Exhibit 4.2
[FORM OF NEW NOTE]
THIS NOTE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, 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, REGISTRATION. THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE
HEREOF (1) REPRESENTS THAT (A) IT IS A “QUALIFIED
INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (B) IT IS A NON-U.S. PURCHASER AND IS
ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION WITHIN THE MEANING
OF REGULATION S UNDER THE SECURITIES ACT, OR (C) IT IS AN
INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING
OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 UNDER
THE SECURITIES ACT, AND (2) AGREES TO OFFER, SELL OR OTHERWISE
TRANSFER SUCH NOTE, PRIOR TO THE DATE WHICH IS ONE YEAR (OR SUCH
OTHER PERIOD THAT MAY BE HEREAFTER PROVIDED UNDER RULE 144(K) UNDER
THE SECURITIES ACT PERMITTING RESALES OF RESTRICTED SECURITIES BY
NON-AFFILIATES WITHOUT RESTRICTION); OR AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY
OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE (OR ANY
PREDECESSOR OF SUCH NOTE), ONLY (A) TO THE COMPANY,
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG
AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL
BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES 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,
(E) TO AN INSTITUTIONAL “ACCREDITED INVESTOR”
WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR
(7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, 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 OR
(F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
COMPANY’S AND THE TRUSTEE’S, OR TRANSFER AGENT’S,
AS APPLICABLE, RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSES (D), (E), OR (F) TO REQUIRE THE DELIVERY
OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF
THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRUSTEE OR TRANSFER AGENT.
1
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF
THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME
OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR
DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES REGISTERED IN
THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND
NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A
WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A
NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF
THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A
NEW YORK CORPORATION (“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 IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS NOTE HAS BEEN ISSUED WITH
ORIGINAL ISSUE DISCOUNT (“OID”) FOR PURPOSES OF
SECTIONS 1271 ET SEQ. OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED. FOR INFORMATION REGARDING THE ISSUE PRICE, AMOUNT OF OID
PER $1,000 OF PRINCIPAL AMOUNT AND THE YIELD TO MATURITY FOR
PURPOSES OF THE OID RULES, PLEASE CONTACT THE CHIEF FINANCIAL
OFFICER OF THE ISSUER AT 11811 NORTH FREEWAY I-45, SUITE 200,
HOUSTON, TEXAS 77060, (281) 591-6100.
2
BASELINE OIL & GAS
CORP.
15% SENIOR SECURED PIK NOTES DUE
2009
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CUSIP No.
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No.
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$___________
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Baseline Oil & Gas Corp., a
Nevada corporation (the “ Company ,” which term
includes any successor entity), for value received promises to pay
to Cede & Co. or registered assigns the principal sum of
One Hundred Six Million Six Hundred Eighty One Thousand Two Hundred
Fifty Dollars (or such principal amount as may be set forth in the
records of the Trustee hereinafter referred to in accordance with
the Indenture) on June 15, 2009, and to pay interest thereon
as hereinafter set forth.
Interest Rate: 15% per
annum.
Interest Payment Dates: Interest
will be payable quarterly in cash in arrears on
January 1, April 1, July 1 and
October 1 of each year, beginning on January 1, 2009;
provided , however , that a portion of such interest
in an amount equal to the applicable PIK Interest Amount may be
paid by the Company on the applicable Interest Payment Date by
issuing to the registered Holder hereof on the applicable Record
Date one or more PIK Notes in an aggregate principal amount equal
to such PIK Interest Amount in lieu of paying such portion of such
interest in cash.
Record Dates:
December 15, March 15, June 15 and
September 15.
Reference is made to the further
provisions of this Note contained on the reverse side of this Note,
which will for all purposes have the same effect as if set forth at
this place.
IN WITNESS WHEREOF, the Company has
caused this Note to be signed manually or by facsimile by its duly
authorized officer.
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BASELINE
OIL & GAS CORP.
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By:
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Name:
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Patrick H.
McGarey
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Title:
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Chief Financial
Officer
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Dated: October 30,
2008
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TRUSTEE CERTIFICATE OF AUTHENTICATION
This is one of the 15% Senior
Secured PIK Notes due 2009 referred to in the within-mentioned
Indenture.
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THE BANK OF NEW
YORK MELLON, as
Trustee
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Dated:
October 30, 2008
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By:
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Authorized
Signatory
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4
(REVERSE OF SECURITY)
15% Senior Secured PIK Note due
2009
1. Interest . Baseline
Oil & Gas Corp., a Nevada corporation (the “
Company ”), promises to pay interest on the principal
amount of this Note at the rate per annum shown above. Interest on
the Note will accrue from the most recent date on which interest
has been paid or, if no interest has been paid, from and including
October 1, 2008. The Company will pay interest quarterly in
arrears on each Interest Payment Date, commencing January 1,
2009. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months. The Company will pay interest on
overdue principal at 1% per annum in excess of the above rate
and will pay interest on overdue installments of interest at such
higher rate to the extent lawful.
2. Method of Payment . The
Company shall pay interest on the Notes (except defaulted interest)
to the Persons who are the registered Holders at the close of
business on the Record Date immediately preceding the Interest
Payment Date even if the Notes are cancelled on registration of
transfer or registration of exchange after such Record Date, and on
or before such Interest Payment Date. Holders must surrender Notes
to a Paying Agent to collect principal payments. The Company shall
pay principal and interest in money of the United States that at
the time of payment is legal tender for payment of public and
private debts (“ U.S. Legal Tender ”);
provided , however , the Company may pay principal
and interest by check payable in such U.S. Legal Tender;
provided further , however , that a portion of such
interest in an amount equal to the applicable PIK Interest Amount
may be paid by the Company by issuing on the applicable Interest
Payment Date to the registered Holder hereof on the applicable
Record Date one or more PIK Notes in an aggregate principal amount
equal to such PIK Interest Amount in lieu of paying such portion of
such interest in cash. The Company may deliver any such interest
payment to the Paying Agent or to a Holder at the Holder’s
registered address.
3. Paying Agent and Registrar
. Initially, The Bank of New York Mellon (the “
Trustee ”) will act as Paying Agent and Registrar. The
Company may change any Paying Agent, Registrar or co-Registrar
without notice to the Holders.
4. Indenture . The Notes and
the Guarantees were issued under an Amended and Restated Indenture,
dated October 30, 2008 (the “ Indenture ”),
among the Company, the Trustee and the Collateral Agent.
Capitalized terms herein are used as defined in the Indenture
unless otherwise defined herein. 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 (15 U.S. Code
§§ 77aaa-77bbbb) (the “ TIA ”),
as in effect on the date of the Indenture until such time as the
Indenture is qualified under the TIA, and thereafter as in effect
on the date on which the Indenture is qualified under the TIA.
Notwithstanding anything to the contrary herein, the Notes are
subject to all such terms, and Holders of Notes are referred to the
Indenture and the TIA for a statement of such terms. The Notes are
senior secured obligations of the Company. Each Holder, by
accepting a Note, agrees to be bound by all of the terms and
provisions of the Indenture, as the same may be amended from time
to time.
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5. Redemption .
(a) Optional Redemption. The
Company may, at any time, redeem all or a part of the Notes, upon
not less than three nor more than 10 Business Days’ prior
notice mailed by first-class mail to each Holder’s registered
address, at a Redemption Price equal to 100% of the principal
amount of Notes redeemed plus accrued and unpaid interest and
Additional Interest, if any, to the date of redemption (the “
Redemption Date ”), subject to the rights of Holders
of Notes on the relevant Record Date to receive interest due on the
relevant Interest Payment Date.
(b) Mandatory Redemption .
The Company is not required to make any mandatory redemption or
sinking fund payments with respect to the Notes.
6. Notice of Redemption .
Notice of redemption will be mailed by first-class mail at least
three Business Days but not more than 10 Business Days before the
Redemption Date to each Holder of Notes to be redeemed at such
Holder’s registered address with a copy to the Trustee and
Paying Agent. If fewer than all of the Notes are to be redeemed, at
any time, selection of Notes for redemption will be made by the
Trustee in compliance with the requirements of the principal
national securities exchange, if any, on which
