Person named as the "Company" in the first paragraph of this Indenture, until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. "Consolidated Net Tangible Assets" means, as of the date of determination, Consolidated Total Assets after deducting therefrom, to the extent included therein (with respect to clauses (i) and (ii), in each case determined on a consolidated basis in accordance with GAAP (without duplication)): (i) unamortized debt discount and expenses; and (ii) goodwill, patents, trademarks, service marks, trade names, copyrights and other items properly classified as intangible assets in accordance with GAAP; and (iii) all liabilities properly classified as current liabilities in accordance with GAAP (except liabilities that, by their terms, are extendible or renewable at the option of the obligor to a date that is 12 months or more after the date on which such current liabilities are determined). "Consolidated Total Assets" means, as of any date, the total assets of the Company and its Restricted Subsidiaries that would be shown as assets on a consolidated balance sheet of the Company and its Restricted Subsidiaries as of such date prepared in accordance with GAAP (without giving effect to any ceiling limitation writedowns after the Issue Date). "Corporate Trust Office of the Trustee" shall be at the address of the Trustee specified in Section 11.02 hereof or such other address as to which the Trustee may give notice to the Company. "Currency Hedge Obligations" means, at any time as to any Person, the obligations of such Person at such time that were incurred pursuant to any foreign currency exchange agreement, option or futures contract or other similar agreement or arrangement designed to protect against or manage such Person's or any of its Subsidiaries' exposure to fluctuations in foreign currency exchange rates. "Custodian" means any receiver, trustee, assignee, liquidator, sequester or similar official under the Bankruptcy Code. "Default" means any event, act or condition that is, or after notice or passage of time or both would be, an Event of Default. 3 "Definitive Note" means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 hereof, in the form of Exhibit A hereto except that such Note shall not bear the Global Note Legend and shall not have the "Schedule of Exchanges of Interests in the Global Note" attached thereto. "Depositary" means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture. "DTC" means The Depository Trust Company. "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear system. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exchange Notes" means Notes registered under the Securities Act that are issued under Section 2.06 hereof in exchange for the Initial Notes pursuant to the Exchange Offer. "Exchange Offer" has the meaning set forth in the Registration Rights Agreement. "Exchange Offer Registration Statement" has the meaning set forth in the Registration Rights Agreement. "GAAP" means generally accepted accounting principles in the United States as in effect on the Issue Date. "Global Note Legend" means the legend set forth in Section 2.06(g)(ii) hereof, which is required to be placed on all Global Notes issued under this Indenture. "Global Notes" means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes, in the form of Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv), 2.06(d)(iv) or 2.06(f) hereof. "Guarantee" means, as applied to any obligation, (i) a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner, of any part or all of such obligation and (ii) an agreement, direct or indirect, contingent or otherwise, the practical effect of which is to assure in any way the payment or performance (or payment of damages in the event of nonperformance) of all or any part of such obligation, including, without limiting the foregoing, the payment of amounts drawn down by letters of credit. When used as a verb, "guarantee" shall have a corresponding meaning. 4 "Holder" means a Person in whose name a Note is registered. "Indebtedness" of any Person at any date means, without duplication (a) all indebtedness or obligations of such Person for borrowed money (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 obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person in respect of letters of credit or other similar instruments (or reimbursement obligations with respect thereto), other than standby letters of credit and bid or performance bonds issued by such Person in the ordinary course of business, to the extent not drawn or, to the extent drawn, if such drawing is reimbursed not later than thirty business days following demand for reimbursement, (d) all obligations of such Person to pay the deferred and unpaid purchase price of property or services, except trade payables and accrued expenses incurred in the ordinary course of business, (e) all Capitalized Lease Obligations of such Person, (f) all Indebtedness of others secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person, (g) all Indebtedness of others guaranteed by such Person to the extent of such guarantee and (h) all obligations of such Person in respect of Currency Hedge Obligations, Interest Rate Hedging Agreements and Oil and Gas Hedging Contracts. Notwithstanding anything in this definition to the contrary, production payment liabilities (whether recorded as liabilities or as deferred revenue) shall not constitute Indebtedness. "Indenture" means this Indenture, as amended or supplemented from time to time. "Indirect Participant" means a Person who holds a beneficial interest in a Global Note through a Participant. "Initial Notes" means the $125,000,000 in aggregate principal amount of the Notes initially authenticated and delivered under this Indenture on the Issue Date. "Interest Rate Heading Agreements" means, with respect to any Person, the obligations of such Person under (i) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements and (ii) other agreements or arrangements designed to protect such Person or any of its Subsidiaries against fluctuations in interest rates. "Issue Date" means the date on which the Initial Notes are first issued under this Indenture. "Legal Holiday" means, a Saturday, a Sunday or a day on which banking institutions in the City of New York or at a place of payment are authorized by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. "Letter of Transmittal" means the letter of transmittal to be prepared by the Company and sent to all Holders of the Notes for use by such Holders in connection with the Exchange Offer. 5 "Lien" means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such property or asset, whether or not filed, recorded or otherwise perfected under applicable law, but excluding agreements to refrain from granting Liens. For the purposes of this Indenture, a Person shall be deemed to own subject to a Lien any property or asset that it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, Capitalized Lease Obligation or other title retention agreement relating to such asset; provided, however, that "Lien" shall not include a trust or similar arrangement established for the purpose of defeasing any Indebtedness pursuant to the terms of the instrument evidencing or providing for the issuance of such Indebtedness. "Make-Whole Premium" means, in connection with any optional redemption of any Note, the excess, if any, of (i) the aggregate present value as of the date of such redemption of each dollar of principal of such Note being redeemed and the amount of interest (exclusive of interest accrued to the date of redemption) that would have been payable in respect of such dollar if such redemption had not been made, determined by discounting, on a semiannual basis, such principal and interest at a rate equal to the sum of the Treasury Yield (determined on the Business Day immediately preceding the date of such redemption) plus 0.20% per annum, from the respective dates on which such principal and interest would have been payable if such redemption had not been made, over (ii) the aggregate principal amount of such Note being redeemed. "Non-U.S. Person" means a person who is not a U.S. Person. "Note Custodian" means the Trustee, as custodian with respect to the Notes in global form, or any successor entity thereto. "Notes" has the meaning assigned to it in the preamble to this Indenture. "Obligations" means any principal, premium (if any), interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company or its Restricted Subsidiaries whether or not a claim for post-filing interest is allowed in such proceeding), penalties, fees, charges, expenses, indemnifications, reimbursement obligations, damages, guarantees (including the Subsidiary Guarantees) and other liabilities or amounts payable under the documentation governing any Indebtedness or in respect thereof. "Ocean Louisiana" means Ocean Energy, Inc., a Louisiana corporation. "Offering" means the offering of the Initial Notes by the Company. "Offering Memorandum" means the Offering Memorandum of the Company dated July 1, 1998 with respect to the Offering. "Officer" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any 6 Assistant Treasurer, the Controller, the Secretary, any Assistant Secretary or any Vice-President of such Person. "Officers' Certificate" means a certificate signed on behalf of the Company by two Officers of the Company, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company, that meets the requirements of Section 11.05 hereof. "Oil and Gas Hedging Contracts" means any oil and gas purchase or hedging agreement, and other agreement or arrangement, in each case, that is designed to provide protection against oil and gas price fluctuations. "Opinion of Counsel" means a written opinion from legal counsel who is reasonably acceptable to the Trustee, that meets the requirements of Section 11.05 hereof. The counsel may be an employee of or counsel to the Company or any Subsidiary Guarantor. "Pari Passu Indebtedness" means any Indebtedness of the Company, whether outstanding on the Issue Date or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall be subordinated in right of payment to the Notes. "Pari Passu Indebtedness of a Subsidiary Guarantor" means any Indebtedness of such Subsidiary Guarantor, whether outstanding on the Issue Date or thereafter created, incurred, or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall be subordinated in right of payment to the Subsidiary Guarantees. "Participant" means, with respect to DTC, Euroclear or CEDEL, a Person who has an account with DTC, Euroclear or CEDEL, respectively (and, with respect to DTC, shall include Euroclear and CEDEL). "Participating Broker-Dealer" has the meaning set forth in the Registration Rights Agreement. "Person" means any individual, corporation, partnership, limited liability company, joint venture, incorporated or unincorporated association, joint stock company, trust, unincorporated organization or government or other agency or political subdivision thereof or other entity of any kind. "Principal Property" means (i) any property owned or leased by the Company or any Restricted Subsidiary and located within the United States of America, any State thereof (including property located off the coast of the United States of America held pursuant to lease from any United 7 States Federal, State or other governmental body) or Canada that is considered by the Company to be capable of producing oil, gas or other minerals in commercial quantities, (ii) any refinery, smelter or processing or manufacturing plant owned or leased by the Company or any Restricted Subsidiary and located within the United States of America, any State thereof, or Canada, except (A) facilities related thereto employed in transportation, distribution or marketing, and (B) any refinery, smelter or processing or manufacturing plant, or portion thereof, that the Board of Directors determines is not material to the business of the Company and its Restricted Subsidiaries taken as a whole, and (iii) any Capital Stock or Indebtedness issued by a Restricted Subsidiary that owns or leases property of the types described in clauses (i) and (ii) of this definition. "Private Placement Legend" means the legend set forth in Section 2.06(g)(i) hereof to be placed on all Notes issued under this Indenture except where otherwise permitted by the provisions of this Indenture. "Project Finance Debt" means Indebtedness of an Unrestricted Subsidiary (i) as to which neither the Company nor any Restricted Subsidiary of the Company is directly or indirectly liable (by virtue of the Company's or such Restricted Subsidiary's being the primary obligor, or guarantor of (by way of guarantee, statute, common law or otherwise), or otherwise contractually liable in any respect on, such Indebtedness) and (ii) that is not secured by any assets of the Company or of any of its Restricted Subsidiaries. "Purchase Agreement" means the Purchase Agreement dated July 1, 1998 among the Company, Ocean Louisiana and the Initial Purchasers (as defined therein.) "QIB" means a "qualified institution buyer" as defined in Rule 144A. "Registration Rights Agreement" means the Registration Rights Agreement, dated as of July 8, 1998, by and among the Company, Ocean Louisiana and the other parties named on the signature pages thereof, as such agreement may be amended, modified or supplemented from time to time. "Regulation S " means Regulation S promulgated under the Securities Act. "Regulation S Global Note" means a permanent global Note in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee. "Responsible Officer," when used with respect to the Trustee, means any officer, including, without limitation, any vice president, assistant vice president, assistant treasurer or secretary within the Corporate Trust Administration of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to particular corporate trust matter, any 8 other officer or employee to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Restricted Definitive Note" means a Definitive Note bearing the Private Placement Legend. "Restricted Global Note" means a Global Note bearing the Private Placement Legend. "Restricted Period" means the 40-day distribution compliance period as set forth in Regulation S. "Restricted Subsidiary" means any Subsidiary of the Company, whether existing on or after the Issue Date, other than an Unrestricted Subsidiary. "Rule 144" means Rule 144 promulgated under the Securities Act. "Rule 144A" means Rule 144A promulgated under the Securities Act. "Rule 144A Global Note" means the Global Note in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with and registered in the name of the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 144A. "Rule 903" means Rule 903 promulgated under the Securities Act. "Rule 904" means Rule 904 promulgated under the Securities Act. "Sale/Leaseback Transaction" means any arrangement with any Person providing for the leasing by the Company or any of its Restricted Subsidiaries for a period of more than three years of any Principal Property, which property has been or is to be sold or transferred by the Company or such Restricted Subsidiary to such Person in contemplation of such leasing. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. "Shelf Registration Statement" has the meaning set forth in the Registration Rights Agreement. "Significant Subsidiary" means any Restricted Subsidiary the consolidated assets of which comprise in excess of 5% of Consolidated Net Tangible Assets (as shown in the most recent audited consolidated balance sheet of the Company and its Subsidiaries). 9 "Stated Maturity" means, when used with respect to any Note or any installment of interest thereon, the date specified in such Note as the fixed date on which the principal of such Note or such installment of interest is due and payable, and, when used with respect to any other Indebtedness or any installment of interest thereon, means the date specified in the instrument evidencing or governing such Indebtedness as the fixed date on which the principal of such Indebtedness or such installment of interest is due and payable. "Subordinated Indebtedness of a Subsidiary Guarantor" means any Indebtedness of such Subsidiary Guarantor, whether outstanding on the Issue Date or thereafter created, incurred, or assumed, if the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall be subordinated in right of payment to the Subsidiary Guarantees. "Subsidiary" means, as to any Person, any corporation, association or other business entity, in which such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries own more than 50% of the total combined voting power of all Common Equity, and any partnership or joint venture if more than a 50% interest in the profits or capital thereof is owned by such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries (unless such partnership can and does ordinarily take major business actions without the prior approval of such Person or one or more of its Restricted Subsidiaries). "Subsidiary Guarantee" means any Guarantee of the Notes by any Subsidiary Guarantor pursuant to Article 10 hereof or pursuant to the execution and delivery of a supplemental indenture substantially in the form of Exhibit D hereto. "Subsidiary Guarantor" means (i) Ocean Louisiana and (ii) each of the Company's Restricted Subsidiaries that becomes a guarantor of the Notes pursuant to Article 10.01 hereof and executes a supplemental indenture in which such Restricted Subsidiary agrees to be bound by the terms of this Indenture, in each case until such time as the Subsidiary Guarantee of such Person is released in accordance with the provisions of Article 10 hereof. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-77bbbb) as in effect on the date on which this Indenture is qualified under the TIA. "Treasury Yield" means, in connection with the calculation of any Make- Whole Premium on any Note, the yield to maturity at the time of 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) that has become publicly available at least two business days prior to the date fixed for redemption (or, if such Statistical Release is no longer published, any publicly available source of similar data)) equal to the then remaining maturity of such Note; provided that if no United States Treasury security is available with such a constant maturity and for which a closing yield is given, the Treasury Yield shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the closing yields of United States Treasury securities for which such yields 10 are given, except that if the remaining maturity of such Note 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. "Trustee" means the Person named as the "Trustee" in the first paragraph of this Indenture until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean such successor Trustee. "Unrestricted Definitive Note" means one or more Definitive Notes that do not bear and are not required to bear the Private Placement Legend. "Unrestricted Global Note" means a permanent global Note in the form of Exhibit A attached hereto that bears the Global Note Legend and that has the "Schedule of Exchanges of Interests in the Global Note" attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary, representing Notes that do not bear the Private Placement Legend. "Unrestricted Subsidiary" means (i) Havre Pipeline Company, LLC and Lion GPL, S.A., (ii) any Subsidiary acquired or organized after the Issue Date that is designated as an Unrestricted Subsidiary for purposes of this Indenture by a resolution of the Board of Directors of the Company in accordance with the requirements of this paragraph, and (iii) any Subsidiary of an Unrestricted Subsidiary, in each case until such time as such Subsidiary is designated as a Restricted Subsidiary for purposes of this Indenture by a resolution of the Board of Directors of the Company in accordance with the requirements of this paragraph. The Company may designate any Subsidiary that satisfies the requirements of this paragraph to be an Unrestricted Subsidiary by a resolution of the Board of Directors of the Company if after giving effect to such designation (a) such Subsidiary does not own or hold any Capital Stock of, or any Lien on any property of, the Company or any Restricted Subsidiary and (b) such Subsidiary is not liable, directly or indirectly, with respect to any Indebtedness other than Project Finance Debt. The Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary by a resolution of the Board of Directors of the Company if immediately after giving effect to such designation, no Default or Event of Default has occurred and is continuing. "U.S. Person" means a U.S. person as defined in Rule 902(o) under the Securities Act. "Voting Stock" means any class or classes of Capital Stock 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 any Person (irrespective of whether or not, at the time, stock of any other class or classes shall have, or might have, voting power by reason of the happening of any contingency). 11 SECTION 1.02 Other Definitions. DEFINED TERM IN SECTION "Change of Control Notice"................. 4.06 "Change of Control Offer".................. 4.06 "Change of Control Purchase Date".......... 4.06 "Change of Control Purchase Price"......... 4.06 "Covenant Defeasance"...................... 8.03 "Event of Default"......................... 6.01 "Funding Guarantor"........................ 10.05 "Legal Defeasance"......................... 8.02 "Paying Agent"............................. 2.03 "Registrar"................................ 2.03 "U.S. Government Obligations".............. 8.04 SECTION 1.03 Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "indenture securities" means the Notes; "indenture security holder" means a holder of a Note; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; and "obligor" on the Notes means the Company and any successor obligor upon the Notes. All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them. SECTION 1.04 Rules of Construction. Unless the context otherwise requires: (1) a term has the meaning assigned to it; 12 (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; (4) words in the singular include the plural, and in the plural include the singular; (5) provisions apply to successive events and transactions; and (6) references to sections of or rules under the Securities Act shall be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time. ARTICLE II THE NOTES SECTION 2.01 Form and Dating. The Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $1,000 and integral multiples thereof. The Notes may bear notations of Subsidiary Guarantees. The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling. Notes issued in global form shall be substantially in the form of Exhibit A attached hereto, including the Global Note Legend and the "Schedule of Exchanges in the Global Note" attached thereto. Notes issued in definitive form shall be substantially in the form of Exhibit A attached hereto, but without the Global Note Legend and without the "Schedule of Exchanges of Interests in the Global Note" attached thereto. Each Global Note shall represent such of the outstanding Notes as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee, the Depositary or the Note Custodian, at the 13 direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof. Notes offered and sold in reliance on Regulation S will initially be represented by one or more Regulation S Global Notes which will be registered in the name of Cede & Co., as nominee of DTC, and deposited on behalf of the purchasers of the Notes represented thereby with a custodian for DTC for credit to the respective accounts of the purchasers (or to such other accounts as they may direct) at Euroclear or CEDEL Bank. Prior to the 40th day after the later of the commencement of the Offering and the Issue Date, interests in Regulation S Global Notes may only be held through Euroclear or CEDEL. The aggregate principal amount of the Regulation S Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided. The provisions of the "Operating Procedures of the Euroclear System" and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank" and "Customer Handbook" of CEDEL shall be applicable to transfers of beneficial interests in the Regulation S Global Notes that are held by members of, or Participants, in DTC through Euroclear or CEDEL. SECTION 2.02 Execution and Authentication. Two Officers shall sign the Notes for the Company by manual or facsimile signature. If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid. A Note shall not be valid until authenticated by the manual signature of the Trustee. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture. The Trustee shall, upon a written order of the Company signed by two Officers, authenticate Notes for original issue on the Issue Date up to $125,000,000 aggregate principal amount of the Notes. The aggregate principal amount of Notes outstanding at any time may not exceed $125,000,000 except as provided in Section 2.07 hereof. Each Note shall be dated the date of its authentication. The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Company. 14 SECTION 2.03 Registrar and Paying Agent. The Company shall maintain an office or agency within the City and State of New York where Notes may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where Notes may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company may appoint one or more co- registrars and one or more additional paying agents. The term "Registrar" includes any co-registrar and the term "Paying Agent" includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company shall promptly notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent or Registrar. The Company initially appoints DTC to act as Depositary with respect to the Global Notes. The Company initially appoints the Trustee to act as the Registrar and Paying Agent and to act as Note Custodian with respect to the Global Notes. SECTION 2.04 Paying Agent to Hold Money in Trust. The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal or premium, if any, or interest on the Notes, and will notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall have no further liability for the money. If the Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Company, the Trustee shall serve as Paying Agent for the Notes. SECTION 2.05 Holder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA (S) 312(a). If the Trustee is not the Registrar, the Company shall provide to a Responsible Officer of the Trustee at least seven Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes and the Company shall otherwise comply with TIA (S) 312(a). 15 SECTION 2.06 Transfer and Exchange. (a) Transfer and Exchange of Global Notes. A Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Notes will be exchanged by the Company for Definitive Notes if (i) the Company delivers to the Trustee notice from the Depositary that it is unwilling or unable to continue to act as Depositary for the Global Notes or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Company within 90 days after the date of such notice from the Depositary or (ii) the Company in its sole discretion notifies the Trustee in writing that it elects to cause issuance of the Notes in certificated form; provided that in no event shall the Regulation S Global Note be exchanged by the Company for Definitive Notes prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903 under the Securities Act. Upon the occurrence of either of the preceding events in (i) or (ii) above, Definitive Notes shall be issued in such names as the Depositary shall instruct the Trustee. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.11 hereof. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to Section 2.07 or 2.11 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a), however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof. (b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also shall require compliance with either subparagraph (i) or (ii) below, as applicable, as well as one or more of the other following subparagraphs as applicable: (i) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend; provided, however, that prior to the expiration of the Restricted Period transfers of beneficial interests in a Regulation S Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Beneficial interests in any Unrestricted Global Note may be transferred only to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. No written orders or instructions 16 shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(i). (ii) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficial interests (other than a transfer of a beneficial interest in a Global Note to a Person who takes delivery thereof in the form of a beneficial interest in the same Global Note), the transferor of such beneficial interest must deliver to the Registrar (A) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase or (B) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (1) above; provided that in no event shall Definitive Notes be issued upon the transfer or exchange of beneficial interests in a Regulation S Global Note prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903 under the Securities Act. Upon an Exchange Offer by the Company in accordance with Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall be deemed to have been satisfied upon receipt by the Registrar of the instructions contained in the Letter of Transmittal delivered by the Holder of such beneficial interests in the Restricted Global Notes. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture, the Notes and otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(h) hereof. (iii) Transfer of Beneficial Interests to Another Restricted Global Note. A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of clause (ii) above and the Registrar receives the following: (A) if the transferee will take delivery in the form of a beneficial interest in the Rule 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in Item (1) thereof; or (B) if the transferee will take delivery in the form of the Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in Item (2) thereof. 17 (iv) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in the Unrestricted Global Note. A beneficial interest in any Restricted Global Note may be exchanged by any Holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of clause (ii) above and: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder of the beneficial interest to be transferred, in the case of an exchange, or the transferee, in the case of a transfer, is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) any such transfer is effected by a Participating Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in Item (1)(a) thereof; (2) if the Holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in Item (4) thereof; and (3) in each such case set forth in this subparagraph (D), an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are not required in order to maintain compliance with the Securities Act. If any such transfer is effected pursuant to subparagraph (B) or (D) above at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an authentication order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or 18 more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of beneficial interests transferred pursuant to subparagraph (B) or (D) above. Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note. (c) Transfer or Exchange of Beneficial Interests for Definitive Notes. (i) If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon receipt by the Registrar of the following documentation: (A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in Item (2)(a) thereof; (B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (1) thereof; (C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (2) thereof; (D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (3)(a) thereof; (E) if such beneficial interest is being transferred pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by Item (3) thereof, if applicable; (F) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (3)(b) thereof; or 19 (G) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (3)(c) thereof, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Company shall execute and the Trustee shall authenticate and make available for delivery to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall make available for delivery such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein. (ii) Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a beneficial interest in the Regulation S Global Note may not be (A) exchanged for a Definitive Note prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(c)(3)(B) under the Securities Act or (B) transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to the conditions set forth in clause (A) above or unless the transfer is pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904. (iii) Notwithstanding 2.06(c)(i) hereof, a holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the holder of such beneficial interest, in the case of an exchange, or the transferee, in the case of a transfer, is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) any such transfer is effected by a Participating Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or 20 (D) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Definitive Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit C hereto, including the certifications in Item (1)(b) thereof; (2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a Definitive Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit B hereto, including the certifications in Item (4) thereof; and (3) in each such case set forth in this subparagraph (D), an Opinion of Counsel in form reasonably acceptable to the Company, to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are not required in order to maintain compliance with the Securities Act. (iv) If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Company shall execute and the Trustee shall authenticate and make available for delivery to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall make available for delivery such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall not bear the Private Placement Legend. A beneficial interest in an Unrestricted Global Note cannot be exchanged for a Definitive Note bearing the Private Placement Legend or transferred to a Person who takes delivery thereof in the form of a Definitive Note bearing the Private Placement Legend. (d) Transfer and Exchange of Definitive Notes for Beneficial Interests. (i) If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Definitive 21 Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation: (A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in Item (2)(b) thereof; (B) if such Definitive Note is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (1) thereof; (C) if such Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (2) thereof; (D) if such Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (3)(a) thereof; (E) if such Definitive Note is being transferred to the Company or any of its subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (3)(b) thereof; or (F) if such Definitive Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (3)(c) thereof, the Trustee shall cancel the Definitive Note, increase or cause to be increased the aggregate principal amount of, in the case of subparagraph (A) above, the appropriate Restricted Global Note and, in the case of subparagraph (B) above, the 144A Global Note, and, in the case of subparagraph (C) above, the Regulation S Global Note. (ii) A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, is not (1) a broker- 22 dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) any such transfer is effected by a Participating Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in Item (1)(c) thereof; (2) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in Item (4) thereof; and (3) in each such case set forth in this subparagraph (D), an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act, that the restrictions on transfer contained herein and in the Private Placement Legend are not required in order to maintain compliance with the Securities Act, and such Definitive Notes are being exchanged or transferred in compliance with any applicable blue sky securities laws of any State of the United States. Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note. (iii) A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes. (iv) If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above at a time when an 23 Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an authentication order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of beneficial interests transferred pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above. (e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a Holder of Definitive Notes and such Holder's compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by his attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, pursuant to the provisions of this Section 2.06(e). (i) Restricted Definitive Notes may be transferred to and registered in the name of Persons who take delivery thereof if the Registrar receives the following: (A) if the transfer will be made pursuant to Rule 144A under the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in Item (1) thereof; (B) if the transfer will be made pursuant to Rule 903 or Rule 904 of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in Item (2) thereof; and (C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by Item (3) thereof, if applicable. (ii) Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; 24 (C) any such transfer is effected by a Participating Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in Item (1)(b) thereof; (2) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in Item (4) thereof; and (3) in each such case set forth in this subparagraph (D), an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act, that the restrictions on transfer contained herein and in the Private Placement Legend are not required in order to maintain compliance with the Securities Act, and such Restricted Definitive Note is being exchanged or transferred in compliance with any applicable blue sky securities laws of any State of the United States. (iii) A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request for such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof. Unrestricted Definitive Notes cannot be exchanged for or transferred to Persons who take delivery thereof in the form of a Restricted Definitive Note. (f) Exchange Offer. Upon the occurrence of the Exchange Offer in accordance with the Registration Rights Agreement, the Company shall issue and, upon receipt of (A) an authentication order in accordance with Section 2.02 hereof and (B) an Opinion of Counsel opining as to the enforceability of the Exchange Notes and the Guarantees thereof, the Trustee shall authenticate (i) one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of the beneficial interests in the Restricted Global Notes tendered for acceptance by persons that are not (x) broker-dealers, (y) Persons participating in the distribution of the Exchange Notes or (z) Persons who are affiliates (as defined in Rule 144) of the Company and accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an aggregate principal amount equal to the principal amount of the Restricted Definitive Notes accepted for exchange in the Exchange Offer. Concurrent with the issuance of such Notes, the Trustee shall cause the aggregate principal amount of the applicable Restricted Global Notes to be reduced accordingly, and 25 the Company shall execute and the Trustee shall authenticate and make available for delivery to the Persons designated by the Holders of Definitive Notes so accepted Definitive Notes in the appropriate principal amount. (g) Legends. The following legends shall appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture. (i) Private Placement Legend. (A) Except as permitted by subparagraph (B) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form: THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES (1) NOT TO OFFER, SELL, OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO (X) THE DATE THAT IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(k) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF THIS SECURITY) AND THE LAST DAY ON WHICH OCEAN ENERGY, INC. (THE "COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAWS (THE "RESALE RESTRICTION TERMINATION DATE"), EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT IS ACQUIRING SUCH SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND (2) THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY, THE TRUSTEE, THE TRANSFER AGENT AND THE REGISTRAR SHALL HAVE THE RIGHT PRIOR TO ANY 26 SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFER TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A OR (2) A NON-U.S. PERSON AND IS ACQUIRING THE NOTE IN AN "OFFSHORE TRANSACTION" PURSUANT TO RULE 904 OF REGULATION S UNDER THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. (B) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraph (b)(iv), (c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) of this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend. (ii) Global Note Legend. Each Global Note shall bear a legend in substantially the following form: "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO ARTICLE 2 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY." (h) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on 27 such Global Note, by the Trustee, the Note Custodian or the Depositary at the direction of the Trustee, to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note, by the Trustee, the Note Custodian or by the Depositary at the direction of the Trustee, to reflect such increase. (i) General Provisions Relating to Transfers and Exchanges. (i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon the Company's order or at the Registrar's request. (ii) No service charge shall be made to a holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 4.10, 4.15 and 9.05 hereof). (iii) The Registrar shall not be required to register the transfer or exchange of any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. (iv) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange. (v) The Company shall not be required (A) to issue, to register the transfer of or to exchange Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part or (C) to register the transfer of or to exchange a Note between a record date and the next succeeding Interest Payment Date. (vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary. 28 (vii) The Trustee shall authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.02 hereof. (viii) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a transfer or exchange may be submitted by facsimile. SECTION 2.07 Replacement Notes. If any mutilated Note is surrendered to the Trustee or the Company and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Company shall issue and the Trustee, upon the written order of the Company signed by two Officers of the Company, shall authenticate a replacement Note if the Trustee's requirements are met. If required by the Trustee or the Company, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Company may charge for its expenses in replacing a Note. Every replacement Note is an additional obligation of the Company and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder. SECTION 2.08 Outstanding Notes. The Notes outstanding at any time are all the Notes authenticated and delivered by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note. If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue. If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest. 29 SECTION 2.09 Treasury Notes. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded. SECTION 2.10 Temporary Notes. Until Definitive Notes are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Notes upon a written order of the Company signed by two Officers of the Company. Temporary Notes shall be substantially in the form of Definitive Notes but may have variations that the Company considers appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate Definitive Notes in exchange for temporary Notes. Holders of temporary Notes shall be entitled to all of the benefits of this Indenture. SECTION 2.11 Cancellation. The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall return such canceled Notes to the Company. The Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation. SECTION 2.12 Defaulted Interest. If the Company defaults in a payment of interest on the Notes, it shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01 hereof. The Company shall promptly notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Company shall fix or cause to be fixed each such special record date and payment date, provided that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest. At least 15 days before the special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) shall mail or cause to be mailed to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid. 30 SECTION 2.13 CUSIP Numbers. The Company in issuing the Notes may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee of any change in the "CUSIP" numbers. ARTICLE III REDEMPTION AND PREPAYMENT SECTION 3.01 Notices to Trustee. If the Company elects to redeem Notes pursuant to the optional redemption provisions of Section 3.05 hereof, it shall furnish to the Trustee, at least 30 days but not more than 60 days before such redemption date, an Officers' Certificate setting forth the matters described in Section 3.02 hereof. SECTION 3.02 Notice of Redemption. Not less than 30 and not more than 60 days before such redemption date, the Company shall mail or cause to be mailed, by first class mail, postage prepaid, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address. The notice shall identify the Notes (including CUSIP numbers) to be redeemed and shall state: (a) the redemption date; (b) the redemption price; (c) the name and address of the Paying Agent; (d) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price; (e) that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date; 31 (f) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and (g) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes. At the Company's request, the Trustee shall give the notice of redemption in the name and at the expense of the Company; provided, however, that the Company shall have delivered to the Trustee, at least 40 days prior to the redemption date, an Officers' Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph. SECTION 3.03 Effect of Notice of Redemption. Once notice of redemption is mailed in accordance with Section 3.02 hereof, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price. SECTION 3.04 Deposit of Redemption Price. No later than 10:00 a.m. New York City time on the redemption date, the Company shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption price of and accrued interest on all Notes to be redeemed on that date. The Trustee or the Paying Agent shall promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price of, and accrued interest on, all Notes to be redeemed. If the Company complies with the provisions of the preceding paragraph, on and after the redemption date, interest shall cease to accrue on the Notes called for redemption. If a Note is redeemed on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof. SECTION 3.05 Optional Redemption. (a) The Notes will be subject to redemption at any time at the option of the Company, in whole but not in part, at a redemption price equal to the sum of (a) an amount equal to 100% of the principal amount thereof and (b) the Make-Whole Premium, together with accrued 32 and unpaid interest to the date fixed for redemption. In no event will such redemption price ever be less than 100% of the principal amount of the Notes plus accrued interest to the date of redemption. (b) Any redemption pursuant to this Section 3.05 shall be made pursuant to the provisions of Sections 3.01 through 3.04 hereof. ARTICLE IV COVENANTS SECTION 4.01 Payment of Principal, Premium, if any, and Interest. The Company covenants and agrees for the benefit of the Holders of Notes that it will duly and punctually pay the principal of (and premium, if any, on) and interest on the Notes in accordance with the terms of the Notes and this Indenture. SECTION 4.02 Maintenance of Office or Agency. The Company shall maintain in the Borough of Manhattan, The City of New York, an office or agency where Notes may be presented or surrendered for payment, where Notes may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Notes, the Subsidiary Guarantees and this Indenture may be served. The office of the Trustee, maintained on behalf of the Trustee by DTC and located at 55 Water Street, New York, NY 10041, shall be such office or agency of the Company, unless the Company shall designate and maintain some other office or agency for one or more of such purposes. The Company will give prompt written notice to the Trustee of any change in the location of any such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the aforementioned office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. The Company may also from time to time designate one or more other offices or agencies (in or outside of The City of New York) where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind any such designation; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York for such purposes. The Company will give prompt written notice to the Trustee of any such designation or recission and any change in the location of any such other office or agency. 33 SECTION 4.0 Compliance Certificate. (a) The Company shall deliver to the Trustee, within 90 days after the end of each fiscal year of the Company and within 45 days after the end of each of the first, second and third quarters of each fiscal year of the Company, an Officers' Certificate stating that a review of the activities of the Company and its Restricted Subsidiaries during the preceding fiscal quarter or fiscal year, as applicable, has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of such Officer's knowledge the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions hereof (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which such Officer may have knowledge and what action the Company is taking or proposes to take with respect thereto). Such Officers' Certificate shall comply with TIA Section 314(a)(4). For purposes of this Section 4.03(a), such compliance shall be determined without regard to any period of grace or requirement of notice under this Indenture. (b) The Company and the Subsidiary Guarantors shall, so long as any of the Notes are outstanding, deliver to the Trustee, within 10 days of any Default or Event of Default or default in the performance of any covenant, agreement or condition contained in this Indenture, an Officers' Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto. SECTION 4.0 Liens. (a) The Company will not, and will not permit any Restricted Subsidiary of the Company to, issue, assume or guarantee any Indebtedness for borrowed money secured by any Lien on any Principal Property now owned or hereafter acquired by the Company or such Restricted Subsidiary without making effective provision whereby any and all Notes then or thereafter outstanding will be secured by a Lien equally and ratably with any and all other obligations thereby secured for so long as any such obligations shall be so secured. The foregoing restriction will not, however, apply to the Company and its Restricted Subsidiaries with respect to: (i) Liens existing on the Issue Date or provided for pursuant to agreements (and terms thereof) existing on the Issue Date securing Indebtedness (A) existing on the Issue Date or (B) to be incurred under agreements existing on the Issue Date; (ii) Liens on property (and all improvements, additions and accessions thereto and all proceeds thereof) securing (A) all or any portion of the cost of exploration, drilling, development, operation or maintenance of such property or the cost of acquiring, constructing, altering, improving or repairing such property or improvements used or to be used in connection with such property (including the cost of financing such actions) or 34 (B) Indebtedness incurred by the Company or any Restricted Subsidiary to provide funds for the activities set forth in clause (A) above; (iii) Liens securing Indebtedness owed by a Restricted Subsidiary to the Company or to any other Restricted Subsidiary or by the Company to any Restricted Subsidiary that is a Subsidiary Guarantor; (iv) Liens on the property of any Person existing at the time such Person becomes a Restricted Subsidiary and not incurred as a result of (or in connection with or in anticipation of) such Person becoming a Restricted Subsidiary, provided that such Liens do not extend to or cover any property of the Company or any of its Restricted Subsidiaries other than the property encumbered at the time such Person becomes a Restricted Subsidiary, all improvements, additions and accessions thereto and all proceeds thereof; (v) Liens affecting property existing at the time it becomes property of the Company or a Restricted Subsidiary, all improvements, additions and accessions thereto and all proceeds thereof; (vi) Liens on any property securing (A) Indebtedness incurred in connection with the construction, installation or financing of pollution control or abatement facilities or other forms of industrial revenue bond financing or (B) Indebtedness issued or guaranteed by the United States or any State thereof or any department, agency or instrumentality of either; (vii) Any Lien extending, renewing or replacing (or successive extensions, renewals or replacements of) any Lien of any type permitted under clauses (i) through (vi) above, provided that such Lien extends to or covers only the property that is subject to the Lien being extended, renewed or replaced and that the principal amount of Indebtedness secured thereby shall not exceed the sum of (A) the principal amount of Indebtedness so secured at the time of such extension, renewal or replacement, (B) any additional Indebtedness incurred to pay the cost of altering, improving or repairing such property and (C) any expenses of the Company and its Restricted Subsidiaries (including any premium) incurred in connection with any such extension, renewal or replacement; and (viii) Other Liens (exclusive of any Lien of any type otherwise permitted under clauses (i) through (vii) above or paragraph (b) below) securing Indebtedness for borrowed money of the Company or any of its Restricted Subsidiaries in an aggregate principal amount that, together with the aggregate amount of Attributable Indebtedness deemed to be outstanding in respect of all Sale/Leaseback Transactions entered into pursuant to Section 4.05(a) hereof (exclusive of any such Sale/Leaseback Transactions otherwise permitted under clauses (i) through (vii) above of this Section 4.04(a) or Section 4.04 (b) below), does not at the time such Indebtedness is incurred exceed 15% of Consolidated Net 35 Tangible Assets (as shown in the most recent audited consolidated balance sheet of the Company and its Restricted Subsidiaries). (b) The following types of transactions will not be prohibited or otherwise limited by the foregoing covenant: (i) the sale, granting of Liens with respect to, or other transfer of, oil, gas or other minerals in place for a period of time until, or in an amount such that, the transferee will realize therefrom a specified amount (however determined) of money or of such oil, gas or other minerals; (ii) the sale or other transfer of any other interest in property of the character commonly referred to as a production payment, overriding royalty, forward sale or similar interest; (iii) the entering into of Currency Hedge Obligations, Interest Rate Hedging Agreements or Oil and Gas Hedging Contracts but Liens securing any Indebtedness for borrowed money that is related to any Interest Rate Hedging Agreement shall not be permitted hereby unless otherwise permitted under this Section 4.04; and (iv) the granting of Liens in favor of the United States, any State thereof or any foreign government or any subdivision, department, agency, organization or instrumentality of any of the foregoing to secure partial, progress, advance or other payments or other obligations pursuant to the provisions of any contract or statute, or in favor of any other Person to secure obligations in connection with any letters of credit, bank guarantees, bonds or surety obligations required or requested by any such governmental authority in connection with any contract or statute. SECTION 4.0 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 a Restricted Subsidiary) unless either: (a) the Company or such Restricted Subsidiary would be entitled to incur Indebtedness, in a principal amount equal to the Attributable Indebtedness with respect to such Sale/Leaseback Transaction, secured by a Lien on the property subject to such Sale/Leaseback Transaction pursuant to Section 4.04 hereof without equally and ratably securing the Notes pursuant to such Section 4.04; or (b) such Sale/Leaseback Transaction occurs within 180 days from the date of acquisition of such Principal Property or the date of the completion of construction or commencement of full operations of such Principal Property, whichever is later; or (c) after the Issue Date and within a period commencing six months prior to the consummation of such Sale/Leaseback Transaction and ending six months after the consummation thereof, the Company or a Restricted Subsidiary shall have expended for property used or to be used in the business of the Company and its Restricted Subsidiaries an amount equal to all or a portion of the net proceeds from such Sale/Leaseback Transaction and the Company shall have elected to designate such amount as a credit against such Sale/Leaseback Transaction (with any such amount not being so expended and so designated to be applied as set forth in Section 4.05(d) below); or 36 (d) the Company or a Restricted Subsidiary, during the 12-month period after the effective date of such Sale/Leaseback Transaction, shall have applied to the voluntary repayment, repurchase, redemption, defeasance or other acquisition or retirement ("retirement") of Notes, any Pari Passu Indebtedness, any Pari Passu Indebtedness of a Subsidiary Guarantor or any Indebtedness of a Restricted Subsidiary that is not a Subsidiary Guarantor ("Retired Indebtedness") an amount equal to the greater of (i) the net proceeds of the sale or transfer of the property leased in such Sale/Leaseback Transaction and (ii) the fair value, as determined by the Board of Directors of the Company, of such property at the time of entering into such Sale/Leaseback Transaction (in either case reduced to reflect the remaining term of the lease and any amount expended by the Company or a Restricted Subsidiary as set forth in Section 4.05(c) above), less an amount equal to the principal amount of such Retired Indebtedness voluntarily retired within such 12-month period and not designated as a credit against any other Sale/Leaseback Transaction entered into by the Company or any Restricted Subsidiary during such period. SECTION 4.06 Purchase of Notes Upon Change of Control. (a) Upon the occurrence of a Change of Control, the Company shall be obligated to make an offer to purchase all of the then outstanding Notes (a "Change of Control Offer"), and shall purchase, on a business day (the "Change of Control Purchase Date") not more than 70 nor less than 30 days following the Change of Control, all of the then outstanding Notes validly tendered pursuant to such Change of Control Offer, at a purchase price (the "Change of Control Purchase Price") equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the Change of Control Purchase Date. (b) The Change of Control Offer is required to remain open for at least 20 Business Days and until the close of business on the Change of Control Purchase Date. The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer at the same purchase price, at the same times and otherwise in substantial compliance with the requirements 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. (c) Not later than the 30th day following any Change of Control, the Company shall give to the Trustee and each Holder of the Notes, in the manner provided in Section 11.02, a notice (the "Change of Control Notice") stating: (1) that a Change in Control has occurred and that such Holder has the right to require the Company to repurchase such Holder's Notes, or portion thereof, at the Change of Control Purchase Price; (2) any information regarding such Change of Control required to be furnished pursuant to Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder; 37 (3) the Change of Control Purchase Date which shall be on a Business Day and no earlier than 30 days nor later than 70 days from the date the Change of Control occurred; (4) that any Note, or portion thereof, not tendered or accepted for payment will continue to accrue interest; (5) that unless the Company defaults in depositing money with the Paying Agent in accordance with the last paragraph of clause (d) of this Section 4.06, or payment is otherwise prevented, any Note, or portion thereof, accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Purchase Date; and (6) the instructions a Holder must follow in order to have its Notes repurchased in accordance with paragraph (d) of this Section. (d) Holders electing to have Notes purchased will be required to surrender such Notes to the Company at the address specified in the Change of Control Notice at least five Business Days prior to the Change of Control Purchase Date. Holders will be entitled to withdraw their election if the Company receives, not later than three Business Days prior to the Change of Control Purchase Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the certificate number(s) and principal amount of the Notes delivered for purchase by the Holder as to which his election is to be withdrawn and a statement that such Holder is withdrawing his election to have such Notes purchased. Holders whose Notes are purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered. On the Change of Control Purchase Date, the Company shall (i) accept for payment Notes or portions thereof tendered pursuant to a Change of Control Offer, (ii) deposit with the Paying Agent money sufficient to pay the purchase price of all Notes or portions thereof so tendered, and (iii) deliver or cause to be delivered to the Trustee the Notes so accepted. The Paying Agent shall promptly mail or deliver to Holders of the Notes so tendered payment in an amount equal to the purchase price for the Notes, and the Company will promptly execute and the Trustee will promptly authenticate and mail or make available for delivery to such Holders a new Note equal in principal amount to any unpurchased portion of the Note which any such Holder did not surrender for purchase. The Company shall announce the results of a Change of Control Offer on or as soon as practicable after the Change of Control Purchase Date. For purposes of this Section 4.06, the Trustee will act as the Paying Agent. (e) The Company shall comply with Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable, in the event that a Change of Control occurs and the Company is required to purchase Notes as described above. 38 SECTION 4.07 Additional Subsidiary Guarantors. (a) The Company shall not permit any Restricted Subsidiary that is not a Subsidiary Guarantor to guarantee the payment of any Indebtedness of the Company unless (i) (A) such Restricted Subsidiary simultaneously executes and delivers a supplemental indenture to this Indenture substantially in the form of Exhibit D hereto, providing for a Subsidiary Guarantee of the Notes by such Restricted Subsidiary and (B) with respect to any guarantee of subordinated indebtedness by a Restricted Subsidiary, any such guarantee shall be subordinated to such Restricted Subsidiary's Subsidiary Guarantee; (ii except to the extent contemplated by Section 10.05 hereof, such Restricted Subsidiary waives and will not in any manner whatsoever claim or take the benefit or advantage of, any rights of reimbursement, indemnity or subrogation or any other rights against the Company or any other Restricted Subsidiary as a result of any payment by such Restricted Subsidiary under its Subsidiary Guarantee until such time as the obligations guaranteed thereby are paid in full; and (ii such Restricted Subsidiary shall deliver to the Trustee an Opinion of Counsel to the effect that such Subsidiary Guarantee has been duly executed and authorized and constitutes a valid, binding and enforceable obligation of such Restricted Subsidiary, except insofar as enforcement thereof may be limited by bankruptcy, insolvency or similar laws (including, without limitation, all laws relating to fraudulent transfers) and except insofar as enforcement thereof is subject to general principles of equity; provided that this paragraph (a) shall not be applicable to any guarantee of any Restricted Subsidiary that (x) existed at the time such Person became a Restricted Subsidiary of the Company and (y) was not incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary of the Company. (b) The Company may from time to time, at its option, nominate any Restricted Subsidiary as an additional Subsidiary Guarantor. Any such Restricted Subsidiary shall execute and deliver a supplemental indenture to this Indenture agreeing to guarantee the Notes. At the election of the Company, such Subsidiary Guarantee may contain such release provisions as the Company may deem appropriate (including, without limitation, release provisions of the type in paragraph (c) below). (c) Notwithstanding the foregoing paragraph (a) and the other provisions of this Indenture, any Subsidiary Guarantee incurred by a Restricted Subsidiary pursuant to this Section 4.07 may, at the election of the Company, provide by its terms that it shall be automatically and unconditionally released and discharged upon (i) any sale or other disposition of all of the Company's Capital Stock in, or all or substantially all the assets of, such Restricted Subsidiary (ii the merger of such Restricted Subsidiary into the Company or any other Restricted Subsidiary (provided the surviving Restricted Subsidiary assumes the Subsidiary Guarantee) or the liquidation and dissolution of such Restricted Subsidiary; or (ii the release or discharge of the guarantee which resulted in the creation of such Subsidiary Guarantee, except a discharge or release by or as a result of payment under such guarantee. (d) Unless specified to the contrary in a supplemental indenture hereto, any Subsidiary Guarantee incurred by a Restricted Subsidiary pursuant to this Section 4.07 shall be 39 deemed to provide for the release and discharge thereof as contemplated by Sections 4.07(c) and 10.04 hereof. ARTICLE V SUCCESSORS SECTION 5.01 Consolidation, Merger and Sale of Assets. The Company will not (A) consolidate with or merge with any Person, or (B) sell, lease, convey, transfer or otherwise dispose of all or substantially all of its assets (each an "asset disposition") to any Person, unless: (i) either (a) in the case of any such consolidation or merger, the Company is the continuing Person or (b) the Person formed by or surviving such consolidation or merger (if other than the Company), or to which such asset disposition shall be made (collectively, the "Successor"), is organized and existing under the laws of the United States, any political subdivision thereof or any State thereof or the District of Columbia, and assumes by supplemental indenture all the obligations of the Company under this Indenture and the Notes; and (ii) immediately after giving effect to such transaction, no Default or Event of Default has occurred and is continuing. SECTION 5.02 Successor Substituted. Upon any consolidation, merger or the Company asset disposition in accordance with Section 5.01 hereof, the Successor shall be substituted for the Company (so that from and after the date of such consolidation, merger or asset disposition, the provisions of this Indenture referring to the "Company" shall refer instead to the Successor and not to the Company), and may exercise every right and power of the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and, in the case of an asset disposition, the Company will thereafter be relieved of all obligations and covenants under this Indenture and the Notes. ARTICLE VI DEFAULTS AND REMEDIES SECTION 6.01 Events of Default. An "Event of Default" occurs if: (a) default in the payment of the principal of or premium, if any, on any of the Notes, whether such payment is due at maturity, upon redemption, upon repurchase pursuant to a Change of Control Offer, upon acceleration or otherwise; or 40 (b) default in the payment of any installment of interest on any of the Notes, when it becomes due and payable, and the continuance of such default for a period of 30 days; or (c) the failure to make or consummate a Change of Control Offer in accordance with the provisions of Section 4.06 hereof; or (d) the Company or any Subsidiary Guarantor shall fail to perform or observe any other term, covenant or agreement contained in the Notes, any Subsidiary Guarantee or this Indenture (other than a default specified in (a), (b) or (c) above) for a period of 60 days after written notice of such failure requiring the Company to remedy the same shall have been given (i) to the Company by the Trustee or (ii) to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Notes then outstanding; or (e) the occurrence and continuation beyond any applicable grace period of any default in the payment of the principal of (or premium, if any, on) or interest on any Indebtedness of the Company or any Restricted Subsidiary for money borrowed (other than the Notes and the Subsidiary Guarantees) when due, or any other default causing acceleration of any Indebtedness of the Company or any Restricted Subsidiary for money borrowed, provided that the aggregate principal amount of such Indebtedness shall exceed the greater of (i) $20 million and (ii) 5% of Consolidated Net Tangible Assets (as shown in the most recent audited balance sheet of the Company and its Subsidiaries); provided further that any such default is not cured or waived or any such acceleration is not rescinded, or such debt is not repaid, within a period of 20 days after a written notice thereof to the Company as provided in Section 11.02 of this Indenture; or (f) any Subsidiary Guarantee shall for any reason cease to be, or be asserted by the Company or any Subsidiary Guarantor, as applicable, not to be, in full force and effect, enforceable in accordance with its terms (except pursuant to the release of any such Subsidiary Guarantee in accordance with this Indenture); or (g) final judgments or orders rendered against the Company or any Restricted Subsidiary that are unsatisfied and that require the payment in money, either individually or in an aggregate amount, that exceed the coverage under applicable insurance policies by the greater of (i) $20 million and (ii) 5% of Consolidated Net Tangible Assets (as shown in the most recent audited balance sheet of the Company and its Subsidiaries), and either (x) commencement by any creditor of an enforcement proceeding upon such judgment (other than a judgment that is stayed by reason of pending appeal or otherwise) or (y) the occurrence of a 60-day period during which a stay of such judgment or order, by reason of pending appeal or otherwise, was not in effect; or (h) the entry of a decree or order by a court having jurisdiction in the premises (i) for relief in respect of the Company, any Subsidiary Guarantor or any Significant Subsidiary in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or (ii) adjudging the Company, any Subsidiary Guarantor or any Significant Subsidiary bankrupt or insolvent, or approving a petition seeking reorganization, 41 arrangement, adjustment or composition of the Company, any Subsidiary Guarantor or any Significant Subsidiary under any applicable federal or state law, or appointing under any such law a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company, any Subsidiary Guarantor or any Significant Subsidiary or of a substantial part of their consolidated assets, or ordering the winding up or liquidation of their affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or (i) the commencement by the Company, any Subsidiary Guarantor or any Significant Subsidiary of a voluntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or any other case or proceeding to be adjudicated bankrupt or insolvent, or the consent by the Company, any Subsidiary Guarantor or any Significant Subsidiary to the entry of a decree or order for relief in respect thereof in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by the Company, any Subsidiary Guarantor or any Significant Subsidiary of a petition or consent seeking reorganization or relief under any applicable federal or state law, or the consent by it under any such law to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or other similar official) of any of the Company, any Subsidiary Guarantor or any Significant Subsidiary or of any substantial part of their consolidated assets, or the making by it of an assignment for the benefit of creditors under any such law, or the admission by it in writing of its inability to pay its debts generally as they become due or taking of corporate action by the Company, any Subsidiary Guarantor or any Significant Subsidiary in furtherance of any such action. SECTION 6.02 Acceleration; Rescission. If any Event of Default (other than as specified in clause (h) or (i) of Section 6.01 above) occurs and is continuing, the Trustee, by written notice to the Company, or the Holders of at least 25% in aggregate principal amount of the then outstanding Notes, by written notice to the Trustee and the Company may declare the principal of, premium, if any, and accrued interest on all the then outstanding Notes due and payable immediately. Upon any such declaration, the Notes shall become due and payable immediately. Notwithstanding the foregoing, if an Event of Default specified in clause (h) or (i) of Section 6.01 hereof occurs, the principal of, premium, if any, and accrued interest on all the then outstanding Notes shall ipso facto become and be immediately due and payable without any declaration, notice or other act on the part of the Trustee or any Holder. After a declaration of acceleration has been made, but before a judgment or decree for payment of the money due has been obtained by the Trustee, the Holders of a majority in aggregate principal amount of the then outstanding Notes, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if (a) the Company or any Restricted Subsidiary has paid or deposited with the Trustee a sum sufficient to pay (i) all sums paid or advanced by the Trustee under this Indenture and the reasonable compensation, expenses, 42 disbursements and advances of the Trustee, its agents and counsel, (ii) all overdue interest on all Notes, (iii) the principal of and premium, if any, on any Notes which have become due otherwise than by such declaration of acceleration and interest thereon at the rate borne by the Notes, and (iv) to the extent that payment of such interest is lawful, interest upon overdue interest and overdue principal at the rate borne by the Notes which has become due otherwise than by such declaration of acceleration; (b) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction; and (c) all Events of Default, other than the nonpayment of principal of, premium, if any, and interest on the Notes that has become due solely by such declaration of acceleration, have been cured or waived. SECTION 6.03 Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law. SECTION 6.04 Waiver of Past Defaults. The Holders of not less than a majority in aggregate principal amount of the then outstanding Notes may on behalf of the Holders of all the Notes waive any existing Default or Event of Default hereunder and its consequences, except a Default or Event of Default (a) in respect of the payment of the principal of, or premium, if any, or interest on any Note, or (b) in respect of a covenant or provision hereof which under Article IX hereof cannot be modified or amended without the consent of the Holder of each outstanding Note affected. Upon any such waiver, such Default or Event of Default shall cease to exist for every purpose under this Indenture, but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. SECTION 6.05 Control by Majority. Subject to the provisions of Section 7.02 hereof, the Holders of a majority in aggregate principal amount of the then outstanding Notes have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or 43 power conferred on the Trustee under this Indenture. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or that the Trustee determines may be unduly prejudicial to the rights of other Holders of Notes or that may involve the Trustee in personal liability. Subject to the provisions of Section 7.01 hereof, in case an Event of Default shall occur and be continuing, the Trustee is not under any obligation to exercise any of its rights or powers hereunder at the request or direction of any of the Holders unless such Holders shall have offered to the Trustee reasonable security or indemnity. If a Default or an Event of Default occurs and is continuing and is known to the Trustee, the Trustee shall mail to each Holder notice of the Default or Event of Default within 60 days after the occurrence thereof. Except in the case of a Default or an Event of Default in payment of principal of, premium, if any, or interest on the Notes, the Trustee may withhold the notice to the Holders of such Notes if a committee of its trust officers in good faith determines that withholding the notice is in the best interests of the Holders. SECTION 6.06 Limitation on Suits. A Holder of a Note may pursue a remedy with respect to this Indenture or the Notes only if: (a) such Holder has previously given to the Trustee written notice of a continuing Event of Default; (b) the Holders of at least 25% in aggregate principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy; (c) such Holder of a Note or Holders of Notes offer and, if requested, provide to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense to be incurred in compliance with such request; (d) the Trustee does not comply with the request within 60 days after receipt of the request and the offer and, if requested, the provision of indemnity; and (e) during such 60-day period the Holders of a majority in aggregate principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with the request. A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all of such Holders. 44 SECTION 6.07 Rights of Holders of Notes to Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal, premium, if any, and interest on the Note, on or after the respective due dates expressed in the Note (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. SECTION 6.08 Collection Suit by Trustee. If an Event of Default specified in Section 6.01(a) or (b) hereof occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal of, premium, if any, and interest remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. SECTION 6.09 Trustee May File Proofs of Claim. The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Company (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. 45 SECTION 6.10 Priorities. If the Trustee collects any money pursuant to this Article, it shall pay out the money in the following order: First: to the Trustee, its agents and attorneys for amounts due under Section 7.07 hereof, including payment of all compensation, expense, and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection; Second: to Holders of Notes for amounts due and unpaid on the Notes for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any and interest, respectively; and Third: to the Company or to such party as a court of competent jurisdiction shall direct. The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 6.10. SECTION 6.11 Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the cost of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Notes. ARTICLE VII TRUSTEE SECTION 7.01 Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. 46 (b) Except during the continuance of an Event of Default: (i) The Trustee need perform only those duties that are specifically set forth in this Indenture and the TIA and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee. To the extent of any conflict between the duties of the Trustee hereunder and under the TIA, the TIA shall control. (ii) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein). (c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) this paragraph does not limit the effect of paragraph (b) of this Section; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof. (d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section. (e) No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any liability. The Trustee shall be under no obligation to exercise any of its rights and powers under this Indenture at the request of any Holders unless such Holders shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense that might be incurred by it in compliance with such request. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. 47 SECTION 7.02 Rights of Trustee. (a) The Trustee may conclusively rely upon any document (whether in its original or facsimile form) believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture. (e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company. SECTION 7.03 Individual Rights of Trustee. The Trustee, any Paying Agent, any authenticating agent or registrar in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof. SECTION 7.04 Trustee's Disclaimer. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company's use of the proceeds from the Notes or any money paid to the Company or upon the Company's direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication. 48 SECTION 7.05 Notice of Defaults. If a Default or Event of Default occurs and is continuing and is known to a Responsible Officer of the Trustee, the Trustee shall mail to Holders of Notes a notice of the Default or Event of Default within 60 days after the occurrence thereof. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest on the Notes, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the best interests of the Holders of the Notes. SECTION 7.06 Reports by Trustee to Holders of the Notes. Within 60 days after each May 15 beginning with the May 15 following the date of this Indenture, and for so long as Notes remain outstanding, the Trustee shall mail to the Holders of the Notes a brief report dated as of such reporting date that complies with TIA (S)313(a) (but if no event described in TIA (S)313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA (S)313(b)(2). The Trustee shall also transmit by mail all reports as required by TIA (S)313(c). A copy of each report at the time of its mailing to the Holders of Notes shall be mailed to the Company and filed with the SEC and each stock exchange on which the Notes are listed in accordance with TIA (S)313(d). The Company shall promptly notify the Trustee when the Notes are listed on any stock exchange or delisted therefrom. SECTION 7.07 Compensation and Indemnity. The Company shall pay to the Trustee from time to time such compensation for its acceptance of this Indenture and services hereunder as the parties shall agree from time to time. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. The Company shall indemnify each of the Trustee and any predecessor Trustee against any and all losses, liabilities, claims, damages or expenses (including taxes other than taxes based upon the income or gross receipts of the Trustee) incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Company (including this Section 7.07) and defending itself against any claim (whether asserted by the Company or any Holder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability, claim, damage or expense may be attributable to its negligence or bad faith. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its 49 obligations hereunder. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The obligations of the Company under this Section 7.07 shall survive the satisfaction and discharge of this Indenture. To secure the Company's payment obligations in this Section, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01 (h) or (i) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under the Bankruptcy Code. The Trustee shall comply with the provisions of TIA (S) 313(b)(2) to the extent applicable. SECTION 7.08 Replacement of Trustee. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section. The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of Notes of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing. The Company may remove the Trustee if: (a) the Trustee fails to comply with Section 7.10 hereof, (b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under the Bankruptcy Code; (c) a custodian or public officer takes charge of the Trustee or its property; or (d) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company. 50 If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, or the Holders of Notes of at least 10% in principal amount of the then outstanding Notes may, at the expense of the Company, petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee, after written request by any Holder of a Note who has been a Holder of a Note for at least six months, fails to comply with Section 7.10 hereof, such Holder of a Note may, at the expense of the Company, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders of the Notes. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company's obligations under Section 7.07 hereof shall continue for the benefit of the retiring Trustee. SECTION 7.09 Successor Trustee by Merger, Etc. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee. SECTION 7.10 Eligibility; Disqualification. There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition. This Indenture shall always have a Trustee who satisfies the requirements of TIA (S)310(a)(1), (2) and (5). The Trustee is subject to TIA (S)310(b). SECTION 7.11 Preferential Collection of Claims Against Company. The Trustee is subject to TIA (S)311(a), excluding any creditor relationship listed in TIA (S)311(b). A Trustee who has resigned or been removed shall be subject to TIA (S)311(a) to the extent indicated therein. 51 ARTICLE VII DEFEASANCE AND DISCHARGE SECTION 8.01 Option to Effect Legal Defeasance or Covenant Defeasance. The Company may, at the option of its Board of Directors evidenced by a resolution set forth in an Officers' Certificate, at any time, elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article VIII. SECTION 8.02 Legal Defeasance and Discharge. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Company and the Subsidiary Guarantors shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from their obligations with respect to all outstanding Notes on the date the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that the Company and the Subsidiary Guarantors shall be deemed (i) to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be "outstanding" only for the purposes of Section 8.07 hereof and the other Sections of this Indenture referred to in (a) and (b) below, and (ii) to have satisfied all their respective other obligations under such Notes and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of outstanding Notes to receive solely from the trust fund described in Section 8.04 hereof, and as more fully set forth in such Section, payments in respect of the principal of, premium, if any, and interest on such Notes when such payments are due, (b) the obligations of the Company with respect to Notes under Article 2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the respective obligations of the Company in connection therewith and (d) this Article VIII. Subject to compliance with this Article VIII, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof. SECTION 8.03 Covenant Defeasance. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Company and the Subsidiary Guarantors shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from their obligations under the covenants contained in Sections 4.03 - 4.07 hereof and Articles V and X hereof and the Defaults and Events of Default contained in Sections 6.01(c), (e), (f) and (g) hereof with respect to the outstanding Notes on and after the date the conditions set forth below are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed not to be "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) 52 in connection with such provisions but shall continue to be deemed "outstanding" for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes, the Company and the Subsidiary Guarantors may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such provision, whether directly or indirectly, by reason of any reference elsewhere herein to any such provision or by reason of any reference in any such provision to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. SECTION 8.04 Conditions to Legal or Covenant Defeasance. In order to exercise either Legal Defeasance or Covenant Defeasance: (a) the Company or any Subsidiary Guarantor shall irrevocably have deposited or caused to be deposited with the Trustee (or another trustee satisfying the requirements of Section 7.10 hereof who shall agree to comply with the provisions of this Article VIII applicable to it) as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of such Securities, (A) cash in U.S. Dollars in an amount, or (B) U.S. Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, money in an amount, or (C) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee (or other qualifying trustee) to pay and discharge, the principal of, and premium, if any, and interest on the outstanding Notes on the Stated Maturity (or redemption date, if applicable) of such principal, premium, if any, or installment of interest; provided that the Trustee shall have been irrevocably instructed in writing by the Company to apply such money or the proceeds of such U.S. Government Obligations to said payments with respect to such Notes. Before such a deposit, the Company may give to the Trustee, in accordance with Section 3.02 hereof, a notice of its election to redeem all of the outstanding Notes at a future date in accordance with Article III hereof, which notice shall be irrevocable. Such irrevocable redemption notice, if given, shall be given effect in applying the foregoing. For this purpose, "U.S. Government Obligations" means securities that are (x) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged or (y) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such U.S. Government Obligation or a specific payment of principal of or interest on any such U.S. Government Obligation held by such custodian for the account of the holder of such depository receipt, provided that (except as required 53 by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of principal of or interest on the U.S. Government Obligation evidenced by such depository receipt; (b) in the case of an election under Section 8.02 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States 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 Issue Date, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (c) in the case of an election under Section 8.03 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (d) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit); (e) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which the Company or any Subsidiary Guarantor is a party or by which it is bound, as evidenced to the Trustee in an Officers' Certificate delivered to the Trustee concurrently with such deposit; and (f) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, which taken together, state that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with. SECTION 8.05 Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions. Subject to Section 8.06 hereof, all money and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the "Trustee") pursuant to Section 8.04 or 8.08 hereof shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the 54 payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Holders of all sums due and to become due thereon in respect of principal, premium, if any, and interest but such money need not be segregated from other funds except to the extent required by law. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or U.S. Government Obligations deposited pursuant to Section 8.04 or 8.08 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes. Anything in this Article VIII to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon the request of the Company any money or U.S. Government Obligations held by it as provided in Section 8.04 or 8.08 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.04(a) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance, Covenant Defeasance or discharge. SECTION 8.06 Repayment to Company. Subject to applicable escheat and abandoned property laws, any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest on any Note and remaining unclaimed for two years after such principal, and premium, if any, or interest has become due and payable shall be paid to the Company on its request or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company. SECTION 8.07 Reinstatement. If the Trustee or Paying Agent is unable to apply any U.S. dollars or U.S. Government Obligations in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's and the Subsidiary Guarantors' obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the case may be; 55 provided, however, that, if the Company or any Subsidiary Guarantor makes any payment of principal of, premium, if any, or interest on any Note following the reinstatement of its obligations, the Company or such Subsidiary Guarantor shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent. SECTION 8.08 Discharge. This Indenture will cease to be of further effect (except for (1) the rights of Holders to receive the trust funds described in clause (i)(B) of this Section, and (2) the provisions described in Section 8.02, clauses (b), (c) and (d)) when (i) either (A) all outstanding Notes theretofore authenticated and issued (other than destroyed, lost or stolen Notes that have been replaced or paid) have been delivered to the Trustee for cancellation; or (B) all outstanding Notes not theretofore delivered to the Trustee for cancellation (x) have become due and payable, (y) will become due and payable at their Stated Maturity within one year or (z) are to be called for redemption within one year, and the Company has irrevocably deposited or caused to be deposited with the Trustee as funds (immediately available to Holders in the case of clause (x)) in trust for such purpose cash or U.S. Government Obligations, maturing as to principal and interest at such times and in such amounts as will ensure the availability of cash, or a combination thereof that will be sufficient to pay and discharge the entire indebtedness on the Notes for principal and any interest to the date of such deposit (in the case of Notes which have become due and payable), or for principal, premium, if any, and interest to the Stated Maturity or the Redemption Date, as the case may be; or (C) the Company has fulfilled such other means of discharge; (ii) the Company has paid all other sums payable by it; and (iii) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel relating to such matters. ARTICLE IX AMENDMENT, SUPPLEMENT AND WAIVER SECTION 9.01 Without Consent of Holders of Notes. Notwithstanding Section 9.02 hereof, the Company and the Trustee may amend or supplement this Indenture or the Notes without the consent of any Holder of a Note: (a) to cure any ambiguity, omission, defect or inconsistency, (b) to provide for the assumption of the obligations of the Company or any Subsidiary Guarantor under this Indenture by a Successor upon the merger, consolidation or sale or other disposition of all or substantially all of the assets of the Company or such Subsidiary Guarantor, (c) to provide for uncertificated Notes in addition to or in place of certificated Notes, (d) to provide any security for Notes, (e) to reflect the release of any Subsidiary Guarantor from its Subsidiary Guarantee, or the addition of any Subsidiary of the Company as a Subsidiary Guarantor, in the manner provided in this Indenture, (f) to comply with any requirement to effect or maintain the qualification of this Indenture under the TIA, (g) to add covenants or Events of Default, (h) to establish the form or terms of Notes or (i) to make any change that does not adversely affect the interests of any Holder of Notes in any material respect. 56 Upon the request of the Company relating to the execution of any such amended or supplemental Indenture, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Company in the execution of any amended or supplemental Indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into such amended or supplemental Indenture that affects its own rights, duties, liabilities or immunities under this Indenture or otherwise. SECTION 9.02 With Consent of Holders of Notes. Except as provided below in this Section 9.02, the Company, the Subsidiary Guarantors and the Trustee may amend or supplement this Indenture with the consent of the Holders of a majority in principal amount of the outstanding Notes affected thereby; provided, however, that no such amendment or supplement may, without the consent of the Holder of each outstanding Note affected thereby, (i) reduce the amount of Notes whose Holders must consent to an amendment, supplement or waiver, (ii) reduce the rate of or change the time for payment of interest, including default interest, on any Note; (iii) reduce the principal of or premium on or change the stated maturity of, any Note; (iv) reduce the premium, if any, payable upon redemption of any Note; (v) change the currency or currency unit of payment of principal of, premium (if any) or any interest on any Note; (vi) impair the right to institute suit for the enforcement of any payment of principal of, premium (if any) or any interest on, any Note; (vii) waive a continuing Default or Event of Default in payment of principal of, premium (if any) or any interest on, any Note; or (viii) amend, change or modify the obligation of the Company to make and consummate a Change of Control Offer in the event of a Change of Control or modify any provisions or definitions with respect thereto. Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by a Responsible Officer of the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Company in the execution of such amended or supplemental Indenture unless such amended or supplemental Indenture affects the Trustee's own rights, duties, liabilities or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental Indenture. It shall not be necessary for the consent of the Holders of Notes under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this Section becomes effective, the Company shall mail to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or 57 supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate principal amount of Notes then outstanding may waive compliance in a particular instance by the Company with any provision of this Indenture with respect to the Notes, except a continuing Default or Event of Default in the payment of the principal of, premium (if any) or interest on, any Note or in respect of a provision that under this Indenture cannot be modified or amended without the consent of the Holder of each outstanding Note. SECTION 9.03 Compliance with Trust Indenture Act. Every amendment or supplement to this Indenture or the Notes shall be set forth in a amended or supplemental Indenture that complies with the TIA as then in effect. SECTION 9.04 Revocation and Effect of Consents. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder. SECTION 9.05 Notation on or Exchange of Notes. The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company, in exchange for all Notes, may issue and the Trustee shall authenticate new Notes that reflect the amendment, supplement or waiver. Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver. SECTION 9.06 Trustee to Sign Amendments, Etc. The Trustee shall sign any amended or supplemental Indenture authorized pursuant to this Article IX if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties, liabilities or immunities under this Indenture or otherwise. In executing any amended or supplemental indenture, the Trustee shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture. 58 ARTICLE X GUARANTEES SECTION 10.01 Subsidiary Guarantees. Subject to Section 10.05 hereof, any Restricted Subsidiary that is or becomes a Subsidiary Guarantor shall, jointly and severally, unconditionally guarantee to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, the Notes and the Obligations of the Company hereunder and thereunder, that: (a) the principal of, premium, if any, and interest on the Notes will be promptly paid in full when due, subject to any applicable grace period, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal, premium, if any (to the extent permitted by law), and interest on any interest, if any, on the Notes, and all other payment Obligations of the Company to the Holders or the Trustee hereunder or thereunder will be promptly paid in full and performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other Obligations, the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, subject to any applicable grace period, whether at stated maturity, by acceleration, redemption or otherwise. Failing payment when so due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Subsidiary Guarantors will be jointly and severally obligated to pay the same immediately. An Event of Default under this Indenture or the Notes shall constitute an event of default under the Subsidiary Guarantees, and shall entitle the Holders to accelerate the Obligations of the Subsidiary Guarantors hereunder in the same manner and to the same extent as the Obligations of the Company. The Subsidiary Guarantors shall agree that their Obligations hereunder shall be unconditional, irrespective of the validity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a Subsidiary Guarantor. Each Subsidiary Guarantor shall waive diligence, presentment, demand of payment, notice of acceleration, notice of intent to accelerate, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and shall covenant that its Subsidiary Guarantee will not be discharged except by complete performance of the Obligations contained in the Notes and this Indenture. If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Subsidiary Guarantors, or any Note Custodian, Trustee, liquidator or other similar official acting in relation to either the Company or the Subsidiary Guarantors, any amount paid by the Company or any Subsidiary Guarantor to the Trustee or such Holder, the Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated 59 in full force and effect. Each Subsidiary Guarantor shall agree that it shall not be entitled to, and shall waive, any right to exercise any right of subrogation in relation to the Holders in respect of any Obligations guaranteed by the Subsidiary Guarantee, except as provided under Section 10.05 hereof. Each Subsidiary Guarantor shall further agree that, as between the Subsidiary Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the Obligations guaranteed by the Subsidiary Guarantee may be accelerated as provided in Article 6 hereof for the purposes of its Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations guaranteed thereby, and (y) in the event of any declaration of acceleration of such Obligations as provided in Article 6 hereof, such Obligations (whether or not due and payable) shall forthwith become due and payable by each Subsidiary Guarantor for the purpose of its Subsidiary Guarantee. The Subsidiary Guarantors shall have the right to seek contribution from any non-paying Subsidiary Guarantor pursuant to Section 10.05 after the Notes and the Obligations hereunder shall have been paid in full to the Holders under the Subsidiary Guarantees. Pursuant to Section 4.07 hereof, the Company may, and in certain circumstances shall be obligated to, cause Restricted Subsidiaries that are not Subsidiary Guarantors to become Subsidiary Guarantors. SECTION 10.02 Execution and Delivery of Subsidiary Guarantee. To evidence its Subsidiary Guarantee set forth in Section 10.01 hereof, each Subsidiary Guarantor shall execute and deliver this Indenture or a supplemental indenture substantially in the form of Exhibit D hereto, which supplemental indenture shall be executed on behalf of such Subsidiary Guarantor, by manual or facsimile signature, by an Officer of such Subsidiary Guarantor. Each Subsidiary Guarantor shall agree that its Subsidiary Guarantee set forth in Section 10.01 hereof shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Subsidiary Guarantee. If an officer who shall have signed this Indenture or a supplemental indenture no longer holds that office at the time the Trustee authenticates the Note on which a Subsidiary Guarantee is endorsed, the Subsidiary Guarantee shall be valid nevertheless. The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the notation of Subsidiary Guarantee set forth in this Indenture on behalf of the Subsidiary Guarantors. SECTION 10.04 Subsidiary Guarantors May Consolidate, Etc., on Certain Terms. (a) Except as set forth in Articles IV and V hereof, nothing contained in this Indenture shall prohibit a merger between a Subsidiary Guarantor and another Subsidiary Guarantor or a merger between a Subsidiary Guarantor and the Company. 60 (b) Subject to Section 10.04 hereof, no Subsidiary Guarantor may consolidate or merge with or into (whether or not such Subsidiary Guarantor is the surviving Person) another Person unless (i) 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 pursuant to a supplemental indenture, in a form reasonably satisfactory to the Trustee, under the Notes and this Indenture, and (ii) immediately after such transaction, no Default or Event of Default exists. (c) In the case of any such consolidation or merger and upon the assumption by the successor Person, by supplemental indenture, executed and delivered to the Trustee and substantially in the form of Exhibit D hereto, of the Subsidiary Guarantee, such successor Person shall succeed to and be substituted for the Subsidiary Guarantor with the same effect as if it had been named herein as a Subsidiary Guarantor. SECTION 10.04 Releases of Subsidiary Guarantees. In the event of a sale or other disposition of all or substantially all of the assets of any Subsidiary Guarantor, or a sale or other disposition of all of the Capital Stock or other ownership interests of any Subsidiary Guarantor, in each case by way of merger, consolidation or otherwise, then such Subsidiary (in the event of such a sale or other disposition of all the Capital Stock or other ownership interests of such Subsidiary) or such Subsidiary and the Person acquiring the property (in the event of such a sale or other disposition of all or substantially all of the assets of such Subsidiary) will be released and relieved of any obligations under its Subsidiary Guarantee. If, at any time while any of the Notes remain outstanding, none of the Company's then outstanding Indebtedness (other than Notes) is guaranteed by a Subsidiary Guarantor, such Subsidiary Guarantor shall be automatically and unconditionally released, discharged and relieved of any obligations under its Subsidiary Guarantee (which shall be terminated and cease to have any force and effect). In addition, pursuant to Section 4.07 hereof, any Subsidiary Guarantee incurred after the Issue Date may contain such release provisions as may be set forth in the supplemental indenture evidencing the assumption by such Subsidiary Guarantor of the Subsidiary Guarantee obligations under this Indenture. SECTION 10.05 Limitation on Subsidiary Guarantor Liability; Contribution. Each Subsidiary Guarantor, and by its acceptance hereof each Holder, hereby confirms that it is the intention of all such parties that the Guarantee by such Subsidiary Guarantor pursuant to its Subsidiary Guarantee not constitute a fraudulent transfer or fraudulent conveyance for purposes of any federal, state or foreign law. To effectuate the foregoing intention, the Holders and each Subsidiary Guarantor hereby irrevocably agree that the obligations of each Subsidiary Guarantor under its Subsidiary Guarantee shall be limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities (including, but not limited to, Guarantor Senior Indebtedness) of such Subsidiary Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Subsidiary Guarantor in respect of the obligations of such other Subsidiary Guarantor under its Subsidiary Guarantee or pursuant to this Section 10.05, 61 result in the obligations of such Subsidiary Guarantor under its Subsidiary Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal, state or foreign law. This Section 10.05 is for the benefit of the creditors of each Subsidiary Guarantor. In order to provide for just and equitable contribution among the Subsidiary Guarantors, the Subsidiary Guarantors agree, inter se, that in the event any payment or distribution is made by any Subsidiary Guarantor (a "Funding Guarantor") under its Subsidiary Guarantee, such Funding Guarantor shall be entitled to a contribution from each other Subsidiary Guarantor (if any) in a pro rata amount based on the Adjusted Net Assets of each Subsidiary Guarantor (including the Funding Guarantor) for all payments, damages and expenses incurred by that Funding Guarantor in discharging the Company's obligations with respect to the Notes or any other Subsidiary Guarantor's obligations with respect to its Subsidiary Guarantee. SECTION 10.06 Trustee to Include Paying Agent. In case at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article 10 shall in each case (unless the context shall otherwise require) be construed as extending to and including such Paying Agent within its meaning as fully and for all intents and purposes as if such Paying Agent were named in this Article 10 in place of the Trustee. ARTICLE XI MISCELLANEOUS SECTION 11.01 Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA (S)318(c), the imposed duties shall control. SECTION 11.02 Notices. Any notice or communication by the Company, and Subsidiary Guarantor or the Trustee to the others is duly given if in writing and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), telecopier or overnight air courier guaranteeing next day delivery, to the others' address: 62 If to the Company or any Subsidiary Guarantor: Ocean Energy, Inc. 1201 Louisiana, Suite 1400 Houston, Texas 77002-5603 Telecopy: (713) 653-5024 If to the Trustee: Norwest Bank Minnesota, National Association Sixth and Marquette Minneapolis, Minnesota 55479-0069 Attention: Corporate Trust Operations Telecopy: (612) 667-9825 The Company, any Subsidiary Guarantor or the Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications. All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. Any notice or communication to a Holder shall be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication shall also be so mailed to any Person described in TIA (S) 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. If the Company mails a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time. SECTION 11.03 Communication by Holders of Notes with Other Holders of Notes. Holders may communicate pursuant to TIA (S) 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA (S) 312(c). 63 SECTION 11.04 Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: (a) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 11.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and (b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 11.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied. SECTION 11.05 Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA (S) 314(a)(4)) shall comply with the provisions of TIA (S) 314(e) and shall include: (a) a statement that the Person making such certificate or opinion has read such covenant or condition; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been satisfied; and (d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied. SECTION 11.06 Rules by Trustee and Agents. The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions. 64 SECTION 11.07 No Personal Liability of Directors, Officers, Employees and Stockholders. No past, present or future director, officer, employee, incorporator, partner, member or stockholder of the Company or any Subsidiary Guarantor, or of any member, partner or stockholder of any such entity, as such, shall have any liability for any obligations of the Company under the Notes, this Indenture or the Subsidiary Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. SECTION 11.08 Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF, SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES. SECTION 11.09 No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. SECTION 11.10 Successors. All agreements of the Company and the Subsidiary Guarantors in this Indenture and the Notes shall bind their respective successors. All agreements of the Trustee in this Indenture shall bind its successors. SECTION 11.11 Severability. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 11.12 Counterpart Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 65 SECTION 11.13 Table of Contents, Headings, Etc. The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof. [Signatures Page(s) Follow] 66 SIGNATURES Dated as of July 8, 1998 ISSUER: Ocean Energy, Inc., a Delaware corporation By: --------------------------- Name: Title: SUBSIDIARY GUARANTOR: Ocean Energy, Inc., a Louisiana corporation By: --------------------------- Name: Title: TRUSTEE: Norwest Bank Of Minnesota, National Association By: --------------------------- Name: Title: EXHIBIT A (FACE OF NOTE) CUSIP No. 674812 AG7 7 5/8% Series [A/B] Senior Notes due 2005 No. _____ $__________ OCEAN ENERGY, INC. promises to pay to or registered assigns, the principal sum of Dollars on July 1, 2005. Interest Payment Dates: January 1 and July 1 Record Dates: December 15 and June 15 Ocean Energy, Inc. By: --------------------------- Name: Title: By: --------------------------- Name: Title: This is one of the Global Notes referred to in the within-mentioned Indenture: NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION as Trustee By: Dated: --------------------------------- ----------------------------- A-1 (Back of Note) 7 5/8 % Senior Notes due 2005 [Insert the Global Note Legend, if applicable, pursuant to the provisions of the Indenture] [Insert the Private Placement Legend, if applicable, pursuant to the provisions of the Indenture] Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. Interest. Ocean Energy, Inc., a Delaware corporation (the "Company"), promises to pay interest on the principal amount of this Note at 7 5/8% per annum, from July 8, 1998 until maturity. The Company will pay interest semi- annually in arrears on January 1 and July 1 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be January 1, 1999. The Company shall pay interest on overdue principal and premium, if any, from time to time on demand at the rate borne on the Notes; it shall pay interest on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. Method of Payment. The Company will pay interest on the Notes (except defaulted interest) to the Persons who are registered Holders of Notes at the close of business on the December 15 or June 15 next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest, and except that, in the case of interest payable at the maturity of the principal hereof, interest shall be paid to the Person to whom principal is paid. The Notes will be payable as to principal, premium, if any, and interest at the office or agency of the Company maintained for such purpose within the City and State of New York, or, at the option of the Company, payment of principal, premium, if any, and interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders or by wire transfer in the case of Notes held in book-entry form. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. 3. Paying Agent and Registrar. Initially, Norwest Bank of Minnesota, National Association, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity. A-2 4. Indenture. The Company issued the Notes under an Indenture dated as of July 8, 1998 (as amended and supplemented from time to time, the "Indenture") between the Company, the Subsidiary Guarantors parties thereto and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Notes are obligations of the Company limited to $125,000,000 in aggregate principal amount. 5. Optional Redemption. (a) The Notes will be subject to redemption at any time at the option of the Company, in whole but not in part, at a redemption price equal to the sum of (a) an amount equal to 100% of the principal amount thereof and (b) the Make- Whole Premium, together with accrued and unpaid interest to the date fixed for redemption. In no event will such redemption price ever be less than 100% of the principal amount of the Notes plus accrued interest to the date of redemption. (b) Any redemption pursuant to this paragraph 5 shall be made pursuant to the provisions of Article III of the Indenture. Notice of redemption will be mailed at least 30 days but not more than 60 days before a redemption date to each Holder whose Notes are to be redeemed at its registered address. On and after the redemption date, interest will cease to accrue on Notes or portions thereof called for redemption. 6. Mandatory Redemption. Except as set forth in paragraph 7 below, the Company shall not be required to make mandatory redemption payments with respect to the Notes. 7. Purchase of Notes upon Change of Control. Upon the occurrence of a Change of Control, the Company shall be obligated to make an offer to purchase all of the then outstanding Notes (a "Change of Control Offer"), and shall purchase, on a business day (the "Change of Control Purchase Date") not more than 70 nor less than 30 days following the Change of Control, all of the then outstanding Notes validly tendered pursuant to such Change of Control Offer, at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the Change of Control Purchase Date. 8. Denominations, Transfer, Exchange. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of A-3 any Note or portion of a Note selected for redemption. Also, it need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 9. Persons Deemed Owners. The registered Holder of a Note may be treated as its owner for all purposes. 10. Amendment, Supplement and Waiver. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes, and any existing default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes. Without the consent of any Holder of a Note, the Indenture or the Notes may be amended or supplemented to (a) to cure any ambiguity, omission, defect or inconsistency, (b) to provide for the assumption of the obligations of the Company or any Subsidiary Guarantor under the Indenture by a Successor upon the merger, consolidation or sale or other disposition of all or substantially all of the assets of the Company or such Subsidiary Guarantor, (c) to provide for uncertificated Notes in addition to or in place of certificated Notes, (d) to provide any security for Notes, (e) to reflect the release of any Subsidiary Guarantor from its Subsidiary Guarantee, or the addition of any Subsidiary of the Company as a Subsidiary Guarantor, in the manner provided in the Indenture, (f) to comply with any requirement to effect or maintain the qualification of the Indenture under the TIA, (g) to add covenants or Events of Default, (h) to establish the form or terms of Notes or (i) to make any change that does not adversely affect the interests of any Holder of Notes in any material respect. 11. Defaults and Remedies. Events of Default include: (a) default in the payment when due of principal of or premium, if any, on the Notes when the same becomes due and payable at maturity, upon redemption, upon repurchase pursuant to a Change of Control Offer, upon acceleration or otherwise; (b) default in the payment when due of interest on the Notes and such default continues for a period of 30 days; (c) failure by the Company to make or consummate a Change of Control Offer in accordance with the provisions of the Indenture; (d) failure by the Company or any Subsidiary Guarantor to observe or perform any other term, covenant, or agreement in the Indenture, the Notes or any Subsidiary Guarantee (other than a default specified in paragraphs (a), (b) and (c) above) for 60 days after notice to (i) the Company by the Trustee or (ii) the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Notes then outstanding; (e) default beyond any applicable grace period with respect to the principal of, premium, if any or interest on any Indebtedness of the Company or any Restricted Subsidiary for A-4 money borrowed (other than the Notes or the Subsidiary Guarantees) when due, or any other default causing acceleration of any Indebtedness of the Company or any Restricted Subsidiary for money borrowed, provided that the aggregate principal amount of such Indebtedness shall exceed the greater of (i) $20 million and (ii) 5% of Consolidated Net Tangible Assets; provided further that any such default is not cured or waived or any such acceleration is not rescinded, or such debt is not repaid, within a period of 20 days after a written notice thereof to the Company as provided in the Indenture; (f) any Subsidiary Guarantee ceases to be, or is asserted by the Company or any Subsidiary Guarantor not to be, in effect (except in accordance with the Indenture); (g) final judgments or orders rendered against the Company or any Restricted Subsidiary that are unsatisfied and that require the payment in money, either individually or in an aggregate amount, that exceed the coverage under applicable insurance policies by the greater of (i) $20 million and (ii) 5% of Consolidated Net Tangible Assets (as shown in the most recent audited balance sheet of the Company and its Subsidiaries), and either (x) commencement by any creditor of an enforcement proceeding upon such judgment (other than a judgment that is stayed by reason of pending appeal or otherwise) or (y) the occurrence of a 60-day period during which a stay of such judgment or order, by reason of pending appeal or otherwise, was not in effect; (h) the entry of a decree or order by a court having jurisdiction in the premises (i) for relief in respect of the Company, any Subsidiary Guarantor or any Significant Subsidiary in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or (ii) adjudging the Company, any Subsidiary Guarantor or any Significant Subsidiary bankrupt or insolvent, or approving a petition seeking reorganization, arrangement, adjustment or composition of the Company, any Subsidiary Guarantor or any Significant Subsidiary under any applicable federal or state law, or appointing under any such law a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company, any Subsidiary Guarantor or any Significant Subsidiary or of a substantial part of their consolidated assets, or ordering the winding up or liquidation of their affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or (i) the commencement by the Company, any Subsidiary Guarantor or any Significant Subsidiary of a voluntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by the Company, any Subsidiary Guarantor or any Significant Subsidiary to the entry of a decree or order for relief in respect thereof in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by the Company, any Subsidiary Guarantor or any Significant Subsidiary of a petition or consent seeking reorganization or relief under any applicable federal or state law, or the consent by it under any such law to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or A-5 sequestrator (or other similar official) of any of the Company, any Subsidiary Guarantor or any Significant Subsidiary or of any substantial part of their consolidated assets, or the making by it of an assignment for the benefit of creditors under any such law, or the admission by it in writing of its inability to pay its debts generally as they become due or taking of corporate action by the Company, any Subsidiary Guarantor or any Significant Subsidiary in furtherance of any such action. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal and interest on the Notes or to enforce the performance of any provision of the Notes or the Indenture. 12. Trustee Dealings with Company. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee. 13. No Recourse Against Others. A director, officer, employee, incorporator, partner, member or stockholder, of the Company or any Subsidiary of the Company or any Subsidiary Guarantor, as such, shall not have any liability for any obligations of the Company under the Notes, the Subsidiary Guarantees or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 14. Authentication. This Note shall not be valid until authenticated by the manual signature of a Responsible Officer of the Trustee or an authenticating agent. 15. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 16. Additional Rights of Holders of Restricted Global Notes and Restricted Definitive Notes. In addition to the rights provided to Holders of Notes under the Indenture, Holders of Restricted Global Notes and Restricted Definitive Notes shall have all the rights set forth in the Registration Rights Agreement dated as of June 8, 1998, between the Company and the parties named on the signature pages thereof, as amended from time to time (the "Registration Rights Agreement"). 17. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. A-6 The Company will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to: Ocean Energy, Inc. 1201 Louisiana, Suite 1400 Houston, Texas 77002-5603 Telecopy: (713) 653-5024 A-7 IF THE NOTES ARE GUARANTEED BY ONE OR MORE SUBSIDIARY GUARANTORS, THE FOLLOWING MAY BE INSERTED IN THE NOTES: NOTATION OF SUBSIDIARY GUARANTEE Subject to the limitations set forth in the Indenture, the Subsidiary Guarantors (as defined in the Indenture) have, jointly and severally, unconditionally guaranteed the Notes to the extent set forth in the Indenture. Capitalized terms used herein shall have the meanings assigned to them in the Indenture unless otherwise indicated. The obligations of each Subsidiary Guarantor are limited as set forth in the Indenture. Any Subsidiary Guarantor may be released from its Subsidiary Guarantee upon the terms and subject to the conditions provided in the Indenture. The Subsidiary Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Note upon which this Subsidiary Guarantee is noted shall have been executed by the Trustee under the Indenture by the manual signature of one of its authorized officers. [SUBSIDIARY GUARANTOR] By: --------------------------- Name: ------------------------- Title: ------------------------ A-8 ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to - -------------------------------------------------------------------------------- (Insert assignee's soc. sec. or tax I.D. no.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint______________________________________________________ to transfer this Note on the books of the Company. The agent may substitute another to act for him. Date: Your Signature:______________________________________________________________ (Sign exactly as your name appears on the face of this Note) SIGNATURE GUARANTEE --------------------------------------------- Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A-9 OPINION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 4.06 of the Indenture, check the following box: [_] If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.06 of the Indenture, state the amount you elect to have purchased: $__________ Date: Your Signature:____________________________________________________________ (Sign exactly as your name appears on the face of the Note) Tax Identification No.:____________________________________________________ SIGNATURE GUARANTEE ---------------------------------------------- Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A-10 SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE/*/ The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:
PRINCIPAL AMOUNT SIGNATURE OF AMOUNT OF AMOUNT OF OF THIS GLOBAL NOTE AUTHORIZED DECREASE IN INCREASE IN FOLLOWING SUCH SIGNATORY OF PRINCIPAL AMOUNT PRINCIPAL AMOUNT DECREASE (OR TRUSTEE OR NOTE DATE OF EXCHANGE OF THIS GLOBAL NOTE OF THIS GLOBAL NOTE INCREASE) CUSTODIAN ---------------- ------------------- ------------------- ------------------- ---------------
- ----------------- /*/This should be included only if the Note is issued in global form. A-11 EXHIBIT B FORM OF CERTIFICATE OF TRANSFER Ocean Energy, Inc. 1201 Louisiana, Suite 1400 Houston, Texas 77002-5603 Attention: Robert K. Reeves, Executive Vice President Norwest Bank Minnesota, National Association Sixth and Marquette Minneapolis, Minnesota 55479-0069 Attention: Corporate Trust Operations Re: 7 5/8% Senior Notes due 2005 Reference is hereby made to the Indenture, dated as of July 8, 1998 (as amended and supplemented from time to time, (the "Indenture"), between Ocean Energy, Inc., as issuer (the "Company"), the Subsidiary Guarantors parties thereto and Norwest Bank Minnesota, National Association, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. ____________________, (the "Transferor") owns and proposes to transfer the Note[s] or interest in such in such Note[s] specified in Annex A hereto, in the principal amount of $__________ in such Note[s] or interests (the "Transfer"), to ____________________ (the "Transferee"), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that: [CHECK ALL THAT APPLY] 1. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believed and believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement B-1 Legend printed on the 144A Global Note and/or the Definitive Note and in the Indenture and the Securities Act. 2. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE REGULATION S GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act and (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Global Note and/or the Definitive Note and in the Indenture and the Securities Act. 3. [_] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A DEFINITIVE NOTE PURSUANT TO ANY PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one): (a) [_] such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act; or (b) [_] such Transfer is being effected to the Company or a subsidiary thereof; or (c) [_] such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act. B-2 4. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE. (a) [_] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture. (b) [_] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture. (c) [_] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture. This certificate and the statements contained herein are made for your benefit and the benefit of the Company. ____________________________________ [Insert Name of Transferor] By: --------------------------------- Name: Title: Dated: B-3 ANNEX A TO CERTIFICATE OF TRANSFER 1. The Transferor owns and proposes to transfer the following: [CHECK ONE OF (A) OR (B)] (a) [_] a beneficial interest in the: (i) [_] 144A Global Note (CUSIP __________), or (ii) [_] Regulation S Global Note (CUSIP _________); or (b) [_] a Restricted Definitive Note. 2. After the Transfer the Transferee will hold: [CHECK ONE] (a) [_] a beneficial interest in the: (i) [_] 144A Global Note (CUSIP __________), or (ii) [_] Regulation S Global Note (CUSIP __________), or (iii) [_] Unrestricted Global Note (CUSIP __________); or (b) [_] a Restricted Definitive Note. (c) [_] an Unrestricted Definitive Note, in accordance with the terms of the Indenture. B-4 EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE Ocean Energy, Inc. 1201 Louisiana, Suite 1400 Houston, Texas 77002-5603 Attention: Robert K. Reeves, Executive Vice President Norwest Bank of Minnesota, National Association Sixth and Marquette Minneapolis, Minnesota 55479-0069 Attention: Corporate Trust Operations Re: 7 5/8% Senior Notes due 2005 (CUSIP No. 674812 AG 7) Reference is hereby made to the Indenture, dated as of July 8, 1998 (the "Indenture"), between Ocean Energy, Inc., as issuer (the "Company"), the Subsidiary Guarantors named therein and Norwest Bank Minnesota, National Association, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. ____________________ (the "Owner") owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $__________ in such Note[s] or interests (the "Exchange"). In connection with the Exchange, the Owner hereby certifies that: 1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL NOTE (a) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an C-1 Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (b) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (c) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Owner's Exchange of a Restricted Definitive Note for a beneficiary interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (d) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. 2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES (a) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner's own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the C-2 restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act. (b) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner's Restricted Definitive Note for a beneficial interest in the [CHECK ONE] [_] 144A Global Note [_] Regulation S Global Note with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act. This certificate and the statements contained herein are made for your benefit and the benefit of the Company. [Insert Name of Owner] By: -------------------------- Name: Title: Dated:_______________, _____ C-3 EXHIBIT D FORM OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of _______________, _____ among Ocean Energy, Inc., a Delaware corporation (the "Company"), [Existing Subsidiary Guarantors, if any,] [Subsidiary Guarantor] (the "New Subsidiary Guarantor"), and Norwest Bank Minnesota, National Association, as trustee under the indenture referred to below (the "Trustee"). Capitalized terms used herein and not defined herein shall have the meaning ascribed to them in the Indenture (as defined below). W I T N E S E T H WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture (as amended and supplemented from time to time, the "Indenture"), dated as of July 8, 1998, providing for the issuance of an aggregate principal amount of $125,000,000 of 7 5/8% Senior Notes due 2005 (the "Notes"); WHEREAS, Section 4.07 and Article X of the Indenture provide that under certain circumstances the Company may or must cause certain of its subsidiaries to execute and deliver to the Trustee a supplemental indenture pursuant to which such subsidiaries shall unconditionally guarantee all of the Company's Obligations under the Notes pursuant to a Subsidiary Guarantee on the terms and conditions set forth herein; and WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Company, the New Subsidiary Guarantor and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: 1. Agreement to Guarantee. Subject to Section 10.05 of the Indenture, the New Subsidiary Guarantor hereby, jointly and severally with all other Subsidiary Guarantors, unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, the Notes and the Obligations of the Company under the Notes or under the Indenture, that: (a) the principal of, premium, if any, and interest on the Notes will be promptly paid in full when due, subject to any applicable grace period, whether at maturity, by acceleration, redemption or otherwise, and interest on overdue principal, premium, if any (to the extent permitted by law), and interest on any interest, if any, on the Notes and all other payment Obligations of the Company to the Holders or the Trustee under the Indenture or under the Notes D-1 will be promptly paid in full and performed, all in accordance with the terms thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other Obligations, the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, subject to any applicable grace period, whether at stated maturity, by acceleration, redemption or otherwise. Failing payment when so due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Subsidiary Guarantors will be jointly and severally obligated to pay the same immediately. The obligations of the Subsidiary Guarantors to the Holders and to the Trustee pursuant to this Supplemental Indenture and the Indenture are expressly set forth in Article X of the Indenture, and reference is hereby made to such Indenture for the precise terms of this Subsidiary Guarantee. The terms of Article X of the Indenture are incorporated herein by reference. This Subsidiary Guarantee is subject to release as and to the extent provided in Sections 4.07(c), 4.07(d) and 10.04 of the Indenture. 2. No Recourse Against Others. No past, present or future director, officer, employee, incorporator, partner, member, shareholder or agent of the New Subsidiary Guarantor, as such, shall have any liability for any obligations of the Company or any Subsidiary Guarantor under the Notes, any Subsidiary Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. 3. New York Law to Govern. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE. 4. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 5. Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof. 6. The Trustee. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the correctness of the recitals of fact contained herein, all of which recitals are made solely by the New Subsidiary Guarantor. IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written. Dated: D-2 OCEAN ENERGY, INC., a Delaware corporation By: ------------------------------ Name: Title: [NEW SUBSIDIARY GUARANTOR] By: ------------------------------ Name: Title: [EXISTING SUBSIDIARY GUARANTORS, IF ANY] By: ------------------------------ Name: Title: NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee By: ------------------------------ Name: Title: D-3 EX-10.24 10 07/08/1998 INDENTURE - NORWEST BANK Exhibit 10.24 ================================================================================ Ocean Energy, Inc. And Subsidiary Guarantors Parties Hereto 8 1/4% SENIOR NOTES DUE 2018 INDENTURE Dated as of July 8, 1998 Norwest Bank Minnesota, National Association Trustee ================================================================================ CROSS-REFERENCE TABLE/1/ Trust Indenture Act Section Indenture Section 310 (a)(1).......................................................... 7.10 (a)(2).......................................................... 7.10 (a)(3).......................................................... N.A. (a)(4).......................................................... N.A. (a)(5).......................................................... 7.10 (b)............................................................. 7.10 (c)............................................................. N.A. 311 (a)............................................................. 7.11 (b)............................................................. 7.11 (c)............................................................. N.A. 312 (a)............................................................. 2.05 (b)............................................................. 11.03 (c)............................................................. 11.03 313 (a)............................................................. 7.06 (b)(2)..................................................... 7.06, 7.07 (c)....................................................... 7.06, 11.02 (d)............................................................. 7.06 314 (a)............................................................. 4.03 (a)(4).......................................................... 11.04 (c)(1).......................................................... N.A. (c)(2).......................................................... N.A. (c)(3).......................................................... N.A. (e)............................................................. 11.05 (f)............................................................. N.A. 315 (a)............................................................. 7.01 (b)............................................................. 7.05 (c)............................................................. 7.01 (d)............................................................. 7.01 (e)............................................................. 6.11 316 (a)(last sentence).............................................. 2.09 (a)(1)(A)....................................................... 6.05 (a)(1)(B)....................................................... 6.04 (a)(2).......................................................... N.A. (b)............................................................. 6.07 (c)............................................................. 2.12 317 (a)(1).......................................................... 6.09 (a)(2).......................................................... 6.09 (b)............................................................. 2.04 318 (a)............................................................. 11.01 (b)............................................................. 11.01 (c)............................................................. 11.01 N.A. means not applicable. - ----------------------------- /1/ This Cross-Reference Table is not part of this Indenture. TABLE OF CONTENTS ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01 Definitions................................................. 1 Section 1.02 Other Definitions........................................... 12 Section 1.03 Incorporation by Reference of Trust Indenture Act........... 12 Section 1.04 Rules of Construction....................................... 12 ARTICLE II THE NOTES Section 2.01 Form and Dating............................................. 13 Section 2.02 Execution and Authentication................................ 14 Section 2.03 Registrar and Paying Agent.................................. 15 Section 2.04 Paying Agent to Hold Money in Trust......................... 15 Section 2.05 Holder Lists................................................ 15 Section 2.06 Transfer and Exchange....................................... 16 Section 2.07 Replacement Notes........................................... 29 Section 2.08 Outstanding Notes........................................... 29 Section 2.09 Treasury Notes.............................................. 30 Section 2.10 Temporary Notes............................................. 30 Section 2.11 Cancellation................................................ 30 Section 2.12 Defaulted Interest.......................................... 30 Section 2.13 CUSIP Numbers............................................... 31 ARTICLE III REDEMPTION AND PREPAYMENT Section 3.01 Notices to Trustee.......................................... 31 Section 3.02 Notice of Redemption........................................ 31 Section 3.03 Effect of Notice of Redemption.............................. 32 Section 3.04 Deposit of Redemption Price................................. 32 Section 3.05 Optional Redemption......................................... 32 i ARTICLE IV COVENANTS Section 4.01 Payment of Principal, Premium, if any, and Interest......... 33 Section 4.02 Maintenance of Office or Agency............................. 33 Section 4.03 Compliance Certificate...................................... 34 Section 4.04 Liens....................................................... 34 Section 4.05 Sale/Leaseback Transactions................................. 36 Section 4.06 Purchase of Notes Upon Change of Control.................... 37 Section 4.07 Additional Subsidiary Guarantors............................ 39 ARTICLE V SUCCESSORS Section 5.01 Consolidation, Merger and Sale of Assets.................... 40 Section 5.02 Successor Substituted....................................... 40 ARTICLE VI DEFAULTS AND REMEDIES Section 6.01 Events of Default........................................... 40 Section 6.02 Acceleration; Rescission.................................... 42 Section 6.03 Other Remedies.............................................. 43 Section 6.04 Waiver of Past Defaults..................................... 43 Section 6.05 Control by Majority......................................... 43 Section 6.06 Limitation on Suits......................................... 44 Section 6.07 Rights of Holders of Notes to Receive Payment............... 45 Section 6.08 Collection Suit by Trustee.................................. 45 Section 6.09 Trustee May File Proofs of Claim............................ 45 Section 6.10 Priorities.................................................. 46 Section 6.11 Undertaking for Costs....................................... 46 ARTICLE VII TRUSTEE Section 7.01 Duties of Trustee........................................... 46 Section 7.02 Rights of Trustee........................................... 48 Section 7.03 Individual Rights of Trustee................................ 48 Section 7.04 Trustee's Disclaimer........................................ 48 ii Section 7.05 Notice of Defaults.......................................... 49 Section 7.06 Reports by Trustee to Holders of the Notes.................. 49 Section 7.07 Compensation and Indemnity.................................. 49 Section 7.08 Replacement of Trustee...................................... 50 Section 7.09 Successor Trustee by Merger, Etc............................ 51 Section 7.10 Eligibility; Disqualification............................... 51 Section 7.11 Preferential Collection of Claims Against Company........... 51 ARTICLE VIII DEFEASANCE AND DISCHARGE Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance.... 52 Section 8.02 Legal Defeasance and Discharge.............................. 52 Section 8.03 Covenant Defeasance......................................... 52 Section 8.04 Conditions to Legal or Covenant Defeasance.................. 53 Section 8.05 Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions....................... 54 Section 8.06 Repayment to Company........................................ 55 Section 8.07 Reinstatement............................................... 55 Section 8.08 Discharge................................................... 56 ARTICLE IX AMENDMENT, SUPPLEMENT AND WAIVER Section 9.01 Without Consent of Holders of Notes......................... 56 Section 9.02 With Consent of Holders of Notes............................ 57 Section 9.03 Compliance with Trust Indenture Act......................... 58 Section 9.04 Revocation and Effect of Consents........................... 58 Section 9.05 Notation on or Exchange of Notes............................ 58 Section 9.06 Trustee to Sign Amendments, Etc............................. 58 ARTICLE X GUARANTEES Section 10.01 Subsidiary Guarantees....................................... 59 Section 10.02 Execution and Delivery of Subsidiary Guarantee.............. 60 Section 10.03 Subsidiary Guarantors May Consolidate, Etc., on Certain Terms....................................................... 60 Section 10.04 Releases of Subsidiary Guarantees........................... 61 Section 10.05 Limitation on Subsidiary Guarantor Liability; Contribution.. 61 iii Section 10.06 Trustee to Include Paying Agent............................. 62 ARTICLE XI MISCELLANEOUS Section 11.01 Trust Indenture Act Controls................................ 62 Section 11.02 Notices..................................................... 62 Section 11.03 Communication by Holders of Notes with Other Holders of Notes....................................................... 63 Section 11.04 Certificate and Opinion as to Conditions Precedent.......... 64 Section 11.05 Statements Required in Certificate or Opinion............... 64 Section 11.06 Rules by Trustee and Agents................................. 64 Section 11.07 No Personal Liability of Directors, Officers, Employees and Stockholders............................................ 65 Section 11.08 Governing Law............................................... 65 Section 11.09 No Adverse Interpretation of Other Agreements............... 65 Section 11.10 Successors.................................................. 65 Section 11.11 Severability................................................ 65 Section 11.12 Counterpart Originals....................................... 65 Section 11.13 Table of Contents, Headings, Etc............................ 66 EXHIBITS - -------- EXHIBIT A Form of Note................................................ A-1 EXHIBIT B Form of Certificate of Transfer............................. B-1 EXHIBIT C Form of Certificate of Exchange............................. C-1 EXHIBIT D Form of Supplemental Indenture.............................. D-1 iv INDENTURE dated as of July 8, 1998 among Ocean Energy, Inc., a Delaware corporation (the "Company"), the Subsidiary Guarantors (as defined herein) and Norwest Bank Minnesota, National Association, as trustee (the "Trustee"). The Company and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the 8 1/4% Senior Notes due 2018, Series A (the "Initial Notes"), and the 8 1/4% Senior Notes due 2018, Series B, issued in the Exchange Offer (the "Exchange Notes" and, together with the Initial Notes, the "Notes"): ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01 Definitions. "Adjusted Net Assets" of a Subsidiary Guarantor at any date shall mean the amount by which the fair value of the properties and assets of such Subsidiary Guarantor exceeds the total amount of liabilities, including, without limitation, contingent liabilities (after giving effect to all other fixed and contingent liabilities incurred or assumed on such date), but excluding liabilities under the Subsidiary Guarantee, of such Subsidiary Guarantor at such date. "Affiliate" means, with respect to any specified Person, 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 Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. For purposes of this definition, beneficial ownership of 10% or more of the voting common equity (on a fully diluted basis) or options or warrants to purchase such equity (but only if exercisable at the date of determination or within 60 days thereof) of a Person shall be deemed to constitute control of such Person. "Agent" means any Registrar, Paying Agent or co-registrar. "Applicable Procedures" means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and CEDEL that apply to such transfer or exchange. "Attributable Indebtedness," when used with respect to any Sale/Leaseback Transaction, means, as at the time of determination, the present value (discounted at a rate equivalent to the Company's current weighted average cost of funds for borrowed money as at the time of determination, compounded on a semiannual basis) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended). "Bankruptcy Code" means Title 11, U.S. Code, as amended, or any similar federal or state law for the relief of debtors. "Board of Directors" means the Board of Directors of the Company or any authorized committee of such Board, and, with respect to any Restricted Subsidiary, the Board of Directors of such Restricted Subsidiary or any authorized committee of such Board. "Business Day" means any day other than a Legal Holiday. "Capital Stock" of any Person means and includes any and all shares, interests, rights to purchase, warrants or options (whether or not currently exercisable), participations or other equivalents of or interests (however designated) in the equity (which includes, but is not limited to, common stock, preferred stock and partnership and joint venture interests) of such Person (excluding any debt securities that are convertible into, or exchangeable for such equity). "Capitalized Lease Obligation" of any Person means any obligation of such Person to pay rent or other amounts under a lease of property, real or personal, that is required to be capitalized for financial reporting purposes in accordance with GAAP; and the amount of such obligation shall be the capitalized amount thereof determined in accordance with GAAP. "CEDEL" means Cedel Bank, societe anonyme. "Change of Control" means the occurrence of any of the following events: (a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 50% of the total Voting Stock of the Company; (b) the Company is merged with or into or consolidated with another Person and, immediately after giving effect to the merger or consolidation, (A) less than 50% of the total voting power of the outstanding Voting Stock of the surviving or resulting Person is then "beneficially owned" (within the meaning of Rule 13d-3 under the Exchange Act) in the aggregate by (x) the stockholders of the Company immediately prior to such merger or consolidation, or (y) if a record date has been set to determine the stockholders of the Company entitled to vote with respect to such merger or consolidation, the stockholders of the Company as of such record date and (B) any "person" or "group" (as defined in Section 13(d)(3) or 14(d)(2) of the Exchange Act, has become the direct or indirect "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of the total voting power of the Voting Stock of the surviving or resulting Person; (c) during any consecutive two-year period, individuals who at the beginning of such period constituted the Board of Directors of the Company (together with any new directors whose election by such Board of Directors or whose nomination for election by the stockholders of the Company was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for 2 election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Company then in office; or (d) the liquidation or dissolution of the Company. "Common Equity" of any Person means and includes all Capital Stock of such Person that is generally entitled to (i) if such Person is a corporation, vote in the election of directors of such Person or (ii) if such Person is not a corporation, vote or otherwise participate in the selection of the governing body, partners, managers or others that will control the management and policies of such Person. "Company" means the Person named as the "Company" in the first paragraph of this Indenture, until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. "Consolidated Net Tangible Assets" means, as of the date of determination, Consolidated Total Assets after deducting therefrom, to the extent included therein (with respect to clauses (i) and (ii), in each case determined on a consolidated basis in accordance with GAAP (without duplication)): (i) unamortized debt discount and expenses; and (ii) goodwill, patents, trademarks, service marks, trade names, copyrights and other items properly classified as intangible assets in accordance with GAAP; and (iii) all liabilities properly classified as current liabilities in accordance with GAAP (except liabilities that, by their terms, are extendible or renewable at the option of the obligor to a date that is 12 months or more after the date on which such current liabilities are determined). "Consolidated Total Assets" means, as of any date, the total assets of the Company and its Restricted Subsidiaries that would be shown as assets on a consolidated balance sheet of the Company and its Restricted Subsidiaries as of such date prepared in accordance with GAAP (without giving effect to any ceiling limitation writedowns after the Issue Date). "Corporate Trust Office of the Trustee" shall be at the address of the Trustee specified in Section 11.02 hereof or such other address as to which the Trustee may give notice to the Company. "Currency Hedge Obligations" means, at any time as to any Person, the obligations of such Person at such time that were incurred pursuant to any foreign currency exchange agreement, option or futures contract or other similar agreement or arrangement designed to protect against or manage such Person's or any of its Subsidiaries' exposure to fluctuations in foreign currency exchange rates. "Custodian" means any receiver, trustee, assignee, liquidator, sequester or similar official under the Bankruptcy Code. "Default" means any event, act or condition that is, or after notice or passage of time or both would be, an Event of Default. 3 "Definitive Note" means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 hereof, in the form of Exhibit A hereto except that such Note shall not bear the Global Note Legend and shall not have the "Schedule of Exchanges of Interests in the Global Note" attached thereto. "Depositary" means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture. "DTC" means The Depository Trust Company. "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear system. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exchange Notes" means Notes registered under the Securities Act that are issued under Section 2.06 hereof in exchange for the Initial Notes pursuant to the Exchange Offer. "Exchange Offer" has the meaning set forth in the Registration Rights Agreement. "Exchange Offer Registration Statement" has the meaning set forth in the Registration Rights Agreement. "GAAP" means generally accepted accounting principles in the United States as in effect on the Issue Date. "Global Note Legend" means the legend set forth in Section 2.06(g)(ii) hereof, which is required to be placed on all Global Notes issued under this Indenture. "Global Notes" means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes, in the form of Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv), 2.06(d)(iv) or 2.06(f) hereof. "Guarantee" means, as applied to any obligation, (i) a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner, of any part or all of such obligation and (ii) an agreement, direct or indirect, contingent or otherwise, the practical effect of which is to assure in any way the payment or performance (or payment of damages in the event of nonperformance) of all or any part of such obligation, including, without limiting the foregoing, the payment of amounts drawn down by letters of credit. When used as a verb, "guarantee" shall have a corresponding meaning. 4 "Holder" means a Person in whose name a Note is registered. "Indebtedness" of any Person at any date means, without duplication (a) all indebtedness or obligations of such Person for borrowed money (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 obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person in respect of letters of credit or other similar instruments (or reimbursement obligations with respect thereto), other than standby letters of credit and bid or performance bonds issued by such Person in the ordinary course of business, to the extent not drawn or, to the extent drawn, if such drawing is reimbursed not later than thirty business days following demand for reimbursement, (d) all obligations of such Person to pay the deferred and unpaid purchase price of property or services, except trade payables and accrued expenses incurred in the ordinary course of business, (e) all Capitalized Lease Obligations of such Person, (f) all Indebtedness of others secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person, (g) all Indebtedness of others guaranteed by such Person to the extent of such guarantee and (h) all obligations of such Person in respect of Currency Hedge Obligations, Interest Rate Hedging Agreements and Oil and Gas Hedging Contracts. Notwithstanding anything in this definition to the contrary, production payment liabilities (whether recorded as liabilities or as deferred revenue) shall not constitute Indebtedness. "Indenture" means this Indenture, as amended or supplemented from time to time. "Indirect Participant" means a Person who holds a beneficial interest in a Global Note through a Participant. "Initial Notes" means the $125,000,000 in aggregate principal amount of the Notes initially authenticated and delivered under this Indenture on the Issue Date. "Interest Rate Heading Agreements" means, with respect to any Person, the obligations of such Person under (i) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements and (ii) other agreements or arrangements designed to protect such Person or any of its Subsidiaries against fluctuations in interest rates. "Issue Date" means the date on which the Initial Notes are first issued under this Indenture. "Legal Holiday" means, a Saturday, a Sunday or a day on which banking institutions in the City of New York or at a place of payment are authorized by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. "Letter of Transmittal" means the letter of transmittal to be prepared by the Company and sent to all Holders of the Notes for use by such Holders in connection with the Exchange Offer. 5 "Lien" means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such property or asset, whether or not filed, recorded or otherwise perfected under applicable law, but excluding agreements to refrain from granting Liens. For the purposes of this Indenture, a Person shall be deemed to own subject to a Lien any property or asset that it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, Capitalized Lease Obligation or other title retention agreement relating to such asset; provided, however, that "Lien" shall not include a trust or similar arrangement established for the purpose of defeasing any Indebtedness pursuant to the terms of the instrument evidencing or providing for the issuance of such Indebtedness. "Make-Whole Premium" means, in connection with any optional redemption of any Note, the excess, if any, of (i) the aggregate present value as of the date of such redemption of each dollar of principal of such Note being redeemed and the amount of interest (exclusive of interest accrued to the date of redemption) that would have been payable in respect of such dollar if such redemption had not been made, determined by discounting, on a semiannual basis, such principal and interest at a rate equal to the sum of the Treasury Yield (determined on the Business Day immediately preceding the date of such redemption) plus 0.20% per annum, from the respective dates on which such principal and interest would have been payable if such redemption had not been made, over (ii) the aggregate principal amount of such Note being redeemed. "Non-U.S. Person" means a person who is not a U.S. Person. "Note Custodian" means the Trustee, as custodian with respect to the Notes in global form, or any successor entity thereto. "Notes" has the meaning assigned to it in the preamble to this Indenture. "Obligations" means any principal, premium (if any), interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company or its Restricted Subsidiaries whether or not a claim for post-filing interest is allowed in such proceeding), penalties, fees, charges, expenses, indemnifications, reimbursement obligations, damages, guarantees (including the Subsidiary Guarantees) and other liabilities or amounts payable under the documentation governing any Indebtedness or in respect thereof. "Ocean Louisiana" means Ocean Energy, Inc., a Louisiana corporation. "Offering" means the offering of the Initial Notes by the Company. "Offering Memorandum" means the Offering Memorandum of the Company dated July 1, 1998 with respect to the Offering. "Officer" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any 6 Assistant Treasurer, the Controller, the Secretary, any Assistant Secretary or any Vice-President of such Person. "Officers' Certificate" means a certificate signed on behalf of the Company by two Officers of the Company, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company, that meets the requirements of Section 11.05 hereof. "Oil and Gas Hedging Contracts" means any oil and gas purchase or hedging agreement, and other agreement or arrangement, in each case, that is designed to provide protection against oil and gas price fluctuations. "Opinion of Counsel" means a written opinion from legal counsel who is reasonably acceptable to the Trustee, that meets the requirements of Section 11.05 hereof. The counsel may be an employee of or counsel to the Company or any Subsidiary Guarantor. "Pari Passu Indebtedness" means any Indebtedness of the Company, whether outstanding on the Issue Date or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall be subordinated in right of payment to the Notes. "Pari Passu Indebtedness of a Subsidiary Guarantor" means any Indebtedness of such Subsidiary Guarantor, whether outstanding on the Issue Date or thereafter created, incurred, or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall be subordinated in right of payment to the Subsidiary Guarantees. "Participant" means, with respect to DTC, Euroclear or CEDEL, a Person who has an account with DTC, Euroclear or CEDEL, respectively (and, with respect to DTC, shall include Euroclear and CEDEL). "Participating Broker-Dealer" has the meaning set forth in the Registration Rights Agreement. "Person" means any individual, corporation, partnership, limited liability company, joint venture, incorporated or unincorporated association, joint stock company, trust, unincorporated organization or government or other agency or political subdivision thereof or other entity of any kind. "Principal Property" means (i) any property owned or leased by the Company or any Restricted Subsidiary and located within the United States of America, any State thereof (including property located off the coast of the United States of America held pursuant to lease from any United 7 States Federal, State or other governmental body) or Canada that is considered by the Company to be capable of producing oil, gas or other minerals in commercial quantities, (ii) any refinery, smelter or processing or manufacturing plant owned or leased by the Company or any Restricted Subsidiary and located within the United States of America, any State thereof, or Canada, except (A) facilities related thereto employed in transportation, distribution or marketing, and (B) any refinery, smelter or processing or manufacturing plant, or portion thereof, that the Board of Directors determines is not material to the business of the Company and its Restricted Subsidiaries taken as a whole, and (iii) any Capital Stock or Indebtedness issued by a Restricted Subsidiary that owns or leases property of the types described in clauses (i) and (ii) of this definition. "Private Placement Legend" means the legend set forth in Section 2.06(g)(i) hereof to be placed on all Notes issued under this Indenture except where otherwise permitted by the provisions of this Indenture. "Project Finance Debt" means Indebtedness of an Unrestricted Subsidiary (i) as to which neither the Company nor any Restricted Subsidiary of the Company is directly or indirectly liable (by virtue of the Company's or such Restricted Subsidiary's being the primary obligor, or guarantor of (by way of guarantee, statute, common law or otherwise), or otherwise contractually liable in any respect on, such Indebtedness) and (ii) that is not secured by any assets of the Company or of any of its Restricted Subsidiaries. "Purchase Agreement" means the Purchase Agreement dated July 1, 1998 among the Company, Ocean Louisiana and the Initial Purchasers (as defined therein.) "QIB" means a "qualified institution buyer" as defined in Rule 144A. "Registration Rights Agreement" means the Registration Rights Agreement, dated as of July 8, 1998, by and among the Company, Ocean Louisiana and the other parties named on the signature pages thereof, as such agreement may be amended, modified or supplemented from time to time. "Regulation S" means Regulation S promulgated under the Securities Act. "Regulation S Global Note" means a permanent global Note in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee. "Responsible Officer," when used with respect to the Trustee, means any officer, including, without limitation, any vice president, assistant vice president, assistant treasurer or secretary within the Corporate Trust Administration of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to particular corporate trust matter, any 8 other officer or employee to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Restricted Definitive Note" means a Definitive Note bearing the Private Placement Legend. "Restricted Global Note" means a Global Note bearing the Private Placement Legend. "Restricted Period" means the 40-day distribution compliance period as set forth in Regulation S. "Restricted Subsidiary" means any Subsidiary of the Company, whether existing on or after the Issue Date, other than an Unrestricted Subsidiary. "Rule 144" means Rule 144 promulgated under the Securities Act. "Rule 144A" means Rule 144A promulgated under the Securities Act. "Rule 144A Global Note" means the Global Note in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with and registered in the name of the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 144A. "Rule 903" means Rule 903 promulgated under the Securities Act. "Rule 904" means Rule 904 promulgated under the Securities Act. "Sale/Leaseback Transaction" means any arrangement with any Person providing for the leasing by the Company or any of its Restricted Subsidiaries for a period of more than three years of any Principal Property, which property has been or is to be sold or transferred by the Company or such Restricted Subsidiary to such Person in contemplation of such leasing. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. "Shelf Registration Statement" has the meaning set forth in the Registration Rights Agreement. "Significant Subsidiary" means any Restricted Subsidiary the consolidated assets of which comprise in excess of 5% of Consolidated Net Tangible Assets (as shown in the most recent audited consolidated balance sheet of the Company and its Subsidiaries). 9 "Stated Maturity" means, when used with respect to any Note or any installment of interest thereon, the date specified in such Note as the fixed date on which the principal of such Note or such installment of interest is due and payable, and, when used with respect to any other Indebtedness or any installment of interest thereon, means the date specified in the instrument evidencing or governing such Indebtedness as the fixed date on which the principal of such Indebtedness or such installment of interest is due and payable. "Subordinated Indebtedness of a Subsidiary Guarantor" means any Indebtedness of such Subsidiary Guarantor, whether outstanding on the Issue Date or thereafter created, incurred, or assumed, if the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall be subordinated in right of payment to the Subsidiary Guarantees. "Subsidiary" means, as to any Person, any corporation, association or other business entity, in which such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries own more than 50% of the total combined voting power of all Common Equity, and any partnership or joint venture if more than a 50% interest in the profits or capital thereof is owned by such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries (unless such partnership can and does ordinarily take major business actions without the prior approval of such Person or one or more of its Restricted Subsidiaries). "Subsidiary Guarantee" means any Guarantee of the Notes by any Subsidiary Guarantor pursuant to Article 10 hereof or pursuant to the execution and delivery of a supplemental indenture substantially in the form of Exhibit D hereto. "Subsidiary Guarantor" means (i) Ocean Louisiana and (ii) each of the Company's Restricted Subsidiaries that becomes a guarantor of the Notes pursuant to Article 10.01 hereof and executes a supplemental indenture in which such Restricted Subsidiary agrees to be bound by the terms of this Indenture, in each case until such time as the Subsidiary Guarantee of such Person is released in accordance with the provisions of Article 10 hereof. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-77bbbb) as in effect on the date on which this Indenture is qualified under the TIA. "Treasury Yield" means, in connection with the calculation of any Make- Whole Premium on any Note, the yield to maturity at the time of 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) that has become publicly available at least two business days prior to the date fixed for redemption (or, if such Statistical Release is no longer published, any publicly available source of similar data)) equal to the then remaining maturity of such Note; provided that if no United States Treasury security is available with such a constant maturity and for which a closing yield is given, the Treasury Yield shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the closing yields of United States Treasury securities for which such yields 10 are given, except that if the remaining maturity of such Note 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. "Trustee" means the Person named as the "Trustee" in the first paragraph of this Indenture until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean such successor Trustee. "Unrestricted Definitive Note" means one or more Definitive Notes that do not bear and are not required to bear the Private Placement Legend. "Unrestricted Global Note" means a permanent global Note in the form of Exhibit A attached hereto that bears the Global Note Legend and that has the "Schedule of Exchanges of Interests in the Global Note" attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary, representing Notes that do not bear the Private Placement Legend. "Unrestricted Subsidiary" means (i) Havre Pipeline Company, LLC and Lion GPL, S.A., (ii) any Subsidiary acquired or organized after the Issue Date that is designated as an Unrestricted Subsidiary for purposes of this Indenture by a resolution of the Board of Directors of the Company in accordance with the requirements of this paragraph, and (iii) any Subsidiary of an Unrestricted Subsidiary, in each case until such time as such Subsidiary is designated as a Restricted Subsidiary for purposes of this Indenture by a resolution of the Board of Directors of the Company in accordance with the requirements of this paragraph. The Company may designate any Subsidiary that satisfies the requirements of this paragraph to be an Unrestricted Subsidiary by a resolution of the Board of Directors of the Company if after giving effect to such designation (a) such Subsidiary does not own or hold any Capital Stock of, or any Lien on any property of, the Company or any Restricted Subsidiary and (b) such Subsidiary is not liable, directly or indirectly, with respect to any Indebtedness other than Project Finance Debt. The Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary by a resolution of the Board of Directors of the Company if immediately after giving effect to such designation, no Default or Event of Default has occurred and is continuing. "U.S. Person" means a U.S. person as defined in Rule 902(o) under the Securities Act. "Voting Stock" means any class or classes of Capital Stock 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 any Person (irrespective of whether or not, at the time, stock of any other class or classes shall have, or might have, voting power by reason of the happening of any contingency). 11 Section 1.02 Other Definitions. DEFINED IN TERM SECTION - ---------------------------------------------------------- ----------- "Change of Control Notice"................................ 4.06 "Change of Control Offer"................................. 4.06 "Change of Control Purchase Date"......................... 4.06 "Change of Control Purchase Price"........................ 4.06 "Covenant Defeasance"..................................... 8.03 "Event of Default"........................................ 6.01 "Funding Guarantor"....................................... 10.05 "Legal Defeasance"........................................ 8.02 "Paying Agent"............................................ 2.03 "Registrar"............................................... 2.03 "U.S. Government Obligations"............................. 8.04 Section 1.03 Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "indenture securities" means the Notes; "indenture security holder" means a holder of a Note; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; and "obligor" on the Notes means the Company and any successor obligor upon the Notes. All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them. Section 1.04 Rules of Construction. Unless the context otherwise requires: (1) a term has the meaning assigned to it; 12 (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; (4) words in the singular include the plural, and in the plural include the singular; (5) provisions apply to successive events and transactions; and (6) references to sections of or rules under the Securities Act shall be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time. ARTICLE II THE NOTES Section 2.01 Form and Dating. The Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $1,000 and integral multiples thereof. The Notes may bear notations of Subsidiary Guarantees. The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling. Notes issued in global form shall be substantially in the form of Exhibit A attached hereto, including the Global Note Legend and the "Schedule of Exchanges in the Global Note" attached thereto. Notes issued in definitive form shall be substantially in the form of Exhibit A attached hereto, but without the Global Note Legend and without the "Schedule of Exchanges of Interests in the Global Note" attached thereto. Each Global Note shall represent such of the outstanding Notes as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee, the Depositary or the Note Custodian, at the 13 direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof. Notes offered and sold in reliance on Regulation S will initially be represented by one or more Regulation S Global Notes which will be registered in the name of Cede & Co., as nominee of DTC, and deposited on behalf of the purchasers of the Notes represented thereby with a custodian for DTC for credit to the respective accounts of the purchasers (or to such other accounts as they may direct) at Euroclear or CEDEL Bank. Prior to the 40th day after the later of the commencement of the Offering and the Issue Date, interests in Regulation S Global Notes may only be held through Euroclear or CEDEL. The aggregate principal amount of the Regulation S Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided. The provisions of the "Operating Procedures of the Euroclear System" and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank" and "Customer Handbook" of CEDEL shall be applicable to transfers of beneficial interests in the Regulation S Global Notes that are held by members of, or Participants, in DTC through Euroclear or CEDEL. Section 2.02 Execution and Authentication. Two Officers shall sign the Notes for the Company by manual or facsimile signature. If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid. A Note shall not be valid until authenticated by the manual signature of the Trustee. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture. The Trustee shall, upon a written order of the Company signed by two Officers, authenticate Notes for original issue on the Issue Date up to $125,000,000 aggregate principal amount of the Notes. The aggregate principal amount of Notes outstanding at any time may not exceed $125,000,000 except as provided in Section 2.07 hereof. Each Note shall be dated the date of its authentication. The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Company. 14 Section 2.03 Registrar and Paying Agent. The Company shall maintain an office or agency within the City and State of New York where Notes may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where Notes may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company may appoint one or more co- registrars and one or more additional paying agents. The term "Registrar" includes any co-registrar and the term "Paying Agent" includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company shall promptly notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent or Registrar. The Company initially appoints DTC to act as Depositary with respect to the Global Notes. The Company initially appoints the Trustee to act as the Registrar and Paying Agent and to act as Note Custodian with respect to the Global Notes. Section 2.04 Paying Agent to Hold Money in Trust. The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal or premium, if any, or interest on the Notes, and will notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall have no further liability for the money. If the Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Company, the Trustee shall serve as Paying Agent for the Notes. Section 2.05 Holder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA (S) 312(a). If the Trustee is not the Registrar, the Company shall provide to a Responsible Officer of the Trustee at least seven Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes and the Company shall otherwise comply with TIA (S) 312(a). 15 Section 2.06 Transfer and Exchange. (a) Transfer and Exchange of Global Notes. A Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Notes will be exchanged by the Company for Definitive Notes if (i) the Company delivers to the Trustee notice from the Depositary that it is unwilling or unable to continue to act as Depositary for the Global Notes or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Company within 90 days after the date of such notice from the Depositary or (ii) the Company in its sole discretion notifies the Trustee in writing that it elects to cause issuance of the Notes in certificated form; provided that in no event shall the Regulation S Global Note be exchanged by the Company for Definitive Notes prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903 under the Securities Act. Upon the occurrence of either of the preceding events in (i) or (ii) above, Definitive Notes shall be issued in such names as the Depositary shall instruct the Trustee. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.11 hereof. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to Section 2.07 or 2.11 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a), however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof. (b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also shall require compliance with either subparagraph (i) or (ii) below, as applicable, as well as one or more of the other following subparagraphs as applicable: (i) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend; provided, however, that prior to the expiration of the Restricted Period transfers of beneficial interests in a Regulation S Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Beneficial interests in any Unrestricted Global Note may be transferred only to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. No written orders or instructions shall be 16 required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(i). (ii) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficial interests (other than a transfer of a beneficial interest in a Global Note to a Person who takes delivery thereof in the form of a beneficial interest in the same Global Note), the transferor of such beneficial interest must deliver to the Registrar (A) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase or (B) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (1) above; provided that in no event shall Definitive Notes be issued upon the transfer or exchange of beneficial interests in a Regulation S Global Note prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903 under the Securities Act. Upon an Exchange Offer by the Company in accordance with Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall be deemed to have been satisfied upon receipt by the Registrar of the instructions contained in the Letter of Transmittal delivered by the Holder of such beneficial interests in the Restricted Global Notes. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture, the Notes and otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(h) hereof. (iii) Transfer of Beneficial Interests to Another Restricted Global Note. A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of clause (ii) above and the Registrar receives the following: (A) if the transferee will take delivery in the form of a beneficial interest in the Rule 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in Item (1) thereof; or (B) if the transferee will take delivery in the form of the Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in Item (2) thereof. 17 (iv) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in the Unrestricted Global Note. A beneficial interest in any Restricted Global Note may be exchanged by any Holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of clause (ii) above and: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder of the beneficial interest to be transferred, in the case of an exchange, or the transferee, in the case of a transfer, is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) any such transfer is effected by a Participating Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in Item (1)(a) thereof; (2) if the Holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in Item (4) thereof; and (3) in each such case set forth in this subparagraph (D), an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are not required in order to maintain compliance with the Securities Act. If any such transfer is effected pursuant to subparagraph (B) or (D) above at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an authentication order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or 18 more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of beneficial interests transferred pursuant to subparagraph (B) or (D) above. Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note. (c) Transfer or Exchange of Beneficial Interests for Definitive Notes. (i) If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon receipt by the Registrar of the following documentation: (A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in Item (2)(a) thereof; (B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (1) thereof; (C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (2) thereof; (D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (3)(a) thereof; (E) if such beneficial interest is being transferred pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by Item (3) thereof, if applicable; (F) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (3)(b) thereof; or 19 (G) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (3)(c) thereof, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Company shall execute and the Trustee shall authenticate and make available for delivery to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall make available for delivery such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein. (ii) Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a beneficial interest in the Regulation S Global Note may not be (A) exchanged for a Definitive Note prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(c)(3)(B) under the Securities Act or (B) transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to the conditions set forth in clause (A) above or unless the transfer is pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904. (iii) Notwithstanding 2.06(c)(i) hereof, a holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the holder of such beneficial interest, in the case of an exchange, or the transferee, in the case of a transfer, is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) any such transfer is effected by a Participating Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or 20 (D) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Definitive Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit C hereto, including the certifications in Item (1)(b) thereof; (2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a Definitive Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit B hereto, including the certifications in Item (4) thereof; and (3) in each such case set forth in this subparagraph (D), an Opinion of Counsel in form reasonably acceptable to the Company, to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are not required in order to maintain compliance with the Securities Act. (iv) If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Company shall execute and the Trustee shall authenticate and make available for delivery to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall make available for delivery such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall not bear the Private Placement Legend. A beneficial interest in an Unrestricted Global Note cannot be exchanged for a Definitive Note bearing the Private Placement Legend or transferred to a Person who takes delivery thereof in the form of a Definitive Note bearing the Private Placement Legend. (d) Transfer and Exchange of Definitive Notes for Beneficial Interests. (i) If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Definitive 21 Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation: (A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in Item (2)(b) thereof; (B) if such Definitive Note is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (1) thereof; (C) if such Definitive Note is being transferred to a Non- U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (2) thereof; (D) if such Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (3)(a) thereof; (E) if such Definitive Note is being transferred to the Company or any of its subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (3)(b) thereof; or (F) if such Definitive Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (3)(c) thereof, the Trustee shall cancel the Definitive Note, increase or cause to be increased the aggregate principal amount of, in the case of subparagraph (A) above, the appropriate Restricted Global Note and, in the case of subparagraph (B) above, the 144A Global Note, and, in the case of subparagraph (C) above, the Regulation S Global Note. (ii) A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, is not (1) a broker- 22 dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) any such transfer is effected by a Participating Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in Item (1)(c) thereof; (2) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in Item (4) thereof; and (3) in each such case set forth in this subparagraph (D), an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act, that the restrictions on transfer contained herein and in the Private Placement Legend are not required in order to maintain compliance with the Securities Act, and such Definitive Notes are being exchanged or transferred in compliance with any applicable blue sky securities laws of any State of the United States. Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note. (iii) A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes. (iv) If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above at a time when an 23 Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an authentication order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of beneficial interests transferred pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above. (e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a Holder of Definitive Notes and such Holder's compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by his attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, pursuant to the provisions of this Section 2.06(e). (i) Restricted Definitive Notes may be transferred to and registered in the name of Persons who take delivery thereof if the Registrar receives the following: (A) if the transfer will be made pursuant to Rule 144A under the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in Item (1) thereof; (B) if the transfer will be made pursuant to Rule 903 or Rule 904 of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in Item (2) thereof; and (C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by Item (3) thereof, if applicable. (ii) Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; 24 (C) any such transfer is effected by a Participating Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in Item (1)(b) thereof; (2) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in Item (4) thereof; and (3) in each such case set forth in this subparagraph (D), an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act, that the restrictions on transfer contained herein and in the Private Placement Legend are not required in order to maintain compliance with the Securities Act, and such Restricted Definitive Note is being exchanged or transferred in compliance with any applicable blue sky securities laws of any State of the United States. (iii) A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request for such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof. Unrestricted Definitive Notes cannot be exchanged for or transferred to Persons who take delivery thereof in the form of a Restricted Definitive Note. (f) Exchange Offer. Upon the occurrence of the Exchange Offer in accordance with the Registration Rights Agreement, the Company shall issue and, upon receipt of (A) an authentication order in accordance with Section 2.02 hereof and (B) an Opinion of Counsel opining as to the enforceability of the Exchange Notes and the Guarantees thereof, the Trustee shall authenticate (i) one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of the beneficial interests in the Restricted Global Notes tendered for acceptance by persons that are not (x) broker-dealers, (y) Persons participating in the distribution of the Exchange Notes or (z) Persons who are affiliates (as defined in Rule 144) of the Company and accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an aggregate principal amount equal to the principal amount of the Restricted Definitive Notes accepted for exchange in the Exchange Offer. Concurrent with the issuance of such Notes, the Trustee shall cause the aggregate principal amount of the applicable Restricted Global Notes to be reduced accordingly, and 25 the Company shall execute and the Trustee shall authenticate and make available for delivery to the Persons designated by the Holders of Definitive Notes so accepted Definitive Notes in the appropriate principal amount. (g) Legends. The following legends shall appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture. (i) Private Placement Legend. (A) Except as permitted by subparagraph (B) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form: THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES (1) NOT TO OFFER, SELL, OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO (X) THE DATE THAT IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(k) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF THIS SECURITY) AND THE LAST DAY ON WHICH OCEAN ENERGY, INC. (THE "COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAWS (THE "RESALE RESTRICTION TERMINATION DATE"), EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT IS ACQUIRING SUCH SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND (2) THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY, THE TRUSTEE, THE TRANSFER AGENT AND THE REGISTRAR SHALL HAVE THE RIGHT PRIOR TO ANY 26 SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFER TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A OR (2) A NON-U.S. PERSON AND IS ACQUIRING THE NOTE IN AN "OFFSHORE TRANSACTION" PURSUANT TO RULE 904 OF REGULATION S UNDER THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. (B) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraph (b)(iv), (c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) of this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend. (ii) Global Note Legend. Each Global Note shall bear a legend in substantially the following form: "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO ARTICLE 2 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY." (h) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on 27 such Global Note, by the Trustee, the Note Custodian or the Depositary at the direction of the Trustee, to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note, by the Trustee, the Note Custodian or by the Depositary at the direction of the Trustee, to reflect such increase. (i) General Provisions Relating to Transfers and Exchanges. (i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon the Company's order or at the Registrar's request. (ii) No service charge shall be made to a holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 4.10, 4.15 and 9.05 hereof). (iii) The Registrar shall not be required to register the transfer or exchange of any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. (iv) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange. (v) The Company shall not be required (A) to issue, to register the transfer of or to exchange Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part or (C) to register the transfer of or to exchange a Note between a record date and the next succeeding Interest Payment Date. (vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary. 28 (vii) The Trustee shall authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.02 hereof. (viii) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a transfer or exchange may be submitted by facsimile. Section 2.07 Replacement Notes. If any mutilated Note is surrendered to the Trustee or the Company and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Company shall issue and the Trustee, upon the written order of the Company signed by two Officers of the Company, shall authenticate a replacement Note if the Trustee's requirements are met. If required by the Trustee or the Company, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Company may charge for its expenses in replacing a Note. Every replacement Note is an additional obligation of the Company and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder. Section 2.08 Outstanding Notes. The Notes outstanding at any time are all the Notes authenticated and delivered by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note. If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue. If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest. 29 Section 2.09 Treasury Notes. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded. Section 2.10 Temporary Notes. Until Definitive Notes are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Notes upon a written order of the Company signed by two Officers of the Company. Temporary Notes shall be substantially in the form of Definitive Notes but may have variations that the Company considers appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate Definitive Notes in exchange for temporary Notes. Holders of temporary Notes shall be entitled to all of the benefits of this Indenture. Section 2.11 Cancellation. The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall return such canceled Notes to the Company. The Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation. Section 2.12 Defaulted Interest. If the Company defaults in a payment of interest on the Notes, it shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01 hereof. The Company shall promptly notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Company shall fix or cause to be fixed each such special record date and payment date, provided that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest. At least 15 days before the special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) shall mail or cause to be mailed to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid. 30 Section 2.13 CUSIP Numbers. The Company in issuing the Notes may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee of any change in the "CUSIP" numbers. ARTICLE III REDEMPTION AND PREPAYMENT Section 3.01 Notices to Trustee. If the Company elects to redeem Notes pursuant to the optional redemption provisions of Section 3.05 hereof, it shall furnish to the Trustee, at least 30 days but not more than 60 days before such redemption date, an Officers' Certificate setting forth the matters described in Section 3.02 hereof. Section 3.02 Notice of Redemption. Not less than 30 and not more than 60 days before such redemption date, the Company shall mail or cause to be mailed, by first class mail, postage prepaid, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address. The notice shall identify the Notes (including CUSIP numbers) to be redeemed and shall state: (a) the redemption date; (b) the redemption price; (c) the name and address of the Paying Agent; (d) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price; (e) that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date; 31 (f) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and (g) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes. At the Company's request, the Trustee shall give the notice of redemption in the name and at the expense of the Company; provided, however, that the Company shall have delivered to the Trustee, at least 40 days prior to the redemption date, an Officers' Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph. Section 3.03 Effect of Notice of Redemption. Once notice of redemption is mailed in accordance with Section 3.02 hereof, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price. Section 3.04 Deposit of Redemption Price. No later than 10:00 a.m. New York City time on the redemption date, the Company shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption price of and accrued interest on all Notes to be redeemed on that date. The Trustee or the Paying Agent shall promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price of, and accrued interest on, all Notes to be redeemed. If the Company complies with the provisions of the preceding paragraph, on and after the redemption date, interest shall cease to accrue on the Notes called for redemption. If a Note is redeemed on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof. Section 3.05 Optional Redemption. (a) The Notes will be subject to redemption at any time at the option of the Company, in whole but not in part, at a redemption price equal to the sum of (a) an amount equal to 100% of the principal amount thereof and (b) the Make- Whole Premium, together with accrued 32 and unpaid interest to the date fixed for redemption. In no event will such redemption price ever be less than 100% of the principal amount of the Notes plus accrued interest to the date of redemption. (b) Any redemption pursuant to this Section 3.05 shall be made pursuant to the provisions of Sections 3.01 through 3.04 hereof. ARTICLE IV COVENANTS Section 4.01 Payment of Principal, Premium, if any, and Interest. The Company covenants and agrees for the benefit of the Holders of Notes that it will duly and punctually pay the principal of (and premium, if any, on) and interest on the Notes in accordance with the terms of the Notes and this Indenture. Section 4.02 Maintenance of Office or Agency. The Company shall maintain in the Borough of Manhattan, The City of New York, an office or agency where Notes may be presented or surrendered for payment, where Notes may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Notes, the Subsidiary Guarantees and this Indenture may be served. The office of the Trustee, maintained on behalf of the Trustee by DTC and located at 55 Water Street, New York, NY 10041, shall be such office or agency of the Company, unless the Company shall designate and maintain some other office or agency for one or more of such purposes. The Company will give prompt written notice to the Trustee of any change in the location of any such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the aforementioned office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. The Company may also from time to time designate one or more other offices or agencies (in or outside of The City of New York) where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind any such designation; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York for such purposes. The Company will give prompt written notice to the Trustee of any such designation or recission and any change in the location of any such other office or agency. 33 Section 4.03 Compliance Certificate. (a) The Company shall deliver to the Trustee, within 90 days after the end of each fiscal year of the Company and within 45 days after the end of each of the first, second and third quarters of each fiscal year of the Company, an Officers' Certificate stating that a review of the activities of the Company and its Restricted Subsidiaries during the preceding fiscal quarter or fiscal year, as applicable, has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of such Officer's knowledge the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions hereof (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which such Officer may have knowledge and what action the Company is taking or proposes to take with respect thereto). Such Officers' Certificate shall comply with TIA Section 314(a)(4). For purposes of this Section 4.03(a), such compliance shall be determined without regard to any period of grace or requirement of notice under this Indenture. (b) The Company and the Subsidiary Guarantors shall, so long as any of the Notes are outstanding, deliver to the Trustee, within 10 days of any Default or Event of Default or default in the performance of any covenant, agreement or condition contained in this Indenture, an Officers' Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto. Section 4.04 Liens. (a) The Company will not, and will not permit any Restricted Subsidiary of the Company to, issue, assume or guarantee any Indebtedness for borrowed money secured by any Lien on any Principal Property now owned or hereafter acquired by the Company or such Restricted Subsidiary without making effective provision whereby any and all Notes then or thereafter outstanding will be secured by a Lien equally and ratably with any and all other obligations thereby secured for so long as any such obligations shall be so secured. The foregoing restriction will not, however, apply to the Company and its Restricted Subsidiaries with respect to: (i) Liens existing on the Issue Date or provided for pursuant to agreements (and terms thereof) existing on the Issue Date securing Indebtedness (A) existing on the Issue Date or (B) to be incurred under agreements existing on the Issue Date; (ii) Liens on property (and all improvements, additions and accessions thereto and all proceeds thereof) securing (A) all or any portion of the cost of exploration, drilling, development, operation or maintenance of such property or the cost of acquiring, constructing, altering, improving or repairing such property or improvements used or to be used in connection with such property (including the cost of financing such actions) or 34 (B) Indebtedness incurred by the Company or any Restricted Subsidiary to provide funds for the activities set forth in clause (A) above; (iii) Liens securing Indebtedness owed by a Restricted Subsidiary to the Company or to any other Restricted Subsidiary or by the Company to any Restricted Subsidiary that is a Subsidiary Guarantor; (iv) Liens on the property of any Person existing at the time such Person becomes a Restricted Subsidiary and not incurred as a result of (or in connection with or in anticipation of) such Person becoming a Restricted Subsidiary, provided that such Liens do not extend to or cover any property of the Company or any of its Restricted Subsidiaries other than the property encumbered at the time such Person becomes a Restricted Subsidiary, all improvements, additions and accessions thereto and all proceeds thereof; (v) Liens affecting property existing at the time it becomes property of the Company or a Restricted Subsidiary, all improvements, additions and accessions thereto and all proceeds thereof; (vi) Liens on any property securing (A) Indebtedness incurred in connection with the construction, installation or financing of pollution control or abatement facilities or other forms of industrial revenue bond financing or (B) Indebtedness issued or guaranteed by the United States or any State thereof or any department, agency or instrumentality of either; (vii) Any Lien extending, renewing or replacing (or successive extensions, renewals or replacements of) any Lien of any type permitted under clauses (i) through (vi) above, provided that such Lien extends to or covers only the property that is subject to the Lien being extended, renewed or replaced and that the principal amount of Indebtedness secured thereby shall not exceed the sum of (A) the principal amount of Indebtedness so secured at the time of such extension, renewal or replacement, (B) any additional Indebtedness incurred to pay the cost of altering, improving or repairing such property and (C) any expenses of the Company and its Restricted Subsidiaries (including any premium) incurred in connection with any such extension, renewal or replacement; and (viii) Other Liens (exclusive of any Lien of any type otherwise permitted under clauses (i) through (vii) above or paragraph (b) below) securing Indebtedness for borrowed money of the Company or any of its Restricted Subsidiaries in an aggregate principal amount that, together with the aggregate amount of Attributable Indebtedness deemed to be outstanding in respect of all Sale/Leaseback Transactions entered into pursuant to Section 4.05(a) hereof (exclusive of any such Sale/Leaseback Transactions otherwise permitted under clauses (i) through (vii) above of this Section 4.04(a) or Section 4.04 (b) below), does not at the time such Indebtedness is incurred exceed 15% of Consolidated Net 35 Tangible Assets (as shown in the most recent audited consolidated balance sheet of the Company and its Restricted Subsidiaries). (b) The following types of transactions will not be prohibited or otherwise limited by the foregoing covenant: (i) the sale, granting of Liens with respect to, or other transfer of, oil, gas or other minerals in place for a period of time until, or in an amount such that, the transferee will realize therefrom a specified amount (however determined) of money or of such oil, gas or other minerals; (ii) the sale or other transfer of any other interest in property of the character commonly referred to as a production payment, overriding royalty, forward sale or similar interest; (iii) the entering into of Currency Hedge Obligations, Interest Rate Hedging Agreements or Oil and Gas Hedging Contracts but Liens securing any Indebtedness for borrowed money that is related to any Interest Rate Hedging Agreement shall not be permitted hereby unless otherwise permitted under this Section 4.04; and (iv) the granting of Liens in favor of the United States, any State thereof or any foreign government or any subdivision, department, agency, organization or instrumentality of any of the foregoing to secure partial, progress, advance or other payments or other obligations pursuant to the provisions of any contract or statute, or in favor of any other Person to secure obligations in connection with any letters of credit, bank guarantees, bonds or surety obligations required or requested by any such governmental authority in connection with any contract or statute. Section 4.05 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 a Restricted Subsidiary) unless either: (a) the Company or such Restricted Subsidiary would be entitled to incur Indebtedness, in a principal amount equal to the Attributable Indebtedness with respect to such Sale/Leaseback Transaction, secured by a Lien on the property subject to such Sale/Leaseback Transaction pursuant to Section 4.04 hereof without equally and ratably securing the Notes pursuant to such Section 4.04; or (b) such Sale/Leaseback Transaction occurs within 180 days from the date of acquisition of such Principal Property or the date of the completion of construction or commencement of full operations of such Principal Property, whichever is later; or (c) after the Issue Date and within a period commencing six months prior to the consummation of such Sale/Leaseback Transaction and ending six months after the consummation thereof, the Company or a Restricted Subsidiary shall have expended for property used or to be used in the business of the Company and its Restricted Subsidiaries an amount equal to all or a portion of the net proceeds from such Sale/Leaseback Transaction and the Company shall have elected to designate such amount as a credit against such Sale/Leaseback Transaction (with any such amount not being so expended and so designated to be applied as set forth in Section 4.05(d) below); or 36 (d) the Company or a Restricted Subsidiary, during the 12-month period after the effective date of such Sale/Leaseback Transaction, shall have applied to the voluntary repayment, repurchase, redemption, defeasance or other acquisition or retirement ("retirement") of Notes, any Pari Passu Indebtedness, any Pari Passu Indebtedness of a Subsidiary Guarantor or any Indebtedness of a Restricted Subsidiary that is not a Subsidiary Guarantor ("Retired Indebtedness") an amount equal to the greater of (i) the net proceeds of the sale or transfer of the property leased in such Sale/Leaseback Transaction and (ii) the fair value, as determined by the Board of Directors of the Company, of such property at the time of entering into such Sale/Leaseback Transaction (in either case reduced to reflect the remaining term of the lease and any amount expended by the Company or a Restricted Subsidiary as set forth in Section 4.05(c) above), less an amount equal to the principal amount of such Retired Indebtedness voluntarily retired within such 12-month period and not designated as a credit against any other Sale/Leaseback Transaction entered into by the Company or any Restricted Subsidiary during such period. Section 4.06 Purchase of Notes Upon Change of Control. (a) Upon the occurrence of a Change of Control, the Company shall be obligated to make an offer to purchase all of the then outstanding Notes (a "Change of Control Offer"), and shall purchase, on a business day (the "Change of Control Purchase Date") not more than 70 nor less than 30 days following the Change of Control, all of the then outstanding Notes validly tendered pursuant to such Change of Control Offer, at a purchase price (the "Change of Control Purchase Price") equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the Change of Control Purchase Date. (b) The Change of Control Offer is required to remain open for at least 20 Business Days and until the close of business on the Change of Control Purchase Date. The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer at the same purchase price, at the same times and otherwise in substantial compliance with the requirements 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. (c) Not later than the 30th day following any Change of Control, the Company shall give to the Trustee and each Holder of the Notes, in the manner provided in Section 11.02, a notice (the "Change of Control Notice") stating: (1) that a Change in Control has occurred and that such Holder has the right to require the Company to repurchase such Holder's Notes, or portion thereof, at the Change of Control Purchase Price; (2) any information regarding such Change of Control required to be furnished pursuant to Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder; 37 (3) the Change of Control Purchase Date which shall be on a Business Day and no earlier than 30 days nor later than 70 days from the date the Change of Control occurred; (4) that any Note, or portion thereof, not tendered or accepted for payment will continue to accrue interest; (5) that unless the Company defaults in depositing money with the Paying Agent in accordance with the last paragraph of clause (d) of this Section 4.06, or payment is otherwise prevented, any Note, or portion thereof, accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Purchase Date; and (6) the instructions a Holder must follow in order to have its Notes repurchased in accordance with paragraph (d) of this Section. (d) Holders electing to have Notes purchased will be required to surrender such Notes to the Company at the address specified in the Change of Control Notice at least five Business Days prior to the Change of Control Purchase Date. Holders will be entitled to withdraw their election if the Company receives, not later than three Business Days prior to the Change of Control Purchase Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the certificate number(s) and principal amount of the Notes delivered for purchase by the Holder as to which his election is to be withdrawn and a statement that such Holder is withdrawing his election to have such Notes purchased. Holders whose Notes are purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered. On the Change of Control Purchase Date, the Company shall (i) accept for payment Notes or portions thereof tendered pursuant to a Change of Control Offer, (ii) deposit with the Paying Agent money sufficient to pay the purchase price of all Notes or portions thereof so tendered, and (iii) deliver or cause to be delivered to the Trustee the Notes so accepted. The Paying Agent shall promptly mail or deliver to Holders of the Notes so tendered payment in an amount equal to the purchase price for the Notes, and the Company will promptly execute and the Trustee will promptly authenticate and mail or make available for delivery to such Holders a new Note equal in principal amount to any unpurchased portion of the Note which any such Holder did not surrender for purchase. The Company shall announce the results of a Change of Control Offer on or as soon as practicable after the Change of Control Purchase Date. For purposes of this Section 4.06, the Trustee will act as the Paying Agent. (e) The Company shall comply with Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable, in the event that a Change of Control occurs and the Company is required to purchase Notes as described above. 38 Section 4.07 Additional Subsidiary Guarantors. (a) The Company shall not permit any Restricted Subsidiary that is not a Subsidiary Guarantor to guarantee the payment of any Indebtedness of the Company unless (i) (A) such Restricted Subsidiary simultaneously executes and delivers a supplemental indenture to this Indenture substantially in the form of Exhibit D hereto, providing for a Subsidiary Guarantee of the Notes by such Restricted Subsidiary and (B) with respect to any guarantee of subordinated indebtedness by a Restricted Subsidiary, any such guarantee shall be subordinated to such Restricted Subsidiary's Subsidiary Guarantee; (ii except to the extent contemplated by Section 10.05 hereof, such Restricted Subsidiary waives and will not in any manner whatsoever claim or take the benefit or advantage of, any rights of reimbursement, indemnity or subrogation or any other rights against the Company or any other Restricted Subsidiary as a result of any payment by such Restricted Subsidiary under its Subsidiary Guarantee until such time as the obligations guaranteed thereby are paid in full; and (ii such Restricted Subsidiary shall deliver to the Trustee an Opinion of Counsel to the effect that such Subsidiary Guarantee has been duly executed and authorized and constitutes a valid, binding and enforceable obligation of such Restricted Subsidiary, except insofar as enforcement thereof may be limited by bankruptcy, insolvency or similar laws (including, without limitation, all laws relating to fraudulent transfers) and except insofar as enforcement thereof is subject to general principles of equity; provided that this paragraph (a) shall not be applicable to any guarantee of any Restricted Subsidiary that (x) existed at the time such Person became a Restricted Subsidiary of the Company and (y) was not incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary of the Company. (b) The Company may from time to time, at its option, nominate any Restricted Subsidiary as an additional Subsidiary Guarantor. Any such Restricted Subsidiary shall execute and deliver a supplemental indenture to this Indenture agreeing to guarantee the Notes. At the election of the Company, such Subsidiary Guarantee may contain such release provisions as the Company may deem appropriate (including, without limitation, release provisions of the type in paragraph (c) below). (c) Notwithstanding the foregoing paragraph (a) and the other provisions of this Indenture, any Subsidiary Guarantee incurred by a Restricted Subsidiary pursuant to this Section 4.07 may, at the election of the Company, provide by its terms that it shall be automatically and unconditionally released and discharged upon (i) any sale or other disposition of all of the Company's Capital Stock in, or all or substantially all the assets of, such Restricted Subsidiary (ii the merger of such Restricted Subsidiary into the Company or any other Restricted Subsidiary (provided the surviving Restricted Subsidiary assumes the Subsidiary Guarantee) or the liquidation and dissolution of such Restricted Subsidiary; or (ii the release or discharge of the guarantee which resulted in the creation of such Subsidiary Guarantee, except a discharge or release by or as a result of payment under such guarantee. (d) Unless specified to the contrary in a supplemental indenture hereto, any Subsidiary Guarantee incurred by a Restricted Subsidiary pursuant to this Section 4.07 shall be 39 deemed to provide for the release and discharge thereof as contemplated by Sections 4.07(c) and 10.04 hereof. ARTICLE V SUCCESSORS Section 5.01 Consolidation, Merger and Sale of Assets. The Company will not (A) consolidate with or merge with any Person, or (B) sell, lease, convey, transfer or otherwise dispose of all or substantially all of its assets (each an "asset disposition") to any Person, unless: (i) either (a) in the case of any such consolidation or merger, the Company is the continuing Person or (b) the Person formed by or surviving such consolidation or merger (if other than the Company), or to which such asset disposition shall be made (collectively, the "Successor"), is organized and existing under the laws of the United States, any political subdivision thereof or any State thereof or the District of Columbia, and assumes by supplemental indenture all the obligations of the Company under this Indenture and the Notes; and (ii) immediately after giving effect to such transaction, no Default or Event of Default has occurred and is continuing. Section 5.02 Successor Substituted. Upon any consolidation, merger or the Company asset disposition in accordance with Section 5.01 hereof, the Successor shall be substituted for the Company (so that from and after the date of such consolidation, merger or asset disposition, the provisions of this Indenture referring to the "Company" shall refer instead to the Successor and not to the Company), and may exercise every right and power of the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and, in the case of an asset disposition, the Company will thereafter be relieved of all obligations and covenants under this Indenture and the Notes. ARTICLE VI DEFAULTS AND REMEDIES Section 6.01 Events of Default. An "Event of Default" occurs if: (a) default in the payment of the principal of or premium, if any, on any of the Notes, whether such payment is due at maturity, upon redemption, upon repurchase pursuant to a Change of Control Offer, upon acceleration or otherwise; or 40 (b) default in the payment of any installment of interest on any of the Notes, when it becomes due and payable, and the continuance of such default for a period of 30 days; or (c) the failure to make or consummate a Change of Control Offer in accordance with the provisions of Section 4.06 hereof; or (d) the Company or any Subsidiary Guarantor shall fail to perform or observe any other term, covenant or agreement contained in the Notes, any Subsidiary Guarantee or this Indenture (other than a default specified in (a), (b) or (c) above) for a period of 60 days after written notice of such failure requiring the Company to remedy the same shall have been given (i) to the Company by the Trustee or (ii) to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Notes then outstanding; or (e) the occurrence and continuation beyond any applicable grace period of any default in the payment of the principal of (or premium, if any, on) or interest on any Indebtedness of the Company or any Restricted Subsidiary for money borrowed (other than the Notes and the Subsidiary Guarantees) when due, or any other default causing acceleration of any Indebtedness of the Company or any Restricted Subsidiary for money borrowed, provided that the aggregate principal amount of such Indebtedness shall exceed the greater of (i) $20 million and (ii) 5% of Consolidated Net Tangible Assets (as shown in the most recent audited balance sheet of the Company and its Subsidiaries); provided further that any such default is not cured or waived or any such acceleration is not rescinded, or such debt is not repaid, within a period of 20 days after a written notice thereof to the Company as provided in Section 11.02 of this Indenture; or (f) any Subsidiary Guarantee shall for any reason cease to be, or be asserted by the Company or any Subsidiary Guarantor, as applicable, not to be, in full force and effect, enforceable in accordance with its terms (except pursuant to the release of any such Subsidiary Guarantee in accordance with this Indenture); or (g) final judgments or orders rendered against the Company or any Restricted Subsidiary that are unsatisfied and that require the payment in money, either individually or in an aggregate amount, that exceed the coverage under applicable insurance policies by the greater of (i) $20 million and (ii) 5% of Consolidated Net Tangible Assets (as shown in the most recent audited balance sheet of the Company and its Subsidiaries), and either (x) commencement by any creditor of an enforcement proceeding upon such judgment (other than a judgment that is stayed by reason of pending appeal or otherwise) or (y) the occurrence of a 60-day period during which a stay of such judgment or order, by reason of pending appeal or otherwise, was not in effect; or (h) the entry of a decree or order by a court having jurisdiction in the premises (i) for relief in respect of the Company, any Subsidiary Guarantor or any Significant Subsidiary in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or (ii) adjudging the Company, any Subsidiary Guarantor or any Significant Subsidiary bankrupt or insolvent, or approving a petition seeking reorganization, 41 arrangement, adjustment or composition of the Company, any Subsidiary Guarantor or any Significant Subsidiary under any applicable federal or state law, or appointing under any such law a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company, any Subsidiary Guarantor or any Significant Subsidiary or of a substantial part of their consolidated assets, or ordering the winding up or liquidation of their affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or (i) the commencement by the Company, any Subsidiary Guarantor or any Significant Subsidiary of a voluntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or any other case or proceeding to be adjudicated bankrupt or insolvent, or the consent by the Company, any Subsidiary Guarantor or any Significant Subsidiary to the entry of a decree or order for relief in respect thereof in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by the Company, any Subsidiary Guarantor or any Significant Subsidiary of a petition or consent seeking reorganization or relief under any applicable federal or state law, or the consent by it under any such law to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or other similar official) of any of the Company, any Subsidiary Guarantor or any Significant Subsidiary or of any substantial part of their consolidated assets, or the making by it of an assignment for the benefit of creditors under any such law, or the admission by it in writing of its inability to pay its debts generally as they become due or taking of corporate action by the Company, any Subsidiary Guarantor or any Significant Subsidiary in furtherance of any such action. Section 6.02 Acceleration; Rescission. If any Event of Default (other than as specified in clause (h) or (i) of Section 6.01 above) occurs and is continuing, the Trustee, by written notice to the Company, or the Holders of at least 25% in aggregate principal amount of the then outstanding Notes, by written notice to the Trustee and the Company may declare the principal of, premium, if any, and accrued interest on all the then outstanding Notes due and payable immediately. Upon any such declaration, the Notes shall become due and payable immediately. Notwithstanding the foregoing, if an Event of Default specified in clause (h) or (i) of Section 6.01 hereof occurs, the principal of, premium, if any, and accrued interest on all the then outstanding Notes shall ipso facto become and be immediately due and payable without any declaration, notice or other act on the part of the Trustee or any Holder. After a declaration of acceleration has been made, but before a judgment or decree for payment of the money due has been obtained by the Trustee, the Holders of a majority in aggregate principal amount of the then outstanding Notes, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if (a) the Company or any Restricted Subsidiary has paid or deposited with the Trustee a sum sufficient to pay (i) all sums paid or advanced by the Trustee under this Indenture and the reasonable compensation, expenses, 42 disbursements and advances of the Trustee, its agents and counsel, (ii) all overdue interest on all Notes, (iii) the principal of and premium, if any, on any Notes which have become due otherwise than by such declaration of acceleration and interest thereon at the rate borne by the Notes, and (iv) to the extent that payment of such interest is lawful, interest upon overdue interest and overdue principal at the rate borne by the Notes which has become due otherwise than by such declaration of acceleration; (b) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction; and (c) all Events of Default, other than the nonpayment of principal of, premium, if any, and interest on the Notes that has become due solely by such declaration of acceleration, have been cured or waived. Section 6.03 Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law. Section 6.04 Waiver of Past Defaults. The Holders of not less than a majority in aggregate principal amount of the then outstanding Notes may on behalf of the Holders of all the Notes waive any existing Default or Event of Default hereunder and its consequences, except a Default or Event of Default (a) in respect of the payment of the principal of, or premium, if any, or interest on any Note, or (b) in respect of a covenant or provision hereof which under Article IX hereof cannot be modified or amended without the consent of the Holder of each outstanding Note affected. Upon any such waiver, such Default or Event of Default shall cease to exist for every purpose under this Indenture, but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. Section 6.05 Control by Majority. Subject to the provisions of Section 7.02 hereof, the Holders of a majority in aggregate principal amount of the then outstanding Notes have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or 43 power conferred on the Trustee under this Indenture. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or that the Trustee determines may be unduly prejudicial to the rights of other Holders of Notes or that may involve the Trustee in personal liability. Subject to the provisions of Section 7.01 hereof, in case an Event of Default shall occur and be continuing, the Trustee is not under any obligation to exercise any of its rights or powers hereunder at the request or direction of any of the Holders unless such Holders shall have offered to the Trustee reasonable security or indemnity. If a Default or an Event of Default occurs and is continuing and is known to the Trustee, the Trustee shall mail to each Holder notice of the Default or Event of Default within 60 days after the occurrence thereof. Except in the case of a Default or an Event of Default in payment of principal of, premium, if any, or interest on the Notes, the Trustee may withhold the notice to the Holders of such Notes if a committee of its trust officers in good faith determines that withholding the notice is in the best interests of the Holders. Section 6.06 Limitation on Suits. A Holder of a Note may pursue a remedy with respect to this Indenture or the Notes only if: (a) such Holder has previously given to the Trustee written notice of a continuing Event of Default; (b) the Holders of at least 25% in aggregate principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy; (c) such Holder of a Note or Holders of Notes offer and, if requested, provide to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense to be incurred in compliance with such request; (d) the Trustee does not comply with the request within 60 days after receipt of the request and the offer and, if requested, the provision of indemnity; and (e) during such 60-day period the Holders of a majority in aggregate principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with the request. A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all of such Holders. 44 Section 6.07 Rights of Holders of Notes to Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal, premium, if any, and interest on the Note, on or after the respective due dates expressed in the Note (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. Section 6.08 Collection Suit by Trustee. If an Event of Default specified in Section 6.01(a) or (b) hereof occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal of, premium, if any, and interest remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. Section 6.09 Trustee May File Proofs of Claim. The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Company (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. 45 Section 6.10 Priorities. If the Trustee collects any money pursuant to this Article, it shall pay out the money in the following order: First: to the Trustee, its agents and attorneys for amounts due under Section 7.07 hereof, including payment of all compensation, expense, and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection; Second: to Holders of Notes for amounts due and unpaid on the Notes for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any and interest, respectively; and Third: to the Company or to such party as a court of competent jurisdiction shall direct. The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 6.10. Section 6.11 Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the cost of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Notes. ARTICLE VII TRUSTEE Section 7.01 Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. 46 (b) Except during the continuance of an Event of Default: (i) The Trustee need perform only those duties that are specifically set forth in this Indenture and the TIA and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee. To the extent of any conflict between the duties of the Trustee hereunder and under the TIA, the TIA shall control. (ii) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein). (c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) this paragraph does not limit the effect of paragraph (b) of this Section; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof. (d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section. (e) No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any liability. The Trustee shall be under no obligation to exercise any of its rights and powers under this Indenture at the request of any Holders unless such Holders shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense that might be incurred by it in compliance with such request. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. 47 Section 7.02 Rights of Trustee. (a) The Trustee may conclusively rely upon any document (whether in its original or facsimile form) believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture. (e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company. Section 7.03 Individual Rights of Trustee. The Trustee, any Paying Agent, any authenticating agent or registrar in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof. Section 7.04 Trustee's Disclaimer. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company's use of the proceeds from the Notes or any money paid to the Company or upon the Company's direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication. 48 Section 7.05 Notice of Defaults. If a Default or Event of Default occurs and is continuing and is known to a Responsible Officer of the Trustee, the Trustee shall mail to Holders of Notes a notice of the Default or Event of Default within 60 days after the occurrence thereof. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest on the Notes, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the best interests of the Holders of the Notes. Section 7.06 Reports by Trustee to Holders of the Notes. Within 60 days after each May 15 beginning with the May 15 following the date of this Indenture, and for so long as Notes remain outstanding, the Trustee shall mail to the Holders of the Notes a brief report dated as of such reporting date that complies with TIA (S)313(a) (but if no event described in TIA (S)313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA (S)313(b)(2). The Trustee shall also transmit by mail all reports as required by TIA (S)313(c). A copy of each report at the time of its mailing to the Holders of Notes shall be mailed to the Company and filed with the SEC and each stock exchange on which the Notes are listed in accordance with TIA (S)313(d). The Company shall promptly notify the Trustee when the Notes are listed on any stock exchange or delisted therefrom. Section 7.07 Compensation and Indemnity. The Company shall pay to the Trustee from time to time such compensation for its acceptance of this Indenture and services hereunder as the parties shall agree from time to time. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. The Company shall indemnify each of the Trustee and any predecessor Trustee against any and all losses, liabilities, claims, damages or expenses (including taxes other than taxes based upon the income or gross receipts of the Trustee) incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Company (including this Section 7.07) and defending itself against any claim (whether asserted by the Company or any Holder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability, claim, damage or expense may be attributable to its negligence or bad faith. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its 49 obligations hereunder. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The obligations of the Company under this Section 7.07 shall survive the satisfaction and discharge of this Indenture. To secure the Company's payment obligations in this Section, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01 (h) or (i) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under the Bankruptcy Code. The Trustee shall comply with the provisions of TIA (S) 313(b)(2) to the extent applicable. Section 7.08 Replacement of Trustee. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section. The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of Notes of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing. The Company may remove the Trustee if: (a) the Trustee fails to comply with Section 7.10 hereof, (b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under the Bankruptcy Code; (c) a custodian or public officer takes charge of the Trustee or its property; or (d) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company. 50 If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, or the Holders of Notes of at least 10% in principal amount of the then outstanding Notes may, at the expense of the Company, petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee, after written request by any Holder of a Note who has been a Holder of a Note for at least six months, fails to comply with Section 7.10 hereof, such Holder of a Note may, at the expense of the Company, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders of the Notes. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company's obligations under Section 7.07 hereof shall continue for the benefit of the retiring Trustee. Section 7.09 Successor Trustee by Merger, Etc. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee. Section 7.10 Eligibility; Disqualification. There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition. This Indenture shall always have a Trustee who satisfies the requirements of TIA (S)310(a)(1), (2) and (5). The Trustee is subject to TIA (S)310(b). Section 7.11 Preferential Collection of Claims Against Company. The Trustee is subject to TIA (S)311(a), excluding any creditor relationship listed in TIA (S)311(b). A Trustee who has resigned or been removed shall be subject to TIA (S)311(a) to the extent indicated therein. 51 ARTICLE VII DEFEASANCE AND DISCHARGE Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance. The Company may, at the option of its Board of Directors evidenced by a resolution set forth in an Officers' Certificate, at any time, elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article VIII. Section 8.02 Legal Defeasance and Discharge. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Company and the Subsidiary Guarantors shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from their obligations with respect to all outstanding Notes on the date the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that the Company and the Subsidiary Guarantors shall be deemed (i) to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be "outstanding" only for the purposes of Section 8.07 hereof and the other Sections of this Indenture referred to in (a) and (b) below, and (ii) to have satisfied all their respective other obligations under such Notes and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of outstanding Notes to receive solely from the trust fund described in Section 8.04 hereof, and as more fully set forth in such Section, payments in respect of the principal of, premium, if any, and interest on such Notes when such payments are due, (b) the obligations of the Company with respect to Notes under Article 2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the respective obligations of the Company in connection therewith and (d) this Article VIII. Subject to compliance with this Article VIII, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof. Section 8.03 Covenant Defeasance. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Company and the Subsidiary Guarantors shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from their obligations under the covenants contained in Sections 4.03 - 4.07 hereof and Articles V and X hereof and the Defaults and Events of Default contained in Sections 6.01(c), (e), (f) and (g) hereof with respect to the outstanding Notes on and after the date the conditions set forth below are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed not to be "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) 52 in connection with such provisions but shall continue to be deemed "outstanding" for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes, the Company and the Subsidiary Guarantors may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such provision, whether directly or indirectly, by reason of any reference elsewhere herein to any such provision or by reason of any reference in any such provision to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. Section 8.04 Conditions to Legal or Covenant Defeasance. In order to exercise either Legal Defeasance or Covenant Defeasance: (a) the Company or any Subsidiary Guarantor shall irrevocably have deposited or caused to be deposited with the Trustee (or another trustee satisfying the requirements of Section 7.10 hereof who shall agree to comply with the provisions of this Article VIII applicable to it) as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of such Securities, (A) cash in U.S. Dollars in an amount, or (B) U.S. Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, money in an amount, or (C) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee (or other qualifying trustee) to pay and discharge, the principal of, and premium, if any, and interest on the outstanding Notes on the Stated Maturity (or redemption date, if applicable) of such principal, premium, if any, or installment of interest; provided that the Trustee shall have been irrevocably instructed in writing by the Company to apply such money or the proceeds of such U.S. Government Obligations to said payments with respect to such Notes. Before such a deposit, the Company may give to the Trustee, in accordance with Section 3.02 hereof, a notice of its election to redeem all of the outstanding Notes at a future date in accordance with Article III hereof, which notice shall be irrevocable. Such irrevocable redemption notice, if given, shall be given effect in applying the foregoing. For this purpose, "U.S. Government Obligations" means securities that are (x) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged or (y) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such U.S. Government Obligation or a specific payment of principal of or interest on any such U.S. Government Obligation held by such custodian for the account of the holder of such depository receipt, provided that (except as required 53 by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of principal of or interest on the U.S. Government Obligation evidenced by such depository receipt; (b) in the case of an election under Section 8.02 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States 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 Issue Date, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (c) in the case of an election under Section 8.03 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (d) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit); (e) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which the Company or any Subsidiary Guarantor is a party or by which it is bound, as evidenced to the Trustee in an Officers' Certificate delivered to the Trustee concurrently with such deposit; and (f) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, which taken together, state that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with. Section 8.05 Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions. Subject to Section 8.06 hereof, all money and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the "Trustee") pursuant to Section 8.04 or 8.08 hereof shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the 54 payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Holders of all sums due and to become due thereon in respect of principal, premium, if any, and interest but such money need not be segregated from other funds except to the extent required by law. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or U.S. Government Obligations deposited pursuant to Section 8.04 or 8.08 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes. Anything in this Article VIII to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon the request of the Company any money or U.S. Government Obligations held by it as provided in Section 8.04 or 8.08 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.04(a) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance, Covenant Defeasance or discharge. Section 8.06 Repayment to Company. Subject to applicable escheat and abandoned property laws, any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest on any Note and remaining unclaimed for two years after such principal, and premium, if any, or interest has become due and payable shall be paid to the Company on its request or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company. Section 8.07 Reinstatement. If the Trustee or Paying Agent is unable to apply any U.S. dollars or U.S. Government Obligations in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's and the Subsidiary Guarantors' obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the case may be; 55 provided, however, that, if the Company or any Subsidiary Guarantor makes any payment of principal of, premium, if any, or interest on any Note following the reinstatement of its obligations, the Company or such Subsidiary Guarantor shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent. Section 8.08 Discharge. This Indenture will cease to be of further effect (except for (1) the rights of Holders to receive the trust funds described in clause (i)(B) of this Section, and (2) the provisions described in Section 8.02, clauses (b), (c) and (d)) when (i) either (A) all outstanding Notes theretofore authenticated and issued (other than destroyed, lost or stolen Notes that have been replaced or paid) have been delivered to the Trustee for cancellation; or (B) all outstanding Notes not theretofore delivered to the Trustee for cancellation (x) have become due and payable, (y) will become due and payable at their Stated Maturity within one year or (z) are to be called for redemption within one year, and the Company has irrevocably deposited or caused to be deposited with the Trustee as funds (immediately available to Holders in the case of clause (x)) in trust for such purpose cash or U.S. Government Obligations, maturing as to principal and interest at such times and in such amounts as will ensure the availability of cash, or a combination thereof that will be sufficient to pay and discharge the entire indebtedness on the Notes for principal and any interest to the date of such deposit (in the case of Notes which have become due and payable), or for principal, premium, if any, and interest to the Stated Maturity or the Redemption Date, as the case may be; or (C) the Company has fulfilled such other means of discharge; (ii) the Company has paid all other sums payable by it; and (iii) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel relating to such matters. ARTICLE IX AMENDMENT, SUPPLEMENT AND WAIVER Section 9.01 Without Consent of Holders of Notes. Notwithstanding Section 9.02 hereof, the Company and the Trustee may amend or supplement this Indenture or the Notes without the consent of any Holder of a Note: (a) to cure any ambiguity, omission, defect or inconsistency, (b) to provide for the assumption of the obligations of the Company or any Subsidiary Guarantor under this Indenture by a Successor upon the merger, consolidation or sale or other disposition of all or substantially all of the assets of the Company or such Subsidiary Guarantor, (c) to provide for uncertificated Notes in addition to or in place of certificated Notes, (d) to provide any security for Notes, (e) to reflect the release of any Subsidiary Guarantor from its Subsidiary Guarantee, or the addition of any Subsidiary of the Company as a Subsidiary Guarantor, in the manner provided in this Indenture, (f) to comply with any requirement to effect or maintain the qualification of this Indenture under the TIA, (g) to add covenants or Events of Default, (h) to establish the form or terms of Notes or (i) to make any change that does not adversely affect the interests of any Holder of Notes in any material respect. 56 Upon the request of the Company relating to the execution of any such amended or supplemental Indenture, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Company in the execution of any amended or supplemental Indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into such amended or supplemental Indenture that affects its own rights, duties, liabilities or immunities under this Indenture or otherwise. Section 9.02 With Consent of Holders of Notes. Except as provided below in this Section 9.02, the Company, the Subsidiary Guarantors and the Trustee may amend or supplement this Indenture with the consent of the Holders of a majority in principal amount of the outstanding Notes affected thereby; provided, however, that no such amendment or supplement may, without the consent of the Holder of each outstanding Note affected thereby, (i) reduce the amount of Notes whose Holders must consent to an amendment, supplement or waiver, (ii) reduce the rate of or change the time for payment of interest, including default interest, on any Note; (iii) reduce the principal of or premium on or change the stated maturity of, any Note; (iv) reduce the premium, if any, payable upon redemption of any Note; (v) change the currency or currency unit of payment of principal of, premium (if any) or any interest on any Note; (vi) impair the right to institute suit for the enforcement of any payment of principal of, premium (if any) or any interest on, any Note; (vii) waive a continuing Default or Event of Default in payment of principal of, premium (if any) or any interest on, any Note; or (viii) amend, change or modify the obligation of the Company to make and consummate a Change of Control Offer in the event of a Change of Control or modify any provisions or definitions with respect thereto. Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by a Responsible Officer of the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Company in the execution of such amended or supplemental Indenture unless such amended or supplemental Indenture affects the Trustee's own rights, duties, liabilities or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental Indenture. It shall not be necessary for the consent of the Holders of Notes under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this Section becomes effective, the Company shall mail to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or 57 supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate principal amount of Notes then outstanding may waive compliance in a particular instance by the Company with any provision of this Indenture with respect to the Notes, except a continuing Default or Event of Default in the payment of the principal of, premium (if any) or interest on, any Note or in respect of a provision that under this Indenture cannot be modified or amended without the consent of the Holder of each outstanding Note. Section 9.03 Compliance with Trust Indenture Act. Every amendment or supplement to this Indenture or the Notes shall be set forth in a amended or supplemental Indenture that complies with the TIA as then in effect. Section 9.04 Revocation and Effect of Consents. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder. Section 9.05 Notation on or Exchange of Notes. The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company, in exchange for all Notes, may issue and the Trustee shall authenticate new Notes that reflect the amendment, supplement or waiver. Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver. Section 9.06 Trustee to Sign Amendments, Etc. The Trustee shall sign any amended or supplemental Indenture authorized pursuant to this Article IX if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties, liabilities or immunities under this Indenture or otherwise. In executing any amended or supplemental indenture, the Trustee shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture. 58 ARTICLE X GUARANTEES Section 10.01 Subsidiary Guarantees. Subject to Section 10.05 hereof, any Restricted Subsidiary that is or becomes a Subsidiary Guarantor shall, jointly and severally, unconditionally guarantee to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, the Notes and the Obligations of the Company hereunder and thereunder, that: (a) the principal of, premium, if any, and interest on the Notes will be promptly paid in full when due, subject to any applicable grace period, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal, premium, if any (to the extent permitted by law), and interest on any interest, if any, on the Notes, and all other payment Obligations of the Company to the Holders or the Trustee hereunder or thereunder will be promptly paid in full and performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other Obligations, the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, subject to any applicable grace period, whether at stated maturity, by acceleration, redemption or otherwise. Failing payment when so due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Subsidiary Guarantors will be jointly and severally obligated to pay the same immediately. An Event of Default under this Indenture or the Notes shall constitute an event of default under the Subsidiary Guarantees, and shall entitle the Holders to accelerate the Obligations of the Subsidiary Guarantors hereunder in the same manner and to the same extent as the Obligations of the Company. The Subsidiary Guarantors shall agree that their Obligations hereunder shall be unconditional, irrespective of the validity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a Subsidiary Guarantor. Each Subsidiary Guarantor shall waive diligence, presentment, demand of payment, notice of acceleration, notice of intent to accelerate, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and shall covenant that its Subsidiary Guarantee will not be discharged except by complete performance of the Obligations contained in the Notes and this Indenture. If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Subsidiary Guarantors, or any Note Custodian, Trustee, liquidator or other similar official acting in relation to either the Company or the Subsidiary Guarantors, any amount paid by the Company or any Subsidiary Guarantor to the Trustee or such Holder, the Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated 59 in full force and effect. Each Subsidiary Guarantor shall agree that it shall not be entitled to, and shall waive, any right to exercise any right of subrogation in relation to the Holders in respect of any Obligations guaranteed by the Subsidiary Guarantee, except as provided under Section 10.05 hereof. Each Subsidiary Guarantor shall further agree that, as between the Subsidiary Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the Obligations guaranteed by the Subsidiary Guarantee may be accelerated as provided in Article 6 hereof for the purposes of its Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations guaranteed thereby, and (y) in the event of any declaration of acceleration of such Obligations as provided in Article 6 hereof, such Obligations (whether or not due and payable) shall forthwith become due and payable by each Subsidiary Guarantor for the purpose of its Subsidiary Guarantee. The Subsidiary Guarantors shall have the right to seek contribution from any non-paying Subsidiary Guarantor pursuant to Section 10.05 after the Notes and the Obligations hereunder shall have been paid in full to the Holders under the Subsidiary Guarantees. Pursuant to Section 4.07 hereof, the Company may, and in certain circumstances shall be obligated to, cause Restricted Subsidiaries that are not Subsidiary Guarantors to become Subsidiary Guarantors. Section 10.02 Execution and Delivery of Subsidiary Guarantee. To evidence its Subsidiary Guarantee set forth in Section 10.01 hereof, each Subsidiary Guarantor shall execute and deliver this Indenture or a supplemental indenture substantially in the form of Exhibit D hereto, which supplemental indenture shall be executed on behalf of such Subsidiary Guarantor, by manual or facsimile signature, by an Officer of such Subsidiary Guarantor. Each Subsidiary Guarantor shall agree that its Subsidiary Guarantee set forth in Section 10.01 hereof shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Subsidiary Guarantee. If an officer who shall have signed this Indenture or a supplemental indenture no longer holds that office at the time the Trustee authenticates the Note on which a Subsidiary Guarantee is endorsed, the Subsidiary Guarantee shall be valid nevertheless. The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the notation of Subsidiary Guarantee set forth in this Indenture on behalf of the Subsidiary Guarantors. Section 10.03 Subsidiary Guarantors May Consolidate, Etc., on Certain Terms. (a) Except as set forth in Articles IV and V hereof, nothing contained in this Indenture shall prohibit a merger between a Subsidiary Guarantor and another Subsidiary Guarantor or a merger between a Subsidiary Guarantor and the Company. 60 (b) Subject to Section 10.04 hereof, no Subsidiary Guarantor may consolidate or merge with or into (whether or not such Subsidiary Guarantor is the surviving Person) another Person unless (i) 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 pursuant to a supplemental indenture, in a form reasonably satisfactory to the Trustee, under the Notes and this Indenture, and (ii) immediately after such transaction, no Default or Event of Default exists. (c) In the case of any such consolidation or merger and upon the assumption by the successor Person, by supplemental indenture, executed and delivered to the Trustee and substantially in the form of Exhibit D hereto, of the Subsidiary Guarantee, such successor Person shall succeed to and be substituted for the Subsidiary Guarantor with the same effect as if it had been named herein as a Subsidiary Guarantor. Section 10.04 Releases of Subsidiary Guarantees. In the event of a sale or other disposition of all or substantially all of the assets of any Subsidiary Guarantor, or a sale or other disposition of all of the Capital Stock or other ownership interests of any Subsidiary Guarantor, in each case by way of merger, consolidation or otherwise, then such Subsidiary (in the event of such a sale or other disposition of all the Capital Stock or other ownership interests of such Subsidiary) or such Subsidiary and the Person acquiring the property (in the event of such a sale or other disposition of all or substantially all of the assets of such Subsidiary) will be released and relieved of any obligations under its Subsidiary Guarantee. If, at any time while any of the Notes remain outstanding, none of the Company's then outstanding Indebtedness (other than Notes) is guaranteed by a Subsidiary Guarantor, such Subsidiary Guarantor shall be automatically and unconditionally released, discharged and relieved of any obligations under its Subsidiary Guarantee (which shall be terminated and cease to have any force and effect). In addition, pursuant to Section 4.07 hereof, any Subsidiary Guarantee incurred after the Issue Date may contain such release provisions as may be set forth in the supplemental indenture evidencing the assumption by such Subsidiary Guarantor of the Subsidiary Guarantee obligations under this Indenture. Section 10.05 Limitation on Subsidiary Guarantor Liability; Contribution. Each Subsidiary Guarantor, and by its acceptance hereof each Holder, hereby confirms that it is the intention of all such parties that the Guarantee by such Subsidiary Guarantor pursuant to its Subsidiary Guarantee not constitute a fraudulent transfer or fraudulent conveyance for purposes of any federal, state or foreign law. To effectuate the foregoing intention, the Holders and each Subsidiary Guarantor hereby irrevocably agree that the obligations of each Subsidiary Guarantor under its Subsidiary Guarantee shall be limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities (including, but not limited to, Guarantor Senior Indebtedness) of such Subsidiary Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Subsidiary Guarantor in respect of the obligations of such other Subsidiary Guarantor under its Subsidiary Guarantee or pursuant to this Section 10.05, 61 result in the obligations of such Subsidiary Guarantor under its Subsidiary Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal, state or foreign law. This Section 10.05 is for the benefit of the creditors of each Subsidiary Guarantor. In order to provide for just and equitable contribution among the Subsidiary Guarantors, the Subsidiary Guarantors agree, inter se, that in the event any payment or distribution is made by any Subsidiary Guarantor (a "Funding Guarantor") under its Subsidiary Guarantee, such Funding Guarantor shall be entitled to a contribution from each other Subsidiary Guarantor (if any) in a pro rata amount based on the Adjusted Net Assets of each Subsidiary Guarantor (including the Funding Guarantor) for all payments, damages and expenses incurred by that Funding Guarantor in discharging the Company's obligations with respect to the Notes or any other Subsidiary Guarantor's obligations with respect to its Subsidiary Guarantee. Section 10.06 Trustee to Include Paying Agent. In case at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article 10 shall in each case (unless the context shall otherwise require) be construed as extending to and including such Paying Agent within its meaning as fully and for all intents and purposes as if such Paying Agent were named in this Article 10 in place of the Trustee. ARTICLE XI MISCELLANEOUS Section 11.01 Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA (S)318(c), the imposed duties shall control. Section 11.02 Notices. Any notice or communication by the Company, and Subsidiary Guarantor or the Trustee to the others is duly given if in writing and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), telecopier or overnight air courier guaranteeing next day delivery, to the others' address: 62 If to the Company or any Subsidiary Guarantor: Ocean Energy, Inc. 1201 Louisiana, Suite 1400 Houston, Texas 77002-5603 Telecopy: (713) 653-5024 If to the Trustee: Norwest Bank Minnesota, National Association Sixth and Marquette Minneapolis, Minnesota 55479-0069 Attention: Corporate Trust Operations Telecopy: (612) 667-9825 The Company, any Subsidiary Guarantor or the Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications. All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. Any notice or communication to a Holder shall be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication shall also be so mailed to any Person described in TIA (S) 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. If the Company mails a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time. Section 11.03 Communication by Holders of Notes with Other Holders of Notes. Holders may communicate pursuant to TIA (S) 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA (S) 312(c). 63 Section 11.04 Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: (a) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 11.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and (b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 11.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied. Section 11.05 Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA (S) 314(a)(4)) shall comply with the provisions of TIA (S) 314(e) and shall include: (a) a statement that the Person making such certificate or opinion has read such covenant or condition; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been satisfied; and (d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied. Section 11.06 Rules by Trustee and Agents. The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions. 64 Section 11.07 No Personal Liability of Directors, Officers, Employees and Stockholders. No past, present or future director, officer, employee, incorporator, partner, member or stockholder of the Company or any Subsidiary Guarantor, or of any member, partner or stockholder of any such entity, as such, shall have any liability for any obligations of the Company under the Notes, this Indenture or the Subsidiary Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Section 11.08 Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF, SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES. Section 11.09 No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. Section 11.10 Successors. All agreements of the Company and the Subsidiary Guarantors in this Indenture and the Notes shall bind their respective successors. All agreements of the Trustee in this Indenture shall bind its successors. Section 11.11 Severability. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 11.12 Counterpart Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 65 Section 11.13 Table of Contents, Headings, Etc. The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof. [Signatures Page(s) Follow] 66 SIGNATURES Dated as of July 8, 1998 ISSUER: Ocean Energy, Inc., a Delaware corporation By: ------------------------------------- Name: Title: SUBSIDIARY GUARANTOR: Ocean Energy, Inc., a Louisiana corporation By: ------------------------------------- Name: Title: TRUSTEE: Norwest Bank Of Minnesota, National Association By: ------------------------------------- Name: Title: EXHIBIT A (Face of Note) CUSIP No. 674812 AJ 1 8 1/4% Series [A/B] Senior Notes due 2018 No. $ -------- ------------- Ocean Energy, Inc. promises to pay to or registered assigns, the principal sum of Dollars on July 1, 2018. Interest Payment Dates: January 1 and July 1 Record Dates: December 15 and June 15 Ocean Energy, Inc. By: ------------------------------------- Name: Title: By: ------------------------------------- Name: Title: This is one of the Global Notes referred to in the within-mentioned Indenture: NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION as Trustee By: Dated: ------------------------------- ---------------------------------- A-1 (Back of Note) 8 1/4% Senior Notes due 2018 [Insert the Global Note Legend, if applicable, pursuant to the provisions of the Indenture] [Insert the Private Placement Legend, if applicable, pursuant to the provisions of the Indenture] Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. Interest. Ocean Energy, Inc., a Delaware corporation (the "Company"), promises to pay interest on the principal amount of this Note at 8 1/4% per annum, from July 8, 1998 until maturity. The Company will pay interest semi- annually in arrears on January 1 and July 1 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be January 1, 1999. The Company shall pay interest on overdue principal and premium, if any, from time to time on demand at the rate borne on the Notes; it shall pay interest on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. Method of Payment. The Company will pay interest on the Notes (except defaulted interest) to the Persons who are registered Holders of Notes at the close of business on the December 15 or June 15 next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest, and except that, in the case of interest payable at the maturity of the principal hereof, interest shall be paid to the Person to whom principal is paid. The Notes will be payable as to principal, premium, if any, and interest at the office or agency of the Company maintained for such purpose within the City and State of New York, or, at the option of the Company, payment of principal, premium, if any, and interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders or by wire transfer in the case of Notes held in book-entry form. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. 3. Paying Agent and Registrar. Initially, Norwest Bank of Minnesota, National Association, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity. A-2 4. Indenture. The Company issued the Notes under an Indenture dated as of July 8, 1998 (as amended and supplemented from time to time, the "Indenture") between the Company, the Subsidiary Guarantors parties thereto and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Notes are obligations of the Company limited to $125,000,000 in aggregate principal amount. 5. Optional Redemption. (a) The Notes will be subject to redemption at any time at the option of the Company, in whole but not in part, at a redemption price equal to the sum of (a) an amount equal to 100% of the principal amount thereof and (b) the Make- Whole Premium, together with accrued and unpaid interest to the date fixed for redemption. In no event will such redemption price ever be less than 100% of the principal amount of the Notes plus accrued interest to the date of redemption. (b) Any redemption pursuant to this paragraph 5 shall be made pursuant to the provisions of Article III of the Indenture. Notice of redemption will be mailed at least 30 days but not more than 60 days before a redemption date to each Holder whose Notes are to be redeemed at its registered address. On and after the redemption date, interest will cease to accrue on Notes or portions thereof called for redemption. 6. Mandatory Redemption. Except as set forth in paragraph 7 below, the Company shall not be required to make mandatory redemption payments with respect to the Notes. 7. Purchase of Notes upon Change of Control. Upon the occurrence of a Change of Control, the Company shall be obligated to make an offer to purchase all of the then outstanding Notes (a "Change of Control Offer"), and shall purchase, on a business day (the "Change of Control Purchase Date") not more than 70 nor less than 30 days following the Change of Control, all of the then outstanding Notes validly tendered pursuant to such Change of Control Offer, at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the Change of Control Purchase Date. 8. Denominations, Transfer, Exchange. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Note or portion of a Note selected for redemption. Also, it need not exchange or register the transfer of A-3 any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 9. Persons Deemed Owners. The registered Holder of a Note may be treated as its owner for all purposes. 10. Amendment, Supplement and Waiver. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes, and any existing default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes. Without the consent of any Holder of a Note, the Indenture or the Notes may be amended or supplemented to (a) to cure any ambiguity, omission, defect or inconsistency, (b) to provide for the assumption of the obligations of the Company or any Subsidiary Guarantor under the Indenture by a Successor upon the merger, consolidation or sale or other disposition of all or substantially all of the assets of the Company or such Subsidiary Guarantor, (c) to provide for uncertificated Notes in addition to or in place of certificated Notes, (d) to provide any security for Notes, (e) to reflect the release of any Subsidiary Guarantor from its Subsidiary Guarantee, or the addition of any Subsidiary of the Company as a Subsidiary Guarantor, in the manner provided in the Indenture, (f) to comply with any requirement to effect or maintain the qualification of the Indenture under the TIA, (g) to add covenants or Events of Default, (h) to establish the form or terms of Notes or (i) to make any change that does not adversely affect the interests of any Holder of Notes in any material respect. 11. Defaults and Remedies. Events of Default include: (a) default in the payment when due of principal of or premium, if any, on the Notes when the same becomes due and payable at maturity, upon redemption, upon repurchase pursuant to a Change of Control Offer, upon acceleration or otherwise; (b) default in the payment when due of interest on the Notes and such default continues for a period of 30 days; (c) failure by the Company to make or consummate a Change of Control Offer in accordance with the provisions of the Indenture; (d) failure by the Company or any Subsidiary Guarantor to observe or perform any other term, covenant, or agreement in the Indenture, the Notes or any Subsidiary Guarantee (other than a default specified in paragraphs (a), (b) and (c) above) for 60 days after notice to (i) the Company by the Trustee or (ii) the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Notes then outstanding; (e) default beyond any applicable grace period with respect to the principal of, premium, if any or interest on any Indebtedness of the Company or any Restricted Subsidiary for A-4 money borrowed (other than the Notes or the Subsidiary Guarantees) when due, or any other default causing acceleration of any Indebtedness of the Company or any Restricted Subsidiary for money borrowed, provided that the aggregate principal amount of such Indebtedness shall exceed the greater of (i) $20 million and (ii) 5% of Consolidated Net Tangible Assets; provided further that any such default is not cured or waived or any such acceleration is not rescinded, or such debt is not repaid, within a period of 20 days after a written notice thereof to the Company as provided in the Indenture; (f) any Subsidiary Guarantee ceases to be, or is asserted by the Company or any Subsidiary Guarantor not to be, in effect (except in accordance with the Indenture); (g) final judgments or orders rendered against the Company or any Restricted Subsidiary that are unsatisfied and that require the payment in money, either individually or in an aggregate amount, that exceed the coverage under applicable insurance policies by the greater of (i) $20 million and (ii) 5% of Consolidated Net Tangible Assets (as shown in the most recent audited balance sheet of the Company and its Subsidiaries), and either (x) commencement by any creditor of an enforcement proceeding upon such judgment (other than a judgment that is stayed by reason of pending appeal or otherwise) or (y) the occurrence of a 60-day period during which a stay of such judgment or order, by reason of pending appeal or otherwise, was not in effect; (h) the entry of a decree or order by a court having jurisdiction in the premises (i) for relief in respect of the Company, any Subsidiary Guarantor or any Significant Subsidiary in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or (ii) adjudging the Company, any Subsidiary Guarantor or any Significant Subsidiary bankrupt or insolvent, or approving a petition seeking reorganization, arrangement, adjustment or composition of the Company, any Subsidiary Guarantor or any Significant Subsidiary under any applicable federal or state law, or appointing under any such law a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company, any Subsidiary Guarantor or any Significant Subsidiary or of a substantial part of their consolidated assets, or ordering the winding up or liquidation of their affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or (i) the commencement by the Company, any Subsidiary Guarantor or any Significant Subsidiary of a voluntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by the Company, any Subsidiary Guarantor or any Significant Subsidiary to the entry of a decree or order for relief in respect thereof in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by the Company, any Subsidiary Guarantor or any Significant Subsidiary of a petition or consent seeking reorganization or relief under any applicable federal or state law, or the consent by it under any such law to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or A-5 sequestrator (or other similar official) of any of the Company, any Subsidiary Guarantor or any Significant Subsidiary or of any substantial part of their consolidated assets, or the making by it of an assignment for the benefit of creditors under any such law, or the admission by it in writing of its inability to pay its debts generally as they become due or taking of corporate action by the Company, any Subsidiary Guarantor or any Significant Subsidiary in furtherance of any such action. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal and interest on the Notes or to enforce the performance of any provision of the Notes or the Indenture. 12. Trustee Dealings with Company. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee. 13. No Recourse Against Others. A director, officer, employee, incorporator, partner, member or stockholder, of the Company or any Subsidiary of the Company or any Subsidiary Guarantor, as such, shall not have any liability for any obligations of the Company under the Notes, the Subsidiary Guarantees or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 14. Authentication. This Note shall not be valid until authenticated by the manual signature of a Responsible Officer of the Trustee or an authenticating agent. 15. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 16. Additional Rights of Holders of Restricted Global Notes and Restricted Definitive Notes. In addition to the rights provided to Holders of Notes under the Indenture, Holders of Restricted Global Notes and Restricted Definitive Notes shall have all the rights set forth in the Registration Rights Agreement dated as of June 8, 1998, between the Company and the parties named on the signature pages thereof, as amended from time to time (the "Registration Rights Agreement"). 17. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. A-6 The Company will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to: Ocean Energy, Inc. 1201 Louisiana, Suite 1400 Houston, Texas 77002-5603 Telecopy: (713) 653-5024 A-7 IF THE NOTES ARE GUARANTEED BY ONE OR MORE SUBSIDIARY GUARANTORS, THE FOLLOWING MAY BE INSERTED IN THE NOTES: NOTATION OF SUBSIDIARY GUARANTEE Subject to the limitations set forth in the Indenture, the Subsidiary Guarantors (as defined in the Indenture) have, jointly and severally, unconditionally guaranteed the Notes to the extent set forth in the Indenture. Capitalized terms used herein shall have the meanings assigned to them in the Indenture unless otherwise indicated. The obligations of each Subsidiary Guarantor are limited as set forth in the Indenture. Any Subsidiary Guarantor may be released from its Subsidiary Guarantee upon the terms and subject to the conditions provided in the Indenture. The Subsidiary Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Note upon which this Subsidiary Guarantee is noted shall have been executed by the Trustee under the Indenture by the manual signature of one of its authorized officers. [SUBSIDIARY GUARANTOR] By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- A-8 ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to - -------------------------------------------------------------------------------- (Insert assignee's soc. sec. or tax I.D. no.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint --------------------------------------------------------- to transfer this Note on the books of the Company. The agent may substitute another to act for him. - -------------------------------------------------------------------------------- Date: Your Signature: ----------------------------------------------------------------- (Sign exactly as your name appears on the face of this Note) SIGNATURE GUARANTEE ---------------------------------------------- Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A-9 OPINION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 4.06 of the Indenture, check the following box: [_] If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.06 of the Indenture, state the amount you elect to have purchased: $ ------------- Date: Your Signature: ----------------------------------------------------------------- (Sign exactly as your name appears on the face of the Note) Tax Identification No.: --------------------------------------------------------- SIGNATURE GUARANTEE ---------------------------------------------- Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A-10 SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE/*/ The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:
PRINCIPAL AMOUNT SIGNATURE OF AMOUNT OF AMOUNT OF OF THIS GLOBAL NOTE AUTHORIZED DECREASE IN INCREASE IN FOLLOWING SUCH SIGNATORY OF PRINCIPAL AMOUNT PRINCIPAL AMOUNT DECREASE (OR TRUSTEE OR NOTE DATE OF EXCHANGE OF THIS GLOBAL NOTE OF THIS GLOBAL NOTE INCREASE) CUSTODIAN - ------------------ --------------------- --------------------- --------------------- -----------------
- ----------------------------- /*/This should be included only if the Note is issued in global form. A-11 EXHIBIT B FORM OF CERTIFICATE OF TRANSFER Ocean Energy, Inc. 1201 Louisiana, Suite 1400 Houston, Texas 77002-5603 Attention: Robert K. Reeves, Executive Vice President Norwest Bank Minnesota, National Association Sixth and Marquette Minneapolis, Minnesota 55479-0069 Attention: Corporate Trust Operations Re: 8 1/4% Senior Notes due 2018 Reference is hereby made to the Indenture, dated as of July 8, 1998 (as amended and supplemented from time to time, (the "Indenture"), between Ocean Energy, Inc., as issuer (the "Company"), the Subsidiary Guarantors parties thereto and Norwest Bank Minnesota, National Association, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. ____________________, (the "Transferor") owns and proposes to transfer the Note[s] or interest in such in such Note[s] specified in Annex A hereto, in the principal amount of $__________ in such Note[s] or interests (the "Transfer"), to ____________________ (the "Transferee"), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that: [CHECK ALL THAT APPLY] 1. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believed and believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the B-1 proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Definitive Note and in the Indenture and the Securities Act. 2. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE REGULATION S GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act and (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Global Note and/or the Definitive Note and in the Indenture and the Securities Act. 3. [_] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A DEFINITIVE NOTE PURSUANT TO ANY PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one): (a) [_] such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act; or (b) [_] such Transfer is being effected to the Company or a subsidiary thereof; or (c) [_] such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act. B-2 4. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE. (a) [_] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture. (b) [_] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture. (c) [_] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture. This certificate and the statements contained herein are made for your benefit and the benefit of the Company. - ---------------------------------- [Insert Name of Transferor] By: ------------------------------- Name: Title: Dated: B-3 ANNEX A TO CERTIFICATE OF TRANSFER 1. The Transferor owns and proposes to transfer the following: [CHECK ONE OF (a) OR (b)] (a) [_] a beneficial interest in the: (i) [_] 144A Global Note (CUSIP __________), or (ii) [_] Regulation S Global Note (CUSIP _________); or (b) [_] a Restricted Definitive Note. 2. After the Transfer the Transferee will hold: [CHECK ONE] (a) [_] a beneficial interest in the: (i) [_] 144A Global Note (CUSIP __________), or (ii) [_] Regulation S Global Note (CUSIP __________), or (iii) [_] Unrestricted Global Note (CUSIP __________); or (b) [_] a Restricted Definitive Note. (c) [_] an Unrestricted Definitive Note, in accordance with the terms of the Indenture. B-4 EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE Ocean Energy, Inc. 1201 Louisiana, Suite 1400 Houston, Texas 77002-5603 Attention: Robert K. Reeves, Executive Vice President Norwest Bank of Minnesota, National Association Sixth and Marquette Minneapolis, Minnesota 55479-0069 Attention: Corporate Trust Operations Re: 8 1/4% Senior Notes due 2018 (CUSIP No. 674812 AJ 1) Reference is hereby made to the Indenture, dated as of July 8, 1998 (the "Indenture"), between Ocean Energy, Inc., as issuer (the "Company"), the Subsidiary Guarantors named therein and Norwest Bank Minnesota, National Association, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. ____________________ (the "Owner") owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $__________ in such Note[s] or interests (the "Exchange"). In connection with the Exchange, the Owner hereby certifies that: 1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL NOTE (a) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required C-1 in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (b) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (c) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Owner's Exchange of a Restricted Definitive Note for a beneficiary interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (d) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. 2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES (a) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner's own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the C-2 restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act. (b) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner's Restricted Definitive Note for a beneficial interest in the [CHECK ONE] [_] 144A Global Note [_] Regulation S Global Note with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act. This certificate and the statements contained herein are made for your benefit and the benefit of the Company. [Insert Name of Owner] By: -------------------------------------- Name: Title: Dated:_______________, _____ C-3 EXHIBIT D FORM OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of _______________, _____ among Ocean Energy, Inc., a Delaware corporation (the "Company"), [Existing Subsidiary Guarantors, if any,] [Subsidiary Guarantor] (the "New Subsidiary Guarantor"), and Norwest Bank Minnesota, National Association, as trustee under the indenture referred to below (the "Trustee"). Capitalized terms used herein and not defined herein shall have the meaning ascribed to them in the Indenture (as defined below). W I T N E S E T H WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture (as amended and supplemented from time to time, the "Indenture"), dated as of July 8, 1998, providing for the issuance of an aggregate principal amount of $125,000,000 of 8 1/4% Senior Notes due 2018 (the "Notes"); WHEREAS, Section 4.07 and Article X of the Indenture provide that under certain circumstances the Company may or must cause certain of its subsidiaries to execute and deliver to the Trustee a supplemental indenture pursuant to which such subsidiaries shall unconditionally guarantee all of the Company's Obligations under the Notes pursuant to a Subsidiary Guarantee on the terms and conditions set forth herein; and WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Company, the New Subsidiary Guarantor and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: 1. Agreement to Guarantee. Subject to Section 10.05 of the Indenture, the New Subsidiary Guarantor hereby, jointly and severally with all other Subsidiary Guarantors, unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, the Notes and the Obligations of the Company under the Notes or under the Indenture, that: (a) the principal of, premium, if any, and interest on the Notes will be promptly paid in full when due, subject to any applicable grace period, whether at maturity, by acceleration, redemption or otherwise, and interest on overdue principal, premium, if any (to the D-1 extent permitted by law), and interest on any interest, if any, on the Notes and all other payment Obligations of the Company to the Holders or the Trustee under the Indenture or under the Notes will be promptly paid in full and performed, all in accordance with the terms thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other Obligations, the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, subject to any applicable grace period, whether at stated maturity, by acceleration, redemption or otherwise. Failing payment when so due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Subsidiary Guarantors will be jointly and severally obligated to pay the same immediately. The obligations of the Subsidiary Guarantors to the Holders and to the Trustee pursuant to this Supplemental Indenture and the Indenture are expressly set forth in Article X of the Indenture, and reference is hereby made to such Indenture for the precise terms of this Subsidiary Guarantee. The terms of Article X of the Indenture are incorporated herein by reference. This Subsidiary Guarantee is subject to release as and to the extent provided in Sections 4.07(c), 4.07(d) and 10.04 of the Indenture. 2. No Recourse Against Others. No past, present or future director, officer, employee, incorporator, partner, member, shareholder or agent of the New Subsidiary Guarantor, as such, shall have any liability for any obligations of the Company or any Subsidiary Guarantor under the Notes, any Subsidiary Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. 3. New York Law to Govern. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE. 4. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 5. Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof. 6. The Trustee. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the correctness of the recitals of fact contained herein, all of which recitals are made solely by the New Subsidiary Guarantor. IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written. D-2 Dated: OCEAN ENERGY, INC., a Delaware corporation By: ------------------------------------- Name: Title: [NEW SUBSIDIARY GUARANTOR] By: ------------------------------------- Name: Title: [EXISTING SUBSIDIARY GUARANTORS, IF ANY] By: ------------------------------------- Name: Title: NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee By: ------------------------------------- Name: Title: D-3 EX-10.25 11 REGISTRATION RIGHTS AGREEMENT - JULY 8, 1998 Exhibit 10.25 REGISTRATION RIGHTS AGREEMENT DATED AS OF JULY 8, 1998 AMONG OCEAN ENERGY, INC., ISSUER, OCEAN ENERGY, INC., LOUISIANA, SUBSIDIARY GUARANTOR, AND MERRILL LYNCH & CO., CHASE SECURITIES INC., J.P. MORGAN SECURITIES, INC., LEHMAN BROTHERS, INC., SALOMON BROTHERS INC REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (the "Agreement") is made and entered into this day of July, 1998, among OCEAN ENERGY, INC., a Delaware corporation (the "Company"), and OCEAN ENERGY, INC., a Louisiana corporation and a direct wholly-owned subsidiary of the Company (the "Subsidiary Guarantor"), and MERRILL LYNCH & CO., MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED ("Merrill Lynch"), CHASE SECURITIES INC., J.P. MORGAN SECURITIES, INC., LEHMAN BROTHERS, INC. and SALOMON BROTHERS INC (collectively, the "Initial Purchasers"). This Agreement is made pursuant to the Purchase Agreement, dated July 1, 1998, among the Company and the Initial Purchasers (the "Purchase Agreement"), which provides for the sale by the Company to the Initial Purchasers of an aggregate of $125,000,000 principal amount of the Company's 7 5/8 % Series A Senior Notes due 2005 (the "2005 Notes"), $125,000,000 principal amount of 8 1/4% Series A Senior Notes due 2018 (the "2018 Notes" and, together with the 2005 Notes, the "Senior Notes") and $250,000,000 principal amount of the Company's 8 3/8% Series A Senior Subordinated Notes due 2008 (the "Senior Subordinated Notes" and, together with the Senior Notes, the "Securities"). In order to induce the Initial Purchasers to enter into the Purchase Agreement, the Company and the Subsidiary Guarantor have agreed to provide to the Initial Purchasers and their direct and indirect transferees the registration rights set forth in this Agreement. The execution of this Agreement is a condition to the closing under the Purchase Agreement. In consideration of the foregoing, the parties hereto agree as follows: 1. Definitions. As used in this Agreement, the following capitalized defined terms shall have the following meanings: "1933 Act" shall mean the Securities Act of 1933, as amended from time to time. "1934 Act" shall mean the Securities Exchange Act of 1934, as amended from time to time. "Closing Date" shall mean the Closing Time as defined in the Purchase Agreement. "Company" shall have the meaning set forth in the preamble and shall also include the Company's successors. "Depositary" shall mean The Depository Trust Company, or any other depositary appointed by the Company, provided, however, that such depositary must have an address in the Borough of Manhattan, in the City of New York. "Exchange Offer" shall mean the exchange offer by the Company of Exchange Securities for Registrable Securities pursuant to Section 2.1 hereof. "Exchange Offer Registration" shall mean a registration under the 1933 Act effected pursuant to Section 2.1 hereof. "Exchange Offer Registration Statement" shall mean an exchange offer registration statement on Form S-4 (or, if applicable, on another appropriate form), and all amendments and supplements to such registration statement, including the Prospectus contained therein, all exhibits thereto and all documents incorporated by reference therein. "Exchange Period" shall have the meaning set forth in Section 2.1 hereof. "Exchange Securities" shall mean the 7 5/8% Series B Senior Notes due 2005, the 8 1/4% Series B Senior Notes due 2018 and the 8 3/8% Series B Senior Subordinated Notes due 2008 issued by the Company under the Indentures containing terms identical to the 2005 Notes, the 2018 Notes and the Senior Subordinated Notes, respectively, in all material respects (except for references to certain interest rate provisions, restrictions on transfers and restrictive legends) and the related guarantees of the Securities by the Subsidiary Guarantor, to be offered to Holders of Securities in exchange for Registrable Securities pursuant to the Exchange Offer. "Holder" shall mean an Initial Purchaser, for so long as it owns any Registrable Securities, and each of its successors, assigns and direct and indirect transferees who become registered owners of Registrable Securities under the Indentures. "Indentures" shall mean, collectively, (i) the Indentures relating to the Senior Notes, each dated as of July 8, 1998, among the Company, the Subsidiary Guarantor and NorWest Bank of Minnesota, National Association, as trustee and (ii) the Indenture relating to the Senior Subordinated Notes, dated as of July 8, 1998, among the Company, the Subsidiary Guarantor and U.S. Bank Trust, National Association, as trustee, as the same may be amended, supplemented, waived or otherwise modified from time to time in accordance with the terms thereof. "Initial Purchaser" or "Initial Purchasers" shall have the meaning set forth in the preamble. "Majority Holders" shall mean the Holders of a majority of the aggregate principal amount of Outstanding (as defined in the Indentures) Registrable Securities; provided, however, that whenever the consent or approval of Holders of a specified percentage of Registrable Securities is required hereunder, Registrable Securities held by the Company and other obligors on the Securities or any Affiliate (as defined in the Indentures) of the -2- Company shall be disregarded in determining whether such consent or approval was given by the Holders of such required percentage amount. "Participating Broker-Dealer" shall mean any of Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Chase Securities Inc., J.P. Morgan Securities, Inc., Lehman Brothers, Inc. and Salomon Brothers Inc and any other broker-dealer which makes a market in the Securities and exchanges Registrable Securities in the Exchange Offer for Exchange Securities. "Person" shall mean an individual, partnership (general or limited), corporation, limited liability company, trust or unincorporated organization, or a government or agency or political subdivision thereof. "Prospectus" shall mean the prospectus included in a Registration Statement, including any preliminary prospectus, and any such prospectus as amended or supplemented by any prospectus supplement, including any such prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by a Shelf Registration Statement, and by all other amendments and supplements to a prospectus, including post-effective amendments, and in each case including all material incorporated by reference therein. "Purchase Agreement" shall have the meaning set forth in the preamble. "Registrable Securities" shall mean the Securities; provided, however, that Securities shall cease to be Registrable Securities when (i) a Registration Statement with respect to such Securities shall have been declared effective under the 1933 Act and such Securities shall have been disposed of pursuant to such Registration Statement, (ii) such Securities have been sold to the public pursuant to Rule 144 (or any similar provision then in force, but not Rule 144A) under the 1933 Act, (iii) such Securities shall have ceased to be outstanding or (iv) the Exchange Offer is consummated (except in the case of Securities purchased from the Company and continued to be held by the Initial Purchaser). "Registration Expenses" shall mean any and all expenses incident to performance of or compliance by the Company and the Subsidiary Guarantor with this Agreement, including without limitation: (i) all SEC, stock exchange or National Association of Securities Dealers, Inc. (the "NASD") registration and filing fees, including, if applicable, the fees and expenses of any "qualified independent underwriter" (and its counsel) that is required to be retained by any holder of Registrable Securities in accordance with the rules and regulations of the NASD, (ii) all fees and expenses incurred in connection with compliance with state securities or blue sky laws and compliance with the rules of the NASD (including reasonable fees and disbursements of one firm of legal counsel for any underwriters or Holders in connection with blue sky qualification of any of the Exchange Securities or Registrable Securities and any filings with the NASD), (iii) all expenses of any Persons in preparing or -3- assisting in preparing, word processing, printing and distributing any Registration Statement, any Prospectus, any amendments or supplements thereto relating to the performance of and compliance with this Agreement, (iv) all fees and expenses incurred in connection with the listing, if any, of any of the Registrable Securities or the Exchange Securities, as the case may be, on any securities exchange or exchanges, (v) all rating agency fees, (vi) the fees and disbursements of counsel for the Company and the Subsidiary Guarantor and of the independent public accountants of the Company, including the expenses of any special audits or "cold comfort" letters required by or incident to such performance and compliance, (vii) the fees and expenses of the Trustee, and any escrow agent or custodian, (viii) the reasonable fees and out-of-pocket expenses of the Initial Purchasers in connection with the Exchange Offer, including the reasonable fees and expenses of counsel to the Initial Purchasers in connection therewith, (ix) the reasonable fees and disbursements of one firm of legal counsel selected by the Majority Holders to represent the Holders of Registrable Securities and (x) any fees and disbursements of the underwriters customarily required to be paid by issuers or sellers of securities and the fees and expenses of any special experts retained by the Company or the Subsidiary Guarantor in connection with any Registration Statement, but excluding underwriting discounts and commissions; and transfer taxes, if any, relating to the sale or disposition of Registrable Securities by a Holder. "Registration Statement" shall mean any registration statement of the Company and the Subsidiary Guarantor which covers any of the Exchange Securities or Registrable Securities pursuant to the provisions of this Agreement, and all amendments and supplements to any such Registration Statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated or deemed to be incorporated by reference therein. "Securities" shall have the meaning set forth in the preamble. "SEC" shall mean the United States Securities and Exchange Commission or any successor agency or governmental body performing the functions currently performed by the United States Securities and Exchange Commission. "Senior Notes" shall have the meaning set forth in the preamble. "Senior Subordinated Notes" shall have the meaning set forth in the preamble. "Shelf Registration" shall mean a registration effected pursuant to Section 2.2 hereof. "Shelf Registration Statement" shall mean a "shelf" registration statement of the Company and the Subsidiary Guarantor pursuant to the provisions of Section 2.2 of this Agreement which covers all of the Registrable Securities on an appropriate form under Rule 415 under the 1933 Act, or any similar rule that may be adopted by the SEC, and all amendments and supplements to such registration statement, including post-effective -4- amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "Subsidiary Guarantor" shall have the meaning set forth in the preamble and also includes any subsidiary of the Company that becomes a guarantor of the Securities pursuant to the terms and provisions of the Indentures. "Trustees" shall mean the trustees with respect to the Securities under the Indentures. 2. Registration Under the 1933 Act. 2.1 Exchange Offer. The Company and the Subsidiary Guarantor shall (A) prepare and, as soon as practicable but not later than 60 days following the Closing Date, file with the SEC an Exchange Offer Registration Statement on an appropriate form under the 1933 Act with respect to a proposed Exchange Offer and the issuance and delivery to the Holders, in exchange for the Registrable Securities, of a like principal amount of Exchange Securities, (B) use its reasonable best efforts to cause the Exchange Offer Registration Statement to be declared effective under the 1933 Act within 120 days of the Closing Date, (C) use its reasonable best efforts to keep the Exchange Offer Registration Statement effective until the closing of the Exchange Offer and (D) use its reasonable best efforts to cause the Exchange Offer to be consummated not later than 180 days following the Closing Date. The Exchange Securities will be issued under the Indentures. Upon the effectiveness of the Exchange Offer Registration Statement, the Company and the Subsidiary Guarantor shall promptly commence the Exchange Offer, it being the objective of such Exchange Offer to enable each Holder eligible and electing to exchange Registrable Securities for Exchange Securities (assuming that such Holder (a) is not an affiliate of the Company or the Subsidiary Guarantor within the meaning of Rule 405 under the 1933 Act, (b) is not a broker-dealer tendering Registrable Securities acquired directly from the Company for its own account, (c) acquired the Exchange Securities in the ordinary course of such Holder's business and (d) has no arrangements or understandings with any person to participate in the Exchange Offer for the purpose of distributing the Exchange Securities) to transfer such Exchange Securities from and after their receipt without any limitations or restrictions under the registration requirements of the 1933 Act and without material restrictions under the securities laws of a substantial proportion of the several states of the United States. In connection with the Exchange Offer, the Company shall: (a) mail to each Holder a copy of the Prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents; (b) keep the Exchange Offer open for acceptance for a period of not less than 30 calendar days after the date notice thereof is mailed to the Holders (or longer if required by applicable law) (such period referred to herein as the "Exchange Period"); -5- (c) utilize the services of the Depositary for the Exchange Offer; (d) permit Holders to withdraw tendered Registrable Securities at any time prior to 5:00 p.m. (Eastern Standard Time), on the last business day of the Exchange Period, by sending to the institution specified in the notice, a telegram, telex, facsimile transmission or letter setting forth the name of such Holder, the principal amount of Registrable Securities delivered for exchange, and a statement that such Holder is withdrawing his election to have such Securities exchanged; (e) notify each Holder that any Registrable Security not tendered will remain outstanding and continue to accrue interest, but will not retain any rights under this Agreement (except in the case of certain rights retained by the Initial Purchasers and Participating Broker-Dealers as provided herein); and (f) otherwise comply in all material respects with all applicable laws relating to the Exchange Offer. As soon as practicable after the close of the Exchange Offer, the Company and the Subsidiary Guarantor shall: (i) accept for exchange all Registrable Securities duly tendered and not validly withdrawn pursuant to the Exchange Offer in accordance with the terms of the Exchange Offer Registration Statement and the letter of transmittal which shall be an exhibit thereto; (ii) deliver or cause to be delivered all Registrable Securities so accepted for exchange to the Trustee for cancellation; and (iii) cause the Trustee promptly to authenticate and deliver Exchange Securities to each Holder of Registrable Securities so accepted for exchange in a principal amount equal to the principal amount of the Registrable Securities of such Holder so accepted for exchange. Interest on each Exchange Security will accrue from the last date on which interest was paid on the Registrable Securities surrendered in exchange therefor or, if no interest has been paid on the Registrable Securities, from the date of original issuance. The Exchange Offer shall not be subject to any conditions, other than (i) that the Exchange Offer, or the making of any exchange by a Holder, does not violate applicable law or any applicable interpretation of the staff of the SEC, (ii) the due tendering of Registrable Securities in accordance with the Exchange Offer, (iii) that each Holder of Registrable Securities exchanged in the Exchange Offer shall have represented that all Exchange Securities to be received by it shall be acquired in the ordinary course of its business and that at the time of the consummation of the Exchange Offer it shall have no arrangement or -6- understanding with any person to participate in the distribution (within the meaning of the 1933 Act) of the Exchange Securities and shall have made such other representations as may be reasonably necessary under applicable SEC rules, regulations or interpretations to render the use of Form S-4 or other appropriate form under the 1933 Act available, (iv) that no action or proceeding shall have been instituted or threatened in any court or by or before any governmental agency with respect to the Exchange Offer, (v) that there shall not have been adopted or enacted any law, statute, rule or regulation, (vi) that there shall not have been declared by United States federal or New York state authorities a banking moratorium, (vii) that trading on the New York Stock Exchange or generally in the United States over-the-counter market shall not have been suspended by order of the SEC or any other governmental authority and (viii) such other conditions as may be reasonably acceptable to Merrill Lynch, in each of clauses (iv) through (viii), which, in the Company's judgment, would reasonably be expected to impair the ability of the Company to proceed with the Exchange Offer. The Company shall inform the Initial Purchasers of the names and addresses of the Holders to whom the Exchange Offer is made, and the Initial Purchasers shall have the right to contact such Holders and otherwise facilitate the tender of Registrable Securities in the Exchange Offer. 2.2 Shelf Registration. (i) If, because of any changes in law, SEC rules or regulations or applicable interpretations thereof by the staff of the SEC, the Company is not permitted to effect the Exchange Offer as contemplated by Section 2.1 hereof, (ii) if for any other reason the Exchange Offer Registration Statement is not declared effective within 120 days following the Closing Date or the Exchange Offer is not consummated within 180 days after the Closing Date, (iii) upon the request of Merrill Lynch (but only with respect to any Registrable Securities which the Initial Purchasers acquired directly from the Company) or (iv) if a Holder is advised by counsel that it is not permitted by Federal securities laws or SEC policy to participate in the Exchange Offer or does not receive fully tradeable Exchange Securities pursuant to the Exchange Offer, then in case of each of clauses (i) through (iv) the Company and the Subsidiary Guarantor shall, at their cost: (a) As promptly as practicable, file with the SEC, and thereafter shall use its reasonable best efforts to cause to be declared effective as promptly as practicable but no later than 180 days after the Closing Date, a Shelf Registration Statement relating to the offer and sale of the Registrable Securities by the Holders from time to time in accordance with the methods of distribution elected by the Majority Holders participating in the Shelf Registration and set forth in such Shelf Registration Statement. (b) Use their reasonable best efforts to keep the Shelf Registration Statement continuously effective in order to permit the Prospectus forming part thereof to be usable by Holders for a period of two years from the date the Shelf Registration Statement is declared effective by the SEC, or for such shorter period that will terminate when all Registrable Securities covered by the Shelf Registration Statement (i) have been sold pursuant thereto, or (ii) are distributed to the public pursuant to Rule 144 of the Securities Act or are saleable pursuant to Rule 144(k) under the Securities Act and can be sold pursuant to Rule 144 without any limitations under clauses (c), (e), (f) and (h) of Rule 144 (or any successor rule -7- thereof); provided, however, that the Company shall not be obligated to keep the Shelf Registration Statement effective if (A) the Company determines, in its reasonable judgment, upon advice of counsel, as authorized by a resolution of its Board of Directors, that the continued effectiveness and usability of the Shelf Registration Statement would (x) require the disclosure of material information which the Company has a bona fide business reason for preserving as confidential, or (y) interfere with any financing, acquisition, corporate reorganization or other material transaction involving the Company or any of its subsidiaries, and provided further, that the failure to keep the Shelf Registration Statement effective and usable for offers and sales of Registrable Securities for such reasons shall last no longer than 45 days in any 12-month period (whereafter a Registration Default, as hereinafter defined, shall occur), and (B) the Company promptly thereafter complies with the requirements of Section 3(k) hereof, if applicable. Any such period during which the Company is excused from keeping the Shelf Registration Statement effective and usable for offers and sales of Registrable Securities is referred to herein as a "Suspension Period"; a Suspension Period shall commence on and include the date that the Company gives notice to the Holders that the Shelf Registration Statement is no longer effective or the prospectus included therein is no longer usable for offers and sales of Registrable Securities as a result of the application of the proviso of the foregoing sentence and shall end on the earlier to occur of (1) the date on which each seller of Registrable Securities covered by the Shelf Registration Statement either receives the copies of the supplemented or amended prospectus contemplated by Section 3(k) hereof or is advised in writing by the Company that use of the prospectus may be resumed and (2) the expiration of 45 days in any 12-month period during which one or more Suspension Periods has been in effect. (c) Notwithstanding any other provisions hereof, use their best efforts to ensure that (i) any Shelf Registration Statement and any amendment thereto and any Prospectus forming part thereof and any supplement thereto complies in all material respects with the 1933 Act and the rules and regulations thereunder, (ii) any Shelf Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any Prospectus forming part of any Shelf Registration Statement, and any supplement to such Prospectus (as amended or supplemented from time to time), does not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Company and the Subsidiary Guarantor further agree, if necessary, to supplement or amend the Shelf Registration Statement, as required by Section 3(b) below, and to furnish to the Holders of Registrable Securities copies of any such supplement or amendment promptly after its being used or filed with the SEC. 2.3 Expenses. The Company and the Subsidiary Guarantor shall pay all Registration Expenses in connection with the registration pursuant to Section 2.1 or 2.2. Each -8- Holder shall pay all underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of such Holder's Registrable Securities pursuant to the Shelf Registration Statement. 2.4 Effectiveness. (a) The Company and the Subsidiary Guarantor will be deemed not to have used their reasonable best efforts to cause the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, to become, or to remain, effective during the requisite period if the Company and the Subsidiary Guarantor voluntarily take any action that would, or omits to take any action which omission would, result in any such Registration Statement not being declared effective or in the holders of Registrable Securities covered thereby not being able to exchange or offer and sell such Registrable Securities during that period as and to the extent contemplated hereby, unless such action is required by applicable law. (b) An Exchange Offer Registration Statement pursuant to Section 2.1 hereof or a Shelf Registration Statement pursuant to Section 2.2 hereof will not be deemed to have become effective unless it has been declared effective by the SEC; provided, however, that if, after it has been declared effective, the offering of Registrable Securities pursuant to a Shelf Registration Statement is interfered with by any stop order, injunction or other order or requirement of the SEC or any other governmental agency or court, such Registration Statement will be deemed not to have become effective during the period of such interference, until the offering of Registrable Securities pursuant to such Registration Statement may legally resume. 2.5 Interest. The Indentures executed in connection with the Securities will provide that in the event that either (a) the Exchange Offer Registration Statement is not filed with the Commission on or prior to the 60th calendar day following the Closing Date of the Securities, (b) the Exchange Offer Registration Statement has not been declared effective on or prior to the 120th calendar day following the Closing Date of the Securities, (c) the Exchange Offer is not consummated or a required Shelf Registration Statement is not declared effective, in either case, on or prior to the 180th calendar day following the Closing Date of the Securities or (d) the Exchange Offer Registration Statement or Shelf Registration Statement is filed and declared effective but shall thereafter be withdrawn by the Company or becomes subject to an effective stop order suspending the effectiveness of such registration statement, except as specifically permitted by Section 2.2(b) hereof, without being succeeded immediately by an additional registration statement filed and declared effective (each such event referred to in clauses (a) through (d) above, a "Registration Default"), the interest rate borne by the Securities shall be increased by one-fourth of one percent (0.25%) per annum upon the occurrence of each Registration Default, which rate will increase by an additional one-fourth of one percent (0.25%) per annum if such Registration Default has not been cured within 90 days after occurrence thereof and continuing until all Registration Defaults have been cured, with an aggregate maximum increase in the interest rate equal to one-half of one percent (0.50%) per annum; provided, however, that if the Exchange Offer Registration Statement is not declared effective on or prior to the 120th calendar day following the Closing Date and the Company and the Subsidiary Guarantor shall request holders of Securities to provide information for inclusion in the Shelf Registration Statement, then Securities owned by Holders who do not deliver such -9- information to the Company and the Subsidiary Guarantor or who do not provide comments on the Shelf Registration Statement when requested by the Company and the Subsidiary Guarantor will not be entitled to any such increase in the interest rate for any day after the 180th day following the Closing Date. Following the cure of all Registration Defaults, the accrual of additional interest will cease and the interest rate will revert to the original rate. 2.6 Specific Enforcement. Without limiting the remedies available to the Initial Purchasers and the Holders, the Company and the Subsidiary Guarantor acknowledge that any failure by the Company and the Subsidiary Guarantor to comply with their obligations under Sections 2.1 and 2.2 hereof may result in material irreparable injury to the Initial Purchasers or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchasers or any Holder may, to the extent permitted by law, obtain such relief as may be required to specifically enforce the Company's and the Subsidiary Guarantor's obligations under Sections 2.1 and 2.2 hereof. 3. Registration Procedures. In connection with the obligations of the Company and the Subsidiary Guarantor with respect to Registration Statements pursuant to Sections 2.1 and 2.2 hereof, the Company and the Subsidiary Guarantor shall: (a) prepare and file with the SEC a Registration Statement, within the relevant time period specified in Section 2, on the appropriate form under the 1933 Act, which form (i) shall be selected by the Company, (ii) shall, in the case of a Shelf Registration, be available for the sale of the Registrable Securities by the selling Holders thereof, (iii) shall comply as to form in all material respects with the requirements of the applicable form and include or incorporate by reference all financial statements required by the SEC to be filed therewith or incorporated by reference therein, and (iv) shall comply in all respects with the requirements of Regulation S-T under the Securities Act, and use their reasonable best efforts to cause such Registration Statement to become effective and remain effective in accordance with Section 2 hereof; (b) prepare and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary under applicable law to keep such Registration Statement effective for the applicable period; and cause each Prospectus to be supplemented by any required prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the 1933 Act and comply with the provisions of the 1933 Act applicable to them with respect to the disposition of all securities covered by each Registration Statement during the applicable period in accordance to the extent allowed by law and reasonably practicable to the Company with the intended method or methods of distribution by the selling Holders thereof; (c) in the case of a Shelf Registration, (i) notify each Holder of Registrable Securities, at least five business days prior to filing, that a Shelf Registration Statement with -10- respect to the Registrable Securities is being filed and advising such Holders that the distribution of Registrable Securities will be made in accordance with the method selected by the Majority Holders participating in the Shelf Registration; (ii) furnish to each Holder of Registrable Securities and to each underwriter of an underwritten offering of Registrable Securities, if any, without charge, as many copies of each Prospectus, including each preliminary Prospectus, and any amendment or supplement thereto and such other documents as such Holder or underwriter may reasonably request, including financial statements and schedules and, if the Holder so requests, all exhibits in order to facilitate the public sale or other disposition of the Registrable Securities; and (iii) hereby consent to the use of the Prospectus or any amendment or supplement thereto by each of the selling Holders of Registrable Securities in connection with the offering and sale of the Registrable Securities covered by the Prospectus or any amendment or supplement thereto; (d) use its reasonable best efforts to register or qualify the Registrable Securities under all applicable state securities or "blue sky" laws of such jurisdictions as any Holder of Registrable Securities covered by a Registration Statement and the managing underwriter of an underwritten offering of Registrable Securities shall reasonably request by the time the applicable Registration Statement is declared effective by the SEC, and do any and all other acts and things which may be reasonably necessary or advisable to enable each such Holder and underwriter to consummate the disposition in each such jurisdiction of such Registrable Securities owned by such Holder, provided, however, that the Company and the Subsidiary Guarantor shall not be required to (i) qualify as a foreign corporation or as a dealer in securities in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), or (ii) take any action which would subject it to general service of process or taxation in any such jurisdiction where it is not then so subject; (e) notify promptly each Holder of Registrable Securities under a Shelf Registration or any Participating Broker-Dealer who has notified the Company that it is utilizing the Exchange Offer Registration Statement as provided in paragraph (f) below and, if requested by such Holder or Participating Broker-Dealer, confirm such advice in writing promptly (i) when a Registration Statement has become effective and when any post- effective amendments and supplements thereto become effective, (ii) of any request by the SEC or any state securities authority for post-effective amendments and supplements to a Registration Statement and Prospectus or for additional information after the Registration Statement has become effective, (iii) of the issuance by the SEC or any state securities authority of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, (iv) in the case of a Shelf Registration, if, between the effective date of a Registration Statement and the closing of any sale of Registrable Securities covered thereby, the representations and warranties of the Company contained in any underwriting agreement, securities sales agreement or other similar agreement, if any, relating to such sale cease to be true and correct in all material respects, (v) of the happening of any event or the discovery of any facts during the period a Shelf Registration Statement is effective which makes any statement made in such Registration -11- Statement or the related Prospectus untrue in any material respect or which requires the making of any changes in such Registration Statement or Prospectus in order to make the statements therein not misleading and (vi) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities or the Exchange Securities, as the case may be, for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; (f) (A) in the case of the Exchange Offer Registration Statement (i) include in the Exchange Offer Registration Statement a section entitled "Plan of Distribution" which section shall be reasonably acceptable to the Initial Purchasers, and which shall contain a summary statement of the positions taken or policies made by the staff of the SEC with respect to the potential "underwriter" status of any broker-dealer that holds Registrable Securities acquired for its own account as a result of market- making activities or other trading activities and that will be the beneficial owner (as defined in Rule l3d-3 under the Exchange Act) of Exchange Securities to be received by such broker-dealer in the Exchange Offer, whether such positions or policies have been publicly disseminated by the staff of the SEC or such positions or policies, in the reasonable judgment of the Initial Purchasers and its counsel, represent the prevailing views of the staff of the SEC, including a statement that any such broker-dealer who receives Exchange Securities for Registrable Securities pursuant to the Exchange Offer may be deemed a statutory underwriter and must deliver a prospectus meeting the requirements of the 1933 Act in connection with any resale of such Exchange Securities, (ii) furnish to each Participating Broker-Dealer who has delivered to the Company the notice referred to in Section 3(e), without charge, as many copies of each Prospectus included in the Exchange Offer Registration Statement, including any preliminary Prospectus, and any amendment or supplement thereto, as such Participating Broker-Dealer may reasonably request, (iii) hereby consent to the use of the Prospectus forming part of the Exchange Offer Registration Statement or any amendment or supplement thereto, by any person subject to the prospectus delivery requirements of the SEC, including all Participating Broker-Dealers, in connection with the sale or transfer of the Exchange Securities covered by the prospectus or any amendment or supplement thereto, and (iv) include in the transmittal letter or similar documentation to be executed by an exchange offeree in order to participate in the Exchange Offer (x) the following provision: "If the exchange offeree is a broker-dealer holding Registrable Securities acquired for its own account as a result of market-making activities or other trading activities, it will deliver a prospectus meeting the requirements of the 1933 Act in connection with any resale of Exchange Securities received in respect of such Registrable Securities pursuant to the Exchange Offer" and (y) a statement to the effect that by a broker-dealer making the acknowledgment described in clause (x) and by delivering a Prospectus in connection with the exchange of Registrable Securities, the broker-dealer will not be deemed to admit that it is an underwriter within the meaning of the 1933 Act and -12- (B) to the extent any Participating Broker-Dealer participates in the Exchange Offer, the Company and the Subsidiary Guarantor shall use their reasonable best efforts to cause to be delivered at the request of an entity representing the Participating Broker-Dealers (which entity shall be Merrill Lynch or another Initial Purchaser) (A) a "cold comfort" letter addressed to the Participating Broker-Dealers from the Company's and the Subsidiary Guarantor's independent certified public accountants with respect to the Prospectus in the Exchange Offer Registration Statement in the form existing on the last date for which exchanges are accepted pursuant to the Exchange Offer and (B) an opinion of counsel to the Company and the Subsidiary Guarantor addressed to the Participating Broker-Dealers in substantially the form attached hereto as Exhibit A relating to the Exchange Securities; and (g) (i) in the case of an Exchange Offer, furnish to one firm of legal counsel for the Initial Purchasers and (ii) in the case of a Shelf Registration, furnish to one firm of legal counsel for the Holders of Registrable Securities copies of any comment letters received from the SEC or any other request by the SEC or any state securities authority for amendments or supplements to a Registration Statement and Prospectus or for additional information; (h) make every reasonable effort to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement as soon as practicable and provide prompt notice to one firm of legal counsel for the Holders of the withdrawal of any such order; (i) in the case of a Shelf Registration, furnish to each Holder of Registrable Securities, and each underwriter, if any, without charge, at least one conformed copy of each Registration Statement and any post- effective amendment thereto, including financial statements and schedules (without documents incorporated therein by reference or any exhibits thereto, unless requested); (j) in the case of a Shelf Registration, cooperate with the selling Holders of Registrable Securities to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends; and enable such Registrable Securities to be in such denominations (consistent with the provisions of the Indentures) and registered in such names as the selling Holders or the underwriters, if any, may reasonably request at least three business days prior to the closing of any sale of Registrable Securities; (k) in the case of a Shelf Registration, upon the Company or any Subsidiary Guarantor becoming aware of the occurrence of any event or the discovery of any facts, each as contemplated by Section 3(e)(v) hereof, use their reasonable best efforts to prepare a supplement or post-effective amendment to the Registration Statement or the related Prospectus or any document incorporated therein by reference or file any other required -13- document so that, as thereafter delivered to the purchasers of the Registrable Securities or Participating BrokerDealers, such Prospectus will not contain at the time of such delivery any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (l) obtain a CUSIP number for all Exchange Securities or Registrable Securities, as the case may be, not later than the effective date of a Registration Statement, and provide the Trustee with a printed certificate or certificates for the Exchange Securities or the Registrable Securities, as the case may be, in a form eligible for deposit with the Depositary and consistent with the procedures to be used by the Depositary; (m) unless the Indentures, as they relate to the Exchange Securities or the Registrable Securities, as the case may be, have already been so qualified, use its best efforts to (i) cause the Indentures to be qualified under the Trust Indenture Act of 1939 (the "TIA") in connection with the registration of the Exchange Securities or Registrable Securities, as the case may be, (ii) cooperate with the Trustees and the Holders to effect such changes to the Indentures as may be required for the Indentures to be so qualified in accordance with the terms of the TIA and (iii) execute, and use its best efforts to cause the Trustees to execute, all documents as may be required to effect such changes, and all other forms and documents required to be filed with the SEC to enable the Indentures to be so qualified in a timely manner; (n) in the case of a Shelf Registration, take all customary and appropriate actions reasonably required (including those reasonably requested by the Majority Holders) in order to expedite or facilitate the disposition of the Registrable Securities registered thereby. If requested as set forth below, the Company and the Subsidiary Guarantor agree that they will in good faith negotiate the terms of an underwriting agreement, which shall be in form and scope as is customary for similar offerings of debt securities with similar credit ratings (including, without limitation, representations and warranties to the underwriters) and shall otherwise be reasonably satisfactory to the Company and the managing underwriters; and: (i) if requested by the managing underwriters, obtain opinions of counsel to the Company and the Subsidiary Guarantor (which counsel shall be reasonably satisfactory to the managing underwriters) addressed to such underwriters, covering the matters customarily covered in opinions requested in underwritten sales of securities in substantially the forms specified in the underwriting agreement; (ii) if requested by the managing underwriters, obtain a "cold comfort" letter and an update thereto not later than two weeks after the date of the original letter (or if not available under applicable accounting pronouncements or standards, a single "procedures" letter and a single update thereto) from the Company's independent certified public accountants addressed to the underwriters named in the -14- underwriting agreement and use its best efforts to have such letter addressed to the selling Holders of Registrable Securities (provided, however, that such letter need not be addressed to any Holders to whom, in the reasonable opinion of the Company's independent certified public accountants, addressing such letter is not permissible under applicable accounting standards), such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" (or "procedures") letters to underwriters in connection with similar underwritten offerings; and (iii) deliver such documents and certificates as may be reasonably requested and as are customarily delivered in similar underwritten offerings. Notwithstanding anything herein to the contrary, the Company shall have no obligation to enter into any underwriting agreement or permit an underwritten offering of Registrable Securities unless a request therefor shall have been received from the Majority Holders within ten business days of the date of the notice from the Company as required by Section 3(c). In the case of such a request for an underwritten offering, the Company shall provide reasonable advance written notice to the Holders of all Registrable Securities of such proposed underwritten offering. Such notice shall (A) offer each such Holder the right to participate in such underwritten offering (but may indicate that whether or not all Registrable Securities are included will be at the discretion of the underwriters), (B) specify a date, which shall be no earlier than ten business days following the date of such notice, by which such Holder must inform the Company of its intent to participate in such underwritten offering and (C) include the instructions such Holder must follow in order to participate in such underwritten offering; (o) in the case of a Shelf Registration, and to the extent customary in connection with a "due diligence" investigation for an offering of debt securities with a similar credit rating to that of the Registrable Securities, make available for inspection by representatives appointed by the Majority Holders and any underwriters participating in any disposition pursuant to a Shelf Registration Statement and one firm of legal counsel retained for all Holders participating in such Shelf Registration, and one firm of legal counsel to the underwriters, if any, all financial and other records, pertinent corporate documents and properties of the Company reasonably requested by any such persons, and cause the respective officers, directors, employees, and any other agents of the Company to supply all information reasonably requested by any such representative, underwriter or counsel in connection with a Registration Statement, and make such representatives of the Company available for discussion of such documents as shall be reasonably requested by the Initial Purchasers provided, however, that, if any such records, documents or other information relates to pending or proposed acquisitions or dispositions, or otherwise relates to matters reasonably considered by the Company and the Subsidiary Guarantor to constitute sensitive or proprietary information, the Company and the Subsidiary Guarantor need not provide such records, documents or information unless the foregoing parties enter into a confidentiality agreement in customary form and reasonably acceptable to such parties and the Company; -15- (p) (i) in the case of an Exchange Offer Registration Statement, a reasonable time prior to the filing of any Exchange Offer Registration Statement, any Prospectus forming a part thereof, any amendment to an Exchange Offer Registration Statement or amendment or supplement to such Prospectus, provide copies of such document to Merrill Lynch and make such changes in any such document prior to the filing thereof as Merrill Lynch may reasonably request and, except as otherwise required by applicable law, not file any such document in a form to which Merrill Lynch on behalf of the Holders of Registrable Securities shall reasonably object, and make the representatives of the Company and the Subsidiary Guarantor available for discussion of such documents as shall be reasonably requested by Merrill Lynch; and (ii) in the case of a Shelf Registration, a reasonable time prior to filing any Shelf Registration Statement, any Prospectus forming a part thereof, any amendment to such Shelf Registration Statement or amendment or supplement to such Prospectus, provide copies of such document to Merrill Lynch, one firm of legal counsel appointed by the Majority Holders to represent the Holders participating in such Shelf Registration, the managing underwriters of an underwritten offering of Registrable Securities, if any, and make such changes in any such document prior to the filing thereof as Merrill Lynch, such one firm of legal counsel for the Holders, such managing underwriters or their counsel may reasonably request and not file any such document in a form to which Merrill Lynch, such one firm of legal counsel for the Holders, such managing underwriters or their counsel may reasonably object and make the representatives of the Company and the Subsidiary Guarantor available for discussion of such document as shall be reasonably requested by Merrill Lynch, such one firm of legal counsel for the Holders, such managing underwriters or their counsel. (q) in the case of a Shelf Registration, use its best efforts to cause the Registrable Securities to be rated by the appropriate rating agencies, if so requested by the Majority Holders, or if requested by the managing underwriters of an underwritten offering of Registrable Securities, if any, unless the Exchange Securities or the Registrable Securities, as the case may be, are already so rated or unless the Company has obtained such ratings for its long-term debt securities generally; (r) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC and make available to its security holders, as soon as reasonably practicable, an earnings statement covering at least 12 months which shall satisfy the provisions of Section 11(a) of the 1933 Act and Rule 158 thereunder; (s) cooperate and assist in any filings required to be made with the NASD and, in the case of a Shelf Registration, in the performance of any due diligence investigation by any managing underwriter and its counsel (including any "qualified independent -16- underwriter" that is required to be retained in accordance with the rules and regulations of the NASD); and (t) upon consummation of an Exchange Offer, obtain a customary opinion of counsel to the Company and the Subsidiary Guarantor addressed to the Trustees for the benefit of all Holders of Registrable Securities participating in the Exchange Offer, and which includes an opinion that (i) the Company has duly authorized, executed and delivered the Exchange Securities and the related Indentures and (ii) the Exchange Securities and the related Indentures constitute legal, valid and binding obligations of the Company, enforceable against the Company and the Subsidiary Guarantor in accordance with their respective terms (with customary exceptions). (iii) In the case of a Shelf Registration Statement, the Company and the Subsidiary Guarantor may (as a condition to such Holder's participation in the Shelf Registration) require each Holder of Registrable Securities to furnish to the Company and the Subsidiary Guarantor such information regarding the Holder and the proposed distribution by such Holder of such Registrable Securities as the Company and the Subsidiary Guarantor may from time to time reasonably request in writing. (iv) In the case of a Shelf Registration Statement, each Holder agrees and in the case of the Exchange Offer Registration Statement, each Participating Broker-Dealer agrees that, upon receipt of any notice from the Company and the Subsidiary Guarantor of (a) the happening of any event or the discovery of any facts, each of the kind described in Section 3(e)(v) hereof or (b) the Company's determination, in its reasonable judgment, upon advice of counsel, as authorized by a resolution of its Board of Directors, that the continued effectiveness and usability of the Shelf Registration Statement would (x) require the disclosure of material information, which the Company has a bona fide business reason for preserving as confidential, or (y) interfere with any financing, acquisition, corporate reorganization or other material transaction involving the Company or any of its subsidiaries, such Holder or Participating Broker-Dealer, as the case may be, will forthwith discontinue disposition of Registrable Securities pursuant to such Registration Statement until the receipt by such Holder or Participating Broker- Dealer, as the case may be, of (A) in the case of clause (a) above, the copies of the supplemented or amended Prospectus contemplated by Section 3(k) hereof, and, if so directed by the Company and the Subsidiary Guarantor, such Holder or Participating Broker-Dealers will deliver to the Company (at its expense) all copies in its possession of the Prospectus covering such Registrable Securities current at the time of receipt of such notice, or (B) in the case of clause (b) above, notice in writing from the Company and the Subsidiary Guarantor that such Holder or Participating Broker-Dealers may resume disposition of Registrable Securities pursuant to such Registration Statement. If the Company and the Subsidiary Guarantor shall give any such notice described in clause (a) above to suspend the disposition of Registrable Securities pursuant to a Registration -17- Statement as a result of the happening of any event or the discovery of any facts, each of the kind described in Section 3(e)(v) hereof, the Company and the Subsidiary Guarantor shall be deemed to have used their reasonable best efforts to keep such Registration Statement effective during such Suspension Period provided that the Company and the Subsidiary Guarantor shall use their reasonable best efforts to file and have declared effective (if an amendment) as soon as practicable an amendment or supplement to such Registration Statement. The Company shall extend the period during which such Registration Statement shall be maintained effective pursuant to this Agreement by the number of days during the period from and including the date of the giving of the notice described in clauses (a) and (b) above to and including the date when the Holders or Participating Broker-Dealers shall have received copies of the supplemented or amended Prospectus necessary to resume such dispositions. If any of the Registrable Securities covered by any Shelf Registration Statement are to be sold in an underwritten offering, the underwriter or underwriters and manager or managers that will manage such offering will be selected by the Company and the Subsidiary Guarantor and shall be acceptable to the Majority Holders. No Holder of Registrable Securities may participate in any underwritten offering hereunder unless such Holder (a) agrees to sell such Holder's Registrable Securities on the basis provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements. 4. Indemnification; Contribution. (a) The Company and the Subsidiary Guarantor shall jointly and severally indemnify and hold harmless the Initial Purchasers, each Holder, each Participating Broker-Dealer, each Person who participates as an underwriter (any such Person being an "Underwriter") and each Person, if any, who controls any Holder or Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement (or any amendment or supplement thereto) pursuant to which Exchange Securities or Registrable Securities were registered under the 1933 Act, including all documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading, or arising out of any untrue statement or alleged untrue statement of a material fact contained in any Prospectus (or any amendment or supplement thereto) or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; -18- (ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission; provided that (subject to Section 4(d) below) any such settlement is effected with the written consent of the Company; and (iii) against any and all expense whatsoever, as incurred (including the fees and disbursements of counsel chosen by Merrill Lynch, or in the event that Merrill Lynch is not an indemnified party, by a majority of the indemnified parties), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under subparagraph (i) or (ii) above; provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by the Initial Purchasers, such Holder or Underwriter expressly for use in a Registration Statement (or any amendment thereto) or any Prospectus (or any amendment or supplement thereto). (b) Each Holder severally, but not jointly, agrees to indemnify and hold harmless the Company, the Subsidiary Guarantor, the Initial Purchasers, each Underwriter and the other selling Holders, and each of their respective directors and officers, and each Person, if any, who controls the Company, the Subsidiary Guarantor, the Initial Purchasers, any Underwriter or any other selling Holder within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any and all loss, liability, claim, damage and expense described in the indemnity contained in Section 4(a) hereof, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Shelf Registration Statement (or any amendment thereto) or any Prospectus included therein (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company expressly for use in the Shelf Registration Statement (or any amendment thereto) or such Prospectus (or any amendment or supplement thereto); provided, however, that no such Holder shall be liable for any claims hereunder in excess of the amount of net proceeds received by such Holder from the sale of Registrable Securities pursuant to such Shelf Registration Statement. (c) Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action or proceeding commenced against it in respect of which indemnity may be sought hereunder, but failure so to notify an -19- indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement. An indemnifying party may participate at its own expense in the defense of such action; provided, however, that counsel to the indemnifying party shall not (except with the consent of the indemnified party) also be counsel to the indemnified party. In no event shall the indemnifying party or parties be liable for the fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 4 (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. (d) If at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 4(a)(ii) effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement. (e) If the indemnification provided for in this Section 4 is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Subsidiary Guarantor on the one hand, the Holders on another hand, and the Initial Purchasers on another hand, from the offering of the Securities, the Exchange Securities and the Registrable Securities (taken together) included in such offering or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Subsidiary Guarantor on the one hand, the Holders on another hand and the Initial Purchasers on another hand with respect to the statements or omissions which -20- resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Subsidiary Guarantor from the offering of the Securities, the Exchange Securities and the Registrable Securities (taken together) included in such offering shall in each case be deemed to include the proceeds received by the Company in connection with the offering of the Securities pursuant to the Purchase Agreement. The parties hereto agree that any underwriting discount or commission or reimbursement of fees paid to the Initial Purchasers pursuant to the Purchase Agreement shall not be deemed to be a benefit received by the Initial Purchasers in connection with the offering of the Exchange Securities or Registrable Securities included in such offering. The relative fault of the Company and the Subsidiary Guarantor on the one hand, the Holders on another hand, and the Initial Purchasers on another hand shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company, the Subsidiary Guarantor, the Holders or the Initial Purchasers and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Subsidiary Guarantor, the Holders and the Initial Purchasers agree that it would not be just and equitable if contribution pursuant to this Section 4 were determined by pro rata allocation (even if the Initial Purchasers were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 4. The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred to above in this Section 4 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission. Notwithstanding the provisions of this Section 4, no Initial Purchaser shall be required to contribute any amount in excess of the amount by which the total price at which the Securities sold by it were offered exceeds the amount of any damages which such Initial Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 4, each person, if any, who controls an Initial Purchaser or Holder within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as such Initial Purchaser or Holder, and each director of the -21- Company, and each person, if any, who controls the Company or the Subsidiary Guarantor within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Company. The Initial Purchasers' respective obligations to contribute pursuant to this Section 4 are several in proportion to the principal amount of Securities set forth opposite their respective names in Schedule A to the Purchase Agreement and not joint. 5. Miscellaneous. 5.1 Rule 144 and Rule 144A. For so long as the Company or the Subsidiary Guarantor is subject to the reporting requirements of Section 13 or 15 of the 1934 Act, the Company and the Subsidiary Guarantor covenant that they will file the reports required to be filed by them under the 1933 Act and Section 13(a) or 15(d) of the 1934 Act and the rules and regulations adopted by the SEC thereunder. If the Company or the Subsidiary Guarantor ceases to be so required to file such reports, the Company and the Subsidiary Guarantor covenant that they will upon the request of any Holder of Registrable Securities (a) make publicly available such information as is necessary to permit sales pursuant to Rule 144 under the 1933 Act, (b) deliver such information to a prospective purchaser as is necessary to permit sales pursuant to Rule 144A under the 1933 Act and it will take such further action as any Holder of Registrable Securities may reasonably request and (c) take such further action that is reasonable in the circumstances, in each case, to the extent required from time to time to enable such Holder to sell its Registrable Securities without registration under the 1933 Act within the limitation of the exemptions provided by (i) Rule 144 under the 1933 Act, as such Rule may be amended from time to time, (ii) Rule 144A under the 1933 Act, as such Rule may be amended from time to time or (iii) any similar rules or regulations hereafter adopted by the SEC. Upon the request of any Holder of Registrable Securities, the Company and the Subsidiary Guarantor will deliver to such Holder a written statement as to whether they have complied with such requirements. 5.2 No Inconsistent Agreements. Neither the Company nor the Subsidiary Guarantor has entered into and neither the Company nor the Subsidiary Guarantor will after the date of this Agreement enter into any agreement which is inconsistent with the rights granted to the Holders of Registrable Securities in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with the rights granted to the holders of the Company's nor the Subsidiary Guarantor's other issued and outstanding securities under any such agreements. 5.3 Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given unless the Company and the Subsidiary Guarantor have obtained the written consent of Holders of at least a majority in aggregate principal amount of the outstanding Registrable Securities affected by such amendment, modification, supplement, waiver or departure. Notwithstanding anything in this Agreement to the contrary, this Agreement may be amended, modified or supplemented, and waivers and consents to departures from the provisions hereof may be given, by written agreement signed by the Company and Merrill -22- Lynch to the extent that any such amendment, modification, supplement, waiver or consent is, in their reasonable judgment, necessary or appropriate to comply with applicable law (including any interpretation of the staff of the SEC) or any change therein. 5.4 Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, registered first- class mail, telex, telecopier, or any courier guaranteeing overnight delivery (a) if to a Holder, at the most current address given by such Holder to the Company or the Subsidiary Guarantor by means of a notice given in accordance with the provisions of this Section 5.4, which address initially is the address set forth in the Purchase Agreement with respect to the Initial Purchasers and (b) if to the Company or the Subsidiary Guarantor, initially at the Company's address set forth in the Purchase Agreement, and thereafter at such other address of which notice is given in accordance with the provisions of this Section 5.4. All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; four business days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt is acknowledged, if telecopied; and on the next business day if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands, or other communications shall be concurrently delivered by the person giving the same to the Trustees under the Indentures, at the address specified in such Indentures. 5.5 Successor and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors, assigns and transferees of each of the parties, including, without limitation and without the need for an express assignment, subsequent Holders; provided that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Registrable Securities in violation of the terms of the Purchase Agreement and provided, further, that Holders of Registrable Securities may not assign their rights under this Agreement except in connection with the permitted transfer of Registrable Securities and then only insofar as relates to such Registrable Securities. If any transferee of any Holder shall acquire Registrable Securities, in any manner, whether by operation of law or otherwise, such Registrable Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Registrable Securities such person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement, including the restrictions on resale set forth in this Agreement and, if applicable, the Purchase Agreement, and such person shall be entitled to receive the benefits hereof. 5.6 Third Party Beneficiaries. The Initial Purchasers (even if the Initial Purchasers are not Holders of Registrable Securities) shall be third party beneficiaries to the agreements made hereunder between the Company and the Subsidiary Guarantor, on the one hand, and the Holders, on the other hand, and shall have the right to enforce such agreements directly to the extent they deem such enforcement necessary or advisable to protect their rights or the rights of Holders hereunder. Each Holder of Registrable Securities shall be a third party beneficiary to the -23- agreements made hereunder between the Company and the Subsidiary Guarantor, on the one hand, and the Initial Purchasers, on the other hand, and shall have the right to enforce such agreements directly to the extent it deems such enforcement necessary or advisable to protect its rights hereunder. 5.7 Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and a of which taken together shall constitute one and the same agreement. 5.8 Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. 5.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF. 5.1 Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. -24- IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. OCEAN ENERGY, INC. By: ----------------------------------------- Name: Title: OCEAN ENERGY, INC. (Louisiana) By: ----------------------------------------- Name: Title: Confirmed and accepted as of the date first above written: MERRILL LYNCH & CO. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED CHASE SECURITIES INC. J.P. MORGAN SECURITIES INC. LEHMAN BROTHERS, INC. SALOMON BROTHERS INC BY: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: -------------------------------- Name: Title: -25- Exhibit A FORM OF OPINION OF COUNSEL Merrill Lynch & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated Chase Securities Inc. J.P. Morgan Securities Inc. Lehman Brothers, Inc. Salomon Brothers Inc and any other Participating Broker-Dealers c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated Merrill Lynch World Headquarters North Tower World Financial Center New York, New York 10281-1209 Ladies and Gentlemen: We have acted as counsel for Ocean Energy, Inc., a Delaware corporation (the "Company") and Ocean Energy, Inc., a Louisiana corporation (the "Subsidiary Guarantor"), in connection with the sale by the Company and the Subsidiary Guarantor to the Initial Purchasers (as defined below) of $125,000,000 aggregate principal amount of 7 5/8% Senior Notes due 2005 (the "2005 Notes"), $125,000,000 aggregate principal amount of 8 1/4% Senior Notes due 2018 (the "2018 Notes") and $250,000,000 aggregate principal amount of 8 3/8 % Senior Subordinated Notes due 2008 (the "Senior Subordinated Notes," and together with the 2018 Notes and the 2005 Notes, the "Securities") of the Company pursuant to the Purchase Agreement dated July 1, 1998 (the "Purchase Agreement") among the Company, the Subsidiary Guarantor and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Chase Securities Inc., J.P. Morgan Securities Inc., Lehman Brothers, Inc. and Salomon Brothers Inc (collectively, the "Initial Purchasers") and the filing by the Company and the Subsidiary Guarantor of an Exchange Offer Registration Statement (the "Registration Statement") in connection with an Exchange Offer to be effected pursuant to the Registration Rights Agreement (the "Registration Rights Agreement"), dated July 8, 1998, among the Company, the Subsidiary Guarantor and the Initial Purchasers. This opinion is furnished to you pursuant to Section 3(f)(B) of the Registration Rights Agreement. Unless otherwise defined herein, capitalized terms used in this opinion that are defined in the Registration Rights Agreement are used herein as so defined. A-1 We have examined such documents, records and matters of law as we have deemed necessary for purposes of this opinion. In rendering this opinion, as to all matters of fact relevant to this opinion, we have assumed the completeness and accuracy of, and are relying solely upon, the representations and warranties of the Company and the Subsidiary Guarantor set forth in the Purchase Agreement and the statements set forth in certificates of public officials and officers of the Company and the Subsidiary Guarantor, without making any independent investigation or inquiry with respect to the completeness or accuracy of such representations, warranties or statements, other than a review of the certificate of incorporation, bylaws and relevant minute books of the Company and the Subsidiary Guarantor. Based on and subject to the foregoing, we are of the opinion that the Exchange Offer Registration Statement and the Prospectus included therein (other than the financial statements, notes or schedules thereto and other financial and statistical data and supplemental schedules included or incorporated by reference therein or omitted therefrom, any reserve data included therein and the Form T-1, as to which we express no opinion), comply as to form in all material respects with the requirements of the 1933 Act and the applicable rules and regulations promulgated under the 1933 Act. In addition, we have participated in the preparation of the Exchange Offer Registration Statement and the Prospectus included therein and, although we are not passing upon, and do not assume responsibility for the accuracy, completeness or fairness of, any portion of the Exchange Offer Registration Statement and such Prospectus (relying to a large extent as to factual matters upon certificates of officers and directors of the Company), nothing has come to our attention that causes us to believe that, at the date it became effective, the Exchange Offer Registration Statement (other than the financial statements and schedules and the notes thereto and other financial data included therein, the reserve data included therein and the Form T-1, as to which we make no statement) contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that such Prospectus (other than the financial statements and schedules and the notes thereto and other financial data included therein and the reserve data included therein, as to which we make no statement) as of the date hereof includes an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. This opinion is limited in all respects to federal laws, the Delaware General Corporation Law and New York law. The foregoing opinion is rendered only with respect to laws, rules, and regulations which are presently in effect and applicable court rulings and orders which have been published and are generally available and which are normally applicable to transactions such as the exchange of the Registrable Securities for the Exchange Securities as described in the Exchange Offer Registration Statement. We undertake no duty to advise you as to any changes of law or fact which come to our attention after the date hereof. This letter is strictly limited to the opinions expressly set forth herein and is not to be read as applying by implication or otherwise to any other matter in connection with the Purchase Agreement or the Registration Rights Agreement other than A-2 the sale by Participating Broker-Dealers of the Securities as described in the Registration Rights Agreement. This opinion is being furnished to you solely for your benefit in connection with the transactions contemplated by the Registration Rights Agreement, and may not be used for any other purpose or relied upon by any person other than you. Except with our prior written consent, the opinions herein expressed are not to be used, circulated, quoted or otherwise referred to in connection with any transactions other than those contemplated by the Registration Rights Agreement by or to any other person. Very truly yours, A-3 EX-27.1 12 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 14,348 0 118,893 1,190 17,901 163,328 2,719,465 1,245,462 1,776,130 180,193 987,277 0 0 1,007 569,365 1,776,130 273,965 275,090 0 74,230 365,890 0 21,941 (246,488) (83,509) (162,979) 0 0 0 (162,979) (1.62) (1.62)
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