<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 17, 1997
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
CLARK REFINING & MARKETING, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 2911 43-1491230
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NUMBER)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
8182 MARYLAND AVENUE
ST. LOUIS, MISSOURI 63105
(314) 854-9696
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
KATHERINE D. KNOCKE, ESQ.
CLARK REFINING & MARKETING, INC.
8182 MARYLAND AVENUE
ST. LOUIS, MISSOURI 63105
(314) 854-9696
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
RICHARD S. MILLARD, ESQ.
EDWARD S. BEST, ESQ.
MAYER, BROWN & PLATT
190 SOUTH LASALLE STREET
CHICAGO, ILLINOIS 60603
(312) 782-0600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
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<S> <C> <C> <C> <C>
8 3/8% New Senior Notes due
2007........................... $100,000,000 100% $100,000,000 $29,500.00
8 7/8% New Senior Subordinated
Notes due 2007................. $175,000,000 100% $175,000,000 $51,625.00
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</TABLE>
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
CLARK REFINING & MARKETING, INC.
CROSS-REFERENCE SHEET
(PURSUANT TO RULE 404(A) AND ITEM 501(B) OF REGULATIONS S-K)
<TABLE>
<CAPTION>
FORM S-4 ITEM AND CAPTION LOCATION OR PROSPECTUS CAPTION
------------------------- ------------------------------
<S> <C>
1. Forepart of Registration
Statement and Outside Front Outside Front Cover Page of Prospectus;
Cover Page of Prospectus....... Cross Reference Sheet
2. Inside Front and Outside Back
Cover Pages of Prospectus...... Inside Front Cover Page of Prospectus;
Outside Back Cover Page of Prospectus;
Available Information
3. Risk Factors, Ratio of Earnings
to Fixed Charges and Other Prospectus Summary; Summary Financial Data;
Information.................... Risk Factors
4. Terms of the Transaction....... Prospectus Summary; The Exchange Offer;
Description of New Notes; Certain Federal
Income Tax Considerations
5. Pro Forma Financial
Information.................... Not Applicable
6. Material Contacts with the
Company Being Acquired......... Not Applicable
7. Additional Information Required
for Reoffering by Persons and
Parties Deemed to be
Underwriters................... Not Applicable
8. Interests of Named Experts and
Counsel........................ Not Applicable
9. Disclosure of Commission
Position on Indemnification for
Securities Act Liabilities..... Not Applicable
10. Information with Respect to S-3
Registrants.................... Not Applicable
11. Incorporation of Certain
Information by Reference....... Not Applicable
12. Information with Respect to S-2
or S-3 Registrants............. Not Applicable
13. Incorporation of Certain
Information by Reference....... Not Applicable
14. Information with Respect to
Registrants Other Than S-3 or Business; Selected Financial Data;
S-2 Registrants................ Quarterly Financial Information;
Management's Discussion and Analysis of
Financial Condition and Results of
Operations; Management; Certain
Transactions; Financial Statements
15. Information with Respect to S-3
Companies...................... Not Applicable
16. Information with Respect to S-2
or S-3 Companies............... Not Applicable
17. Information with Respect to
Companies Other Than S-2 or S-3
Companies...................... Not Applicable
18. Information if Proxies,
Consents or Authorizations are
to be Solicited................ Not Applicable
19. Information if Proxies,
Consents or Authorizations are
not to be Solicited or in an Management; Principal Stockholders; Certain
Exchange Offer................. Transactions; The Exchange Offer
</TABLE>
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED DECEMBER 17, 1997
PROSPECTUS CLARK REFINING & MARKETING, INC.
OFFER TO EXCHANGE ITS
8 7/8% NEW SENIOR SUBORDINATED NOTES DUE NOVEMBER 15, 2007
LOGO WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
8 3/8% NEW SENIOR NOTES DUE NOVEMBER 15, 2007 AND
FOR ANY AND ALL OF ITS OUTSTANDING
8 3/8% SENIOR NOTES DUE NOVEMBER 15, 2007 AND
8 7/8% SENIOR SUBORDINATED NOTES DUE NOVEMBER 15, 2007
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1998, UNLESS EXTENDED.
Clark Refining & Marketing, Inc., a Delaware corporation ("Clark" or the
"Company"), hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus (the "Prospectus") and the accompanying Letter of
Transmittal (the "Letter of Transmittal") to exchange (the "Exchange Offer")
$1,000 principal amount of its 8 3/8% New Senior Notes due November 15, 2007
(the "New Senior Notes") and its 8 7/8% New Senior Subordinated Notes due
November 15, 2007 (the "New Senior Subordinated Notes" and, together with the
New Senior Notes, the "New Notes") which have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement of which this Prospectus is a part, for each $1,000
principal amount at maturity of its outstanding 8 3/8% Senior Notes due
November 15, 2007 (the "Old Senior Notes") and its 8 7/8% Senior Subordinated
Notes due November 15, 2007 (the "Old Senior Subordinated Notes" and, together
with the Old Senior Notes, the "Old Notes"). The form and terms of the New
Notes are identical in all material respects to the form and terms of the Old
Notes except that the New Notes have been registered under the Securities Act
and hence will not bear legends restricting the transfer thereof. The New Notes
will evidence the same debt as the Old Notes and will be entitled to the
benefits under the indentures governing the Old Notes (the "Indentures"). The
offering of the Old Notes is referred to herein as the "Debt Offering". The Old
Notes and the New Notes are collectively referred to herein as the "Notes". See
"The Exchange Offer" and "Description of the New Notes".
Clark will accept for exchange any and all Old Notes validly tendered and not
withdrawn prior to 5:00 p.m., New York City time, on , 1998, unless
extended (the "Expiration Date"). Tenders of Old Notes may be withdrawn at any
time prior to 5:00 p.m., New York City time, on the Expiration Date. The
Exchange Offer is subject to certain customary conditions. See "The Exchange
Offer." Old Notes may be tendered only in integral multiples of $1,000.
Interest on the New Senior Notes will be payable on May 15 and November 15 of
each year, commencing May 15, 1998. The New Senior Notes will mature on
November 15, 2007. The New Senior Notes will be redeemable at the option of the
Company, in whole or in part, at any time on and after November 15, 2002 at the
redemption prices set forth herein, plus accrued and unpaid interest, if any,
to the date of redemption. In addition, up to 35% in aggregate principal amount
of the New Senior Notes originally issued are redeemable at the option of the
Company out of the net cash proceeds of one or more Equity Offerings (as
defined herein) at any time prior to November 15, 2001 at a redemption price
equal to 108.375% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the redemption date.
Interest on the New Senior Subordinated Notes will be payable on May 15 and
November 15 of each year, commencing May 15, 1998. The New Senior Subordinated
Notes will mature on November 15, 2007. The New Senior Subordinated Notes will
be redeemable at the option of the Company, in whole or in part, at any time on
and after November 15, 2002 at the redemption prices set forth herein, plus
accrued and unpaid interest, if any, to the date of redemption. In addition, up
to 35% in aggregate principal amount of the New Senior Subordinated Notes
originally issued are redeemable at the option of the Company out of the net
cash proceeds of one or more Equity Offerings at any time prior to November 15,
2001 at a redemption price equal to 108.875% of the principal amount thereof,
plus accrued and unpaid interest, if any, to the redemption date.
Upon the occurrence of a Change of Control that results in a Rating Decline
(each as defined herein), the Company will be required to offer to purchase all
of the New Notes at 101% of the aggregate principal amount thereof, plus
accrued and unpaid interest, if any, to the date of purchase.
The New Senior Notes will rank pari passu with all unsubordinated
indebtedness of the Company, including indebtedness under the Credit Agreement
and the Loan Agreement (each as defined herein). The obligations of the Company
under the Credit Agreement, however, are secured by a lien on substantially all
of the Company's cash and cash equivalents, receivables, crude oil, refined
product and other inventories and trademarks and other intellectual property
and, accordingly, such indebtedness will effectively rank senior in right of
payment to the New Senior Notes to the extent of such assets.
The New Senior Subordinated Notes will be subordinated in right of payment to
all unsubordinated indebtedness of the Company. As of September 30, 1997, on a
pro forma basis after giving effect to the transactions described herein
including the Debt Offering, the occurrence of the Term Loan and the
application of the net proceeds therefrom, there would have been $418.4 million
of unsubordinated long-term indebtedness (including current portions) of the
Company (excluding available borrowings and $238.0 million of letters of credit
under the Credit Agreement). See "Capitalization."
The New Notes have been designated for trading in the Private Offering,
Resales and Trading through Automated Linkages ("PORTAL") Market. Each series
of New Notes sold other than in reliance on Regulation S will initially be
represented by a single permanent global certificate in fully registered form
and will be deposited with a custodian for, and registered in the name of a
nominee of, The Depository Trust Company, New York, New York ("DTC").
(Continued)
SEE "RISK FACTORS" ON PAGES 18-24 FOR A DISCUSSION OF CERTAIN RISK FACTORS
THAT SHOULD BE CONSIDERED BY PURCHASERS OF THE NEW NOTES.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION AND OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
----------
The date of this Preliminary Prospectus is , 1998.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
<PAGE>
(Continuation of cover page)
Based on an interpretation by the staff of the Securities and Exchange
Commission (the "Commission") set forth in several no-action letters to third
parties, the Company believes that the New Notes issued in exchange for Old
Notes pursuant to the Exchange Offer may be offered for resale, resold and
otherwise transferred by holders thereof who are not affiliates of the Company
without compliance with the registration and prospectus delivery provisions of
the Securities Act; provided that the Holder is acquiring New Notes in its
ordinary course of business and has no arrangement or understanding with any
person to participate in any distribution (within the meaning of the
Securities Act) of the New Notes. Persons wishing to exchange Old Notes in the
Exchange Offer must represent to the Company that such conditions have been
met. However, any Holder who is an "affiliate" of the Company or who tenders
in the Exchange Offer with the intention to participate or for the purpose of
participating, in a distribution of the New Notes cannot rely on the
interpretation by the staff of the Commission set forth in the above
referenced no-action letters, and must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
sale or transfer of the Old Notes. See "Risk Factors--Consequences to Non-
Tendering Holders of Old Notes." In addition, each broker-dealer that receives
New Notes for its own account pursuant to the Exchange Offer must acknowledge
that it will deliver a prospectus in connection with any resale of such New
Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act. This Prospectus,
as it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of New Notes received in exchange for
Old Notes where such Old Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities and not acquired
directly from the Company. The Company has agreed that for a period of 180
days after the Expiration Date, it will make this Prospectus available to any
broker-dealer for use in connection with any such resale. See "Plan of
Distribution." EXCEPT AS DESCRIBED IN THIS PARAGRAPH, THIS PROSPECTUS MAY NOT
BE USED FOR AN OFFER TO RESELL, RESALE OR OTHER TRANSFER OF NEW NOTES.
<PAGE>
No person has been authorized in connection with the offering made hereby to
give any information or to make any representations other than those contained
in this Prospectus and, if given or made, such information or representation
must not be relied upon as having been authorized. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any
securities other than the securities to which it relates or an offer to sell
or the solicitation of an offer to buy such securities in any circumstances in
which such offer or solicitation is unlawful. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that the information contained herein is correct as of any
date subsequent to the date hereof.
------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................................................... 4
Incorporation of Certain Documents by Reference.......................... 4
Prospectus Summary....................................................... 5
Risk Factors............................................................. 18
Use of Proceeds.......................................................... 24
The Exchange Offer....................................................... 25
Capitalization........................................................... 33
Selected Consolidated Financial and Other Data........................... 34
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 36
Quarterly Financial Information.......................................... 48
Business................................................................. 49
Management............................................................... 70
Description of the New Notes............................................. 75
Security Ownership of Certain Owners and Management...................... 76
Certain Transactions..................................................... 76
Book Entry; Delivery and Form............................................ 105
Certain U.S. Federal Income Tax Considerations........................... 108
Description of Certain Debt Instruments.................................. 114
Plan of Distribution..................................................... 117
Legal Matters............................................................ 118
Experts.................................................................. 118
Index to Financial Statements and Schedules.............................. F-1
</TABLE>
3
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith has filed reports and other information with the Commission. Such
reports and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's
Regional Offices at 7 World Trade Center, New York, New York 10048 and 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
materials may be obtained by mail from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission
maintains a Web site (http://www.sec.gov) that contains reports and
information statements and other information regarding registrants, such as
the Company, that file electronically with the Commission.
The Company has agreed that, if at any time while shares of the New Notes
are "restricted securities" within the meaning of the Securities Act, the
Company is not subject to the informational requirements of the Exchange Act,
the Company will furnish to holders of the New Notes and to prospective
purchasers designated by such holders the information required to be delivered
pursuant to Rule 144A(d)(4) under the Securities Act to permit compliance with
Rule 144A in connection with resales of the New Notes.
Each report attached as an Appendix is current only as of the date of the
report, and the delivery of such reports as Appendices hereto shall not create
any implication that there has been no change in the affairs of the Company
since the date thereof or that the information contained therein is current as
of any time subsequent to its date. Any statement contained herein shall be
deemed to be modified or suspended for the purpose of this Prospectus to the
extent that a subsequent statement contained herein modifies or supersedes
that statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus. In addition, any statement contained in any such report attached
as an Appendix shall be deemed to be superseded for the purpose of this
Prospectus to the extent that a discussion contained herein relating to the
same subject matter omits such statement. Any such statement omitted shall not
be deemed to constitute a part of this Prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following Company documents filed with the Commission are incorporated
by reference in this Prospectus:
1. The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1996;
2. The Company's Quarterly Reports on Form 10-Q for the periods ended March
31, June 30 and September 30, 1997;
3. The Company's Current Reports on Form 8-K dated April 7, October 1 and
November 21, 1997.
All documents and reports subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the date the Exchange Offer is terminated are
incorporated by reference in this Prospectus.
4
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the more
detailed information and the Consolidated Financial Statements, and related
notes, appearing elsewhere in this Prospectus.
THE COMPANY
The Company is the sixth largest independent refiner and marketer of
petroleum products in the United States (sometimes referred to herein as
"U.S.") with one Texas Gulf Coast refinery and two Illinois refineries
representing over 350,000 barrels per day ("bpd") of rated crude oil throughput
capacity. The Company is also currently the seventh largest direct operator of
gasoline and convenience stores in the U.S. with over 800 retail outlets in 10
Midwestern states. The Company's retail network has conducted operations under
the Clark brand name for 65 years. The Company also markets gasoline, diesel
fuel and other petroleum products on a wholesale branded and unbranded basis.
Since 1992, the Company has focused its business objectives with an
entrepreneurial orientation to cost reduction, productivity improvements,
selective capital investments and growth through acquisitions. Important
initiatives include the equity-financed acquisition of Chevron U.S.A. Inc.'s
("Chevron") Port Arthur, Texas, refinery and certain other assets (the "Port
Arthur Refinery"); retail acquisitions and divestitures intended to strengthen
the Company's position in key markets; the marketing division's store re-
imaging program; and the refining division's productivity enhancement programs.
The Company believes it is well positioned to benefit from improving refining
industry fundamentals and to take advantage of emerging growth opportunities in
the marketing and refining sectors.
REFINING
The Company currently operates three refineries and 16 product terminals
located in its Midwest and Gulf Coast market areas, a crude oil and LPG
terminal associated with the Port Arthur refinery and has minority equity
interests in certain crude oil and product pipelines. The refining division is
the largest business division of the Company in terms of total assets and has
significant operating leverage to crack spreads and crude oil differentials,
which provides the potential for the Company to significantly increase its
operating cash flow. Recent improvements in industry conditions and
productivity gains contributed to the refining division's record earnings
before interest, taxes, depreciation and amortization ("EBITDA") of $72.0
million and $78.2 million in the second and third quarters of 1997,
respectively. See additional operating cash flow disclosures in Selected
Consolidated Financial and Other Data.
The Port Arthur refinery is located in Port Arthur, Texas. The refinery has
the ability to process 100% sour crude oil, including up to 20% heavy sour
crude oil, and has coking capabilities. Heavy sour crude oil has historically
been available at substantially lower costs when compared to light sweet crude
oil such as West Texas Intermediate ("WTI"). The Port Arthur refinery has the
ability to produce jet fuel, 100% low-sulfur diesel fuel, 55% summer
reformulated gasoline ("RFG") and 75% winter RFG. The refinery's Texas Gulf
Coast location provides access to numerous cost effective domestic and
international crude oil sources, and its products can be sold in the
Midcontinent and Eastern U.S. as well as in export markets. Since acquiring the
Port Arthur Refinery in early 1995, the Company has increased crude oil
throughput capability from approximately 178,000 bpd to its current 212,000 bpd
and has lowered operating expenses by approximately 50c per barrel. From the
date of the acquisition through September 30, 1997, the Port Arthur Refinery
has generated EBITDA of approximately $171.0 million. See additional operating
cash flow disclosures in Selected Consolidated Financial and Other Data.
5
<PAGE>
The Company's Illinois refineries, Blue Island (near Chicago, Illinois) and
Hartford (near St. Louis, Missouri), are supplied by common carrier crude oil
pipelines and are located on inland waterways with barge access. The refineries
have access to multiple sources of foreign and domestic crude oil and benefit
from crude oil input flexibility. Recent pipeline expansions, including the new
capacity of the Express Pipeline and expanded capacity on the Interprovincial
Pipeline, have served to increase the availability of lower cost crude oil to
the Company's Illinois refineries. The two refineries are connected by product
pipelines, increasing flexibility relative to stand alone operations. The
Company's product terminals allow efficient distribution of refinery production
through pipeline systems. The Company believes that the Midwest location of
these refineries provides relatively high refining margins and less volatility
than comparable operations located in other regions of the U.S. on a historical
basis principally because demand for refined product has exceeded production in
the region. This excess demand has historically been satisfied by imports from
other regions, providing Midwest refineries with a transportation advantage.
MARKETING
The Company markets gasoline and convenience products in ten Midwestern
states through a retail network of Company-operated stores and also markets
refined petroleum products through a wholesale program to distributors, chain
retailers and industrial consumers. The Company's retail presence is focused in
the Great Lakes region of the U.S. where Company-operated stores market value-
oriented gasoline products, cigarettes and a unique mix of On The Go(R)
convenience products. As of September 30, 1997, the Company had 813 Company-
operated retail locations under the Clark brand name. The Company believes its
high proportion of Company-operated retail stores enables it to respond more
quickly and uniformly to changing market conditions than many of its
competitors, including major oil companies that generally operate their stores
through dealer or jobber networks. Of these stores, 647 were located on
Company-owned real estate (80%) and 166 were leased locations (20%). The
Company's wholesale operation markets petroleum products in both the Midwest
and Gulf Coast regions of the U.S. In 1996, the Company sold approximately 1.0
billion gallons of fuel (representing 40% of refining production) and over
$250.0 million of convenience products through approximately 200 million retail
transactions and sold an additional 1.1 billion gallons of fuel to wholesale
customers ranging from Clark-branded retailers to major transportation and
commercial companies.
Over the past several years, the Company has focused on building core markets
where it believes it can maintain or develop market shares of 7.5% to 15% in
order to leverage brand recognition, promotions and other marketing and
operating activities. In part due to this focus, the Company's monthly gasoline
sales per store averaged 104,500 gallons in 1996, which exceeded the 1996
national industry average of 84,500 gallons, while monthly sales per square
foot averaged approximately $49 for convenience products versus the industry
average of approximately $24. The Company believes its low operating costs rank
it in the first quartile of its industry, providing it with an important
competitive advantage. Chicago, Central Illinois, Southern Michigan, Cleveland,
Milwaukee and Toledo currently are the Company's six highest volume core
metropolitan markets, with market shares of 5% to 18%. A current trend toward
consolidation in the refining and marketing sector is viewed positively by the
Company due to growth opportunities that may develop and the potential
beneficial impact that consolidation may have on longer term pricing.
The Company currently sells gasoline and diesel fuel on an unbranded basis to
approximately 500 distributors and chain retailers. The Company believes these
sales offer higher profitability than spot market alternatives. Wholesale sales
are also made to the transportation and commercial sector, including airlines,
railroads, barge lines and other industrial end-users. During 1997, the Company
has continued to expand its new branded jobber program, increasing to 61 the
number of outlets owned
6
<PAGE>
and operated by branded jobbers as of September 30, 1997. As part of its new
business franchise marketing initiative, the Company partnered with a grocery
chain to add four outlets on grocery store parking lots in 1996 and 1997. The
Company believes that a branded distributor program, new business franchise
marketing, and further focus on the transportation and commercial sectors offer
significant opportunities for incremental sales volumes and earnings in the
future.
BUSINESS STRATEGY
The Company's business strategy focuses on improving productivity, optimizing
capital investments, promoting an entrepreneurial culture, and growing both its
refining and marketing operations to strengthen the Company's business and
financial profile. This strategy is designed to address the commodity-based
nature of the oil refining and marketing industry in which the Company
operates.
. Improving Productivity. The Company continues to implement relatively
low-cost projects in its refining and marketing operations designed to
increase production, sales volumes and production yields and to improve
sales mix while reducing input costs and operating expenses. Improvements
at the Port Arthur refinery, increased yields and crude oil throughput
capability at its Illinois refineries and improved monthly fuel volumes,
convenience product sales and margins in the retail division are examples
of these types of initiatives.
. Optimizing Capital Investment. The Company seeks to optimize capital
investments by linking discretionary capital spending to internally
generated cash flow, focusing its efforts first on those productivity
initiatives that require no capital investment and then on those which have
relatively short payback periods. As an example, in response to weak 1995
and 1996 industry refining market conditions, discretionary capital
expenditures were scaled back significantly from historical levels. Due to
improved results in 1997 and a more robust refining industry environment,
the Company is now implementing several high payback discretionary capital
projects.
. Promoting Entrepreneurial Culture. The Company emphasizes an
entrepreneurial management approach which uses employee incentives to
enhance financial performance and safety. All of the Company's employees
participate in its performance management, profit sharing or other
incentive plans. In addition, the Company has adopted a stock incentive
plan for certain key employees. Blackstone Capital Partners III Merchant
Banking Fund L.P. and its affiliates ("Blackstone"), the Company's new
majority stockholder, intends to put in place a management incentive
program designed to increase management's ownership of stock of Clark USA,
Inc. ("Clark USA"), the Company's corporate parent, through direct
purchases of such stock and options tied to the financial performance of
the Company.
. Growing Through Opportunistic Acquisitions. The Company intends to
continue to expand its refining and marketing operations through
opportunistic acquisitions which can benefit from its business strategy,
create critical mass, increase market share or access new markets. Since
1994, the Company more than doubled its refining capacity by acquiring the
Port Arthur Refinery and strengthened its Northern Illinois and Southern
Michigan presence by adding 122 retail stores in these core markets.
Blackstone is committed to this strategy.
. Strengthening the Balance Sheet. The Company and Clark USA will continue
to seek to improve their capital structure. The financing of the Port
Arthur Refinery acquisition principally with equity contributed by Clark
USA and the contribution by Clark USA of an advance crude oil purchase
receivable lowered the Company's leverage in 1995 and 1996. The Company's
subsequent monetization of the advanced crude oil purchase receivable
significantly improved the Company's liquidity. As of September 30, 1997,
the Company had total cash balances of $286 million. The Equity
Recapitalization and the Debt Refinancing and Repayment (both as defined
herein) are designed to strengthen the balance sheet of Clark USA and its
subsidiaries by extending debt maturities, increasing prepayment
flexibility and lowering the overall borrowing cost.
7
<PAGE>
RECENT DEVELOPMENTS
RECENT RESULTS
For the quarters ended June 30, 1997 and September 30, 1997, the Company
posted record EBITDA of $74.4 million and $81.1 million, respectively,
partially as a result of strong crack spreads and crude oil differentials in
the Company's markets, versus $21.0 million and $8.1 million in the year-
earlier periods. The Company reported EBITDA of $138.6 million for the nine
months ended September 30, 1997, which compared to $29.6 million for the same
period in 1996. The Company would have generated EBITDA of $181.1 million in
the first nine months of 1997 as compared to $9.2 million in the same period of
1996 after adjusting for a significant fall in crude oil prices in 1997 and the
hypothetical cost of lost production associated with a major maintenance
turnaround at the Port Arthur refinery in the first quarter of 1997. The
Company reported an operating loss of $4.3 million for the three months ended
September 30, 1996, which improved to operating income of $64.6 million for the
same period of 1997. The Company reported an operating loss of $7.4 million for
the first nine months of 1996, which improved to operating income of $94.3
million for the same period of 1997. The Company has historically recorded
seasonally lower earnings in the fourth and first quarters of calendar years
due to lower demand for refined products. See additional operating cash flow
disclosures in Selected Consolidated Financial and Other Data.
In the early 1990s the Company invested $25.0 million in a project initiated
to produce low-sulfur diesel fuel at the Hartford refinery (the "DHDS Project")
which was delayed in 1992 based on internal and third-party analyses that
indicated an oversupply of low-sulfur diesel fuel capacity in the Company's
markets. Based on these analyses, the Company projected relatively narrow price
differentials between low- and high-sulfur diesel products. This projection has
thus far been borne out. High-sulfur diesel fuel is utilized by the railroad,
marine and farm industries. In December 1997, the Company determined that
equipment purchased for the DHDS Project could be better utilized for other
projects at its Hartford and Port Arthur refineries, rather than remaining idle
until low- and high-sulfur diesel fuel differentials widened sufficiently to
justify completing the DHDS Project. As a result, in the fourth quarter of 1997
the Company expects to record a charge to earnings of approximately $15.0
million principally for engineering costs specific to the DHDS Project.
EQUITY RECAPITALIZATION
On October 1, 1997, Clark USA and its stockholders completed an equity
recapitalization whereby all previously issued shares of Class A Common Stock
of Clark USA held by certain affiliates (the "Tiger Funds") of Tiger Management
Corporation ("Tiger") (then representing approximately 31% of the total voting
power of all classes of Clark USA stock) were reclassified into a new class of
common stock of Clark USA designated Class E Common Stock (the "Class E Common
Stock"). Trizec Hahn Corporation ("TrizecHahn") then purchased all of the Class
E Common Stock for $7.00 per share in cash, resulting in a total purchase price
of $63.0 million. All of such shares of Class E Common Stock were subsequently
reclassified into 63,000 shares of 11 1/2% Senior Cumulative Exchangeable
Preferred Stock (the "Exchangeable Preferred Stock") of Clark USA and sold to
institutional investors. On or about December , 1997, Clark USA commenced an
offer to exchange 11 1/2% New Senior Cumulative Exchangeable Preferred Stock
("New Exchangeable Preferred Stock") which has been registered under the
Securities Act for its Exchangeable Preferred Stock. Subject to certain
conditions, the New Exchangeable Preferred Stock is exchangeable in whole but
not in part at the option of Clark USA for $63 million aggregate principal
amount of Clark USA's 11 1/2% Subordinated Exchange Debentures due 2009 (the
"Exchange Debentures").
In addition, the shares of common stock of Clark USA owned by Occidental
C.O.B. Partners ("Oxy") were exchanged for an equal number of shares of a new
class of convertible common stock designated Class F Common Stock (the "Class F
Common Stock") of Clark USA having voting rights limited as a class to the
lesser of (a) the aggregate voting power of such shares on a one-vote-per-share
basis and (b) 19.9% of the total voting power of all classes of Clark USA's
voting stock. The
8
<PAGE>
Class F Common Stock is convertible at any time to Common Stock of Clark USA,
on a one-for-one basis, at the option of any holder other than Oxy and its
affiliates. Clark USA also issued to Oxy an additional 545,455 shares of Class
F Common Stock in full satisfaction of Clark USA's obligation to issue shares
under its then existing Stockholders' Agreement with Oxy.
BLACKSTONE TRANSACTION
On November 3, 1997, Blackstone acquired the 13,500,000 shares of Common
Stock of Clark USA previously held by TrizecHahn and certain of its
subsidiaries (referred to herein as the "Blackstone Transaction"), as a result
of which Blackstone obtained a 65% equity interest (73.3% voting interest) in
Clark USA. See "Security Ownership of Certain Owners and Management" and
"Certain Transactions."
The transactions described in the preceding three paragraphs are referred to
herein as the "Equity Recapitalization."
THE CREDIT AGREEMENT
On September 25, 1997, the Company entered into a credit agreement (the
"Credit Agreement") which provides for borrowings and letter of credit
issuances of up to the lesser of $400.0 million or the amount of the borrowing
base calculated with respect to the Company's cash and cash equivalents,
eligible investments, eligible receivables and eligible petroleum inventories,
provided that a sublimit for borrowings is limited to the principal amount of
$50.0 million. Obligations under the Credit Agreement are secured by a lien on
substantially all of the Company's cash and cash equivalents, receivables,
crude oil, refined product and other inventories and trademarks and other
intellectual property. See "Description of Certain Debt Instruments--Credit
Agreement."
THE LOAN AGREEMENT
On November 21, 1997, the Company entered into a term loan agreement (the
"Loan Agreement") with certain lenders and Goldman Sachs Credit Partners L.P.,
as agent, pursuant to which the Company borrowed $125.0 million (the "Term
Loan"). Borrowings under the Loan Agreement are senior unsecured obligations of
the Company.
THE DEBT OFFERING
On November 21, 1997, the Company sold $100,000,000 aggregate principal
amount of its Old Senior Notes and $175,000,000 aggregate principal amount of
its Old Senior Subordinated Notes to the Initial Purchasers (as defined
herein), which placed the Old Notes with institutional investors (the "Debt
Offering"). A portion of the net proceeds of the Debt Offering will be used to
redeem on or about December 24, 1997 all $225,000,000 aggregate principal
amount of the Company's outstanding 10 1/2% Senior Notes due 2001 (the "10 1/2%
Notes"). The remaining net proceeds of the Debt Offering and the Term Loan,
estimated to be approximately $149.1 million, have been used to replenish the
Company's cash reserves and for general corporate purposes. Prior to the
consummation of the Debt Offering, the Company returned to Clark USA $215.0
million of its existing cash (the "Special Dividend") which enabled Clark USA
to repurchase for $206.6 million, $259.2 million (value at maturity) of its
Senior Secured Zero Coupon Notes due 2000, Series A (the "Zero Coupon Notes"),
pursuant to an outstanding tender offer (the "Tender Offer"). Clark USA intends
to call the remaining Zero Coupon Notes outstanding on or about February 15,
1998. On November 24, 1997, Clark issued notice to the holders of its 10 1/2%
Notes that it intends to redeem on December 24, 1997 all $225.0 million of the
notes outstanding at a price of $1,032.96 for each $1,000.00 principal amount
of the notes outstanding, representing the redemption premium and accrued
interest. As a result of the Blackstone Transaction, the $175.0 million of 9
1/2% Senior Notes due 2004 (the "9 1/2% Notes"), and (in the event of a Rating
Decline) $175.0 million of 10 7/8% Notes will be subject to a repurchase offer.
The transactions described in the preceding three paragraphs are referred to
herein as the "Debt Refinancing and Repayment."
9
<PAGE>
THE EXCHANGE OFFER
<TABLE>
<S> <C>
Registration Agreement....... The Old Notes were sold by the Company on Novem-
ber 21, 1997 to Goldman, Sachs & Co., BT Alex.
Brown Incorporated, Bear, Stearns & Co. Inc.,
Donaldson, Lufkin & Jenrette and Lehman Brothers,
as initial purchasers (the "Initial Purchasers"),
which placed the Old Notes with institutional in-
vestors. In connection therewith, the Company ex-
ecuted and delivered for the benefit of the hold-
ers of the Old Notes an exchange and registration
rights agreement (the "Registration Agreement")
providing for the Exchange Offer.
The Exchange Offer........... $1,000 principal amount at maturity of New Notes
in exchange for each $1,000 principal amount of
Old Notes. As of the date hereof, $275,000,000
aggregate principal amount at maturity of Old
Notes are outstanding. The Company will issue the
New Notes to holders on or promptly after the Ex-
piration Date.
Based on an interpretation by the staff of the
Commission set forth in no-action letters issued
to third parties, the Company believes that New
Notes issued in exchange for Old Notes pursuant
to the Exchange Offer may be offered for resale,
resold and otherwise transferred by any holder
thereof (other than any such holder which is an
"affiliate" of the Company within the meaning of
Rule 405 under the Securities Act) without com-
pliance with the registration and prospectus de-
livery provisions of the Securities Act, provided
that such New Notes are acquired in the ordinary
course of such holder's business and that such
holder has no arrangement or understanding with
any person to participate in the distribution of
such New Notes. Persons wishing to
exchange Old Notes in the Exchange Offer must
represent to the Company that such conditions
have been met. Any holder who is an "affiliate"
of the Company or who intends to participate in
the Exchange Offer for the purpose of distribut-
ing the New Notes cannot rely on the interpreta-
tion of the staff of the Commission set forth in
the above referenced no-action letters and must
comply with the registration and prospectus de-
livery requirements of the Securities Act in con-
nection with any sale or transfer of the Old
Notes. See "Risk Factors--Consequences to Non-
Tendering Holders of Old Notes."
Each broker-dealer that receives New Notes for
its own account pursuant to the Exchange Offer
must acknowledge that it will deliver a prospec-
tus in connection with any resale of such New
Notes. The Letter of Transmittal states that by
so acknowledging and by delivering a
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus,
as it may be amended or supplemented from time to
time, may be used by a broker-dealer in connec-
tion with resales of New Notes received in ex-
change for Old Notes where such Old Notes were
acquired by such broker-dealer as a result of
market-making activities or other trading activi-
ties and not acquired directly from the Company.
The Company has agreed that for a period of 180
days after the Expiration Date, it will make this
Prospectus available to any broker-dealer for use
in connection with any such resale. See "Plan of
Distribution."
Expiration Date............. 5:00 p.m., New York City time, on ,
1998 unless the Exchange Offer is extended, in
which case the term "Expiration Date" means the
latest date and time to which the Exchange Offer
is extended.
Conditions to the Exchange The Exchange Offer is subject to certain custom-
Offer...................... ary conditions which may be waived by the Compa-
ny. See "The Exchange Offer--Conditions."
Procedures for Tendering Old Each holder of Old Notes wishing to accept the
Notes...................... Exchange Offer must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, in
accordance with the instructions contained herein
and therein, and mail or otherwise deliver such
Letter of Transmittal, or such facsimile, to-
gether with the Old Notes and any other required
documentation to the Exchange Agent (as defined
herein) at the address set forth herein. By exe-
cuting the Letter of Transmittal, each holder
will represent to the Company that, among other
things, the New Notes acquired pursuant to the
Exchange Offer are being obtained in the ordinary
course of business of the person receiving such
New Notes, whether or not such person is the
holder, that neither the holder nor any such
other person has an arrangement or understanding
with any person to participate in the distribu-
tion of such New Notes and that neither the
holder nor any such other person is an "affili-
ate," as defined under Rule 405 of the Securities
Act, of the Company. See "The Exchange Offer--
Procedures for Tendering." Each broker-dealer
that receives New Notes for its own account in
exchange for Old Notes, where such Old Notes were
acquired by such broker-dealer as a result of
market-making activities or other trading activi-
ties, must acknowledge that it will deliver a
prospectus in connection with any resale of such
New Notes. See "The Exchange Offer--Procedures
for Tendering" and "Plan of Distribution".
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
Special Procedures for Bene- Any beneficial owner whose Old Notes are regis-
ficial Owners.............. tered in the name of a broker, dealer, commercial
bank, trust company or other nominee and who
wishes to tender
should contact such registered holder promptly
and instruct such registered holder to tender on
such beneficial owner's behalf. If such benefi-
cial owner wishes to tender on such owner's own
behalf, such owner must, prior to completing and
executing the Letter of Transmittal and deliver-
ing his Old Notes, either make appropriate ar-
rangements to register ownership of the Old Notes
in such owner's name or obtain a properly com-
pleted bond power from the registered holder. The
transfer of registered ownership may take consid-
erable time. See "The Exchange Offer--Procedures
for Tendering."
Guaranteed Delivery Proce- Holders of Old Notes who wish to tender their Old
dures...................... Notes and whose Old Notes are not immediately
available or who cannot deliver their Old Notes,
the Letter of Transmittal or any other documents
required by the Letter of Transmittal to the Ex-
change Agent prior to the Expiration Date, must
tender their Old Notes according to the guaran-
teed delivery procedures set forth in "The Ex-
change Offer--Guaranteed Delivery Procedures."
Withdrawal Rights........... Tenders may be withdrawn at any time prior to
5:00 p.m., New York City time, on the Expiration
Date.
Acceptance of Old Notes and The Company will accept for exchange any and all
Delivery of New Notes...... Old Notes which are properly tendered in the Ex-
change Offer prior to 5:00 p.m., New York City
time, on the Expiration Date. The New Notes is-
sued pursuant to the Exchange Offer will be de-
livered promptly following the
</TABLE>
Expiration Date. See "The Exchange Of-
fer--Terms of the Exchange Offer."
<TABLE>
<S> <C>
Certain Federal Income Tax
Consequences............... The exchange pursuant to the Exchange Offer
should not be treated as a taxable exchange for
federal income tax purposes. See "Certain Federal
Income Tax Considerations--Consequences of the
Exchange Offer to Exchanging and Nonexchanging
Holders."
Exchange Agent
Old Senior Notes........... Bankers Trust Company is serving as Exchange
Agent in connection with the exchange offer of
New Senior Notes for Old Senior Notes.
Old Senior Subordinated Marine Midland Bank is serving as Exchange Agent
Notes..................... in connection with the exchange offer of New Se-
nior Subordinated Notes for Old Senior Subordi-
nated Notes.
Bankers Trust Company and Marine Midland Bank are
collectively referred to herein as the "Exchange
Agent."
</TABLE>
12
<PAGE>
SUMMARY OF TERMS OF NEW NOTES
The Exchange Offer applies to $275,000,000 aggregate principal amount of Old
Notes. The form and terms of the New Notes are identical in all material
respects to the form and terms of the Old Notes except that the New Notes have
been registered under the Securities Act and, therefore, will not bear legends
restricting the transfer thereof. The New Notes will evidence the same debt as
the Old Notes and will be entitled to the benefits of the Indentures. See
"Description of the New Notes."
<TABLE>
<S> <C>
Securities Offered...... $100,000,000 aggregate principal amount of 8 3/8% New
Senior Notes due 2007
$175,000,000 aggregate principal amount of 8 7/8% New
Senior Subordinated Notes due 2007
Issuer.................. Clark Refining & Marketing, Inc.
Maturity Date........... November 15, 2007
Interest Payment Dates.. May 15 and November 15, commencing May 15, 1998
Optional Redemption
New Senior Notes....... The New Senior Notes will be redeemable at the option
of the Company, in whole or in part, at any time on and
after November 15, 2002 at the redemption prices set
forth herein, plus accrued and unpaid interest, if any,
to the date of redemption. In addition, up to 35% in
aggregate principal amount of the New Senior Notes
originally issued are redeemable at the option of the
Company out of the net cash proceeds of one or more
Equity Offerings at any time prior to November 15,
2001, at a redemption price equal to 108.375% of the
principal amount thereof, plus accrued and unpaid
interest, if any, to the redemption date.
New Senior Subordinated The New Senior Subordinated Notes will be redeemable at
Notes................. the option of the Company, in whole or in part, at any
time on and after November 15, 2002 at the redemption
prices set forth herein, plus accrued and unpaid
interest, if any, to the date of redemption. In
addition, up to 35% in aggregate principal amount of
New Senior Subordinated Notes originally issued are
redeemable at the option of the Company out of the net
cash proceeds of one or more Equity Offerings at any
</TABLE>
time prior to November 15, 2001 at a
redemption price equal to 108.875% of the
principal amount thereof, plus accrued and
unpaid interest, if any, to the redemption
date.
<TABLE>
<S> <C>
Ranking
New Senior Notes...... The New Senior Notes will rank pari passu in right of
payment with all senior debt of the Company, which at
September 30, 1997, consisted solely of the 10 1/2%
Notes, which the Company expects to redeem on or about
December 24, 1997, the 9 1/2% Notes and obligations
under the Credit Agreement and the Loan Agreement.
Because the New Senior Notes are unsecured, obligations
under the Credit Agreement will
</TABLE>
13
<PAGE>
<TABLE>
<S> <C>
effectively rank senior to the New Senior Notes to the
extent of the security in respect of the Credit
Agreement.
New Senior Subordinated The New Senior Subordinated Notes will be subordinated
Notes................. in right of payment to all Senior Debt (as defined
herein) of the Company. As of September 30, 1997, on a
pro forma basis after giving effect to the transactions
contemplated herein, including the Debt Offering, the
incurrence of the Term Loan and the application of the
net proceeds therefrom, there would have been $418.4
million of unsubordinated long-term indebtedness
(including current portions) of the Company (excluding
available borrowings and $238.0 million of letters of
credit under the Credit Agreement).
Change of Control....... Following a Change of Control that results in a Rating
Decline (as defined herein), the Company will be
required to offer to purchase all of the New Notes at
101% of the aggregate principal amount thereof, plus
accrued and unpaid interest, if any, to the date of
purchase. There can be no assurance, however, that the
Company will have sufficient funds with which to
purchase the New Notes at that time, and certain
provisions of the Company's other debt agreements
(including the Credit Agreement) may further limit the
Company's ability to make such purchases. See "Risk
Factors--Change of Control Provisions in New Notes and
Existing Indebtedness" and "Description of the New
Notes."
Certain Covenants Prior
to an Investment Grade The Indentures contain certain covenants that, among
Rating Event........... other things, limit the ability of the Company to incur
or guarantee additional indebtedness, pay dividends on
and redeem capital stock, sell assets and capital
stock, enter into transactions with affiliates, create
liens, engage in mergers and consolidations or transfer
substantially all of its assets to another person.
However, all of these covenants are subject to a number
of important qualifications and exceptions. See
"Description of the New Notes."
Certain Covenants After
an Investment Grade After the occurrence of an Investment Grade Rating
Rating Event........... Event (as defined herein), certain of the covenants
described in the preceding paragraph will cease to
exist or will be modified. The Indentures contain
covenants that, among other things, limit the Company's
ability to create liens with respect to certain assets,
enter into sale-leaseback transactions and engage in
mergers and consolidations.
</TABLE>
14
<PAGE>
USE OF PROCEEDS
The Exchange Offer is intended to satisfy certain obligations of the Company
under the Registration Agreement. The Company will not receive any cash
proceeds from the issuance of the New Notes offered in the Exchange Offer.
RISK FACTORS
See "Risk Factors" for a discussion of certain factors that should be
considered in evaluating an investment in the New Notes.
15
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL AND OTHER INFORMATION
The selected summary consolidated financial data set forth below for the
Company as of December 31, 1995 and 1996 and for each of the three years in the
period ended December 31, 1996 are derived from the audited financial
statements included elsewhere herein. The selected summary financial data set
forth below for the Company as of December 31, 1992, 1993 and 1994 and for each
of the two years in the period ended December 31, 1993 are derived from the
audited financial statements not included elsewhere herein. This table should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Consolidated Financial Statements
and related notes included herein. The selected summary historical data for the
nine-month periods ended September 30, 1996 and 1997 is unaudited.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------ ------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- -------- -------- --------
(IN MILLIONS, EXCEPT RATIOS AND OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS
DATA:
Net sales and operating
revenues.............. $2,253.0 $2,263.4 $2,440.0 $4,486.1 $5,072.7 $3,724.4 $3,296.4
Cost of sales.......... 1,952.4 1,936.6 2,092.5 4,018.3 4,560.0 3,346.3 2,791.4
Operating expenses
(a)................... 217.3 204.6 219.9 373.3 418.9 304.6 319.0
General and
administrative
expenses (a).......... 38.3 41.0 51.4 52.3 59.1 43.9 47.4
Depreciation and
amortization (b)...... 30.4 35.3 37.3 43.5 48.4 37.0 44.3
Operating income
(loss)................ 14.6 19.4 65.4 (1.3) (13.7) (7.4) 94.3
Interest and financing
costs, net (c)........ 26.4 29.9 37.6 39.9 38.7 31.2 26.3
Earnings (loss) from
continuing operations
before extraordinary
items and cumulative
effect of change in
accounting
principles............ 3.3 1.4 18.1 (25.5) (38.5) (23.9) 56.3
BALANCE SHEET DATA:
Cash, cash equivalents
and short-term
investments........... $ 218.3 $ 212.1 $ 134.1 $ 106.6 $ 334.3 $ 79.4 $ 285.9
Total assets........... 800.0 829.1 859.5 1,188.3 1,393.3 1,129.9 1,375.9
Long-term debt......... 401.5 401.0 400.7 420.4 417.6 417.2 415.3
Stockholder's equity... 154.2 146.0 162.9 304.1 534.1 313.6 590.5
SELECTED FINANCIAL DATA:
EBITDA, as adjusted
(d)................... $ 45.0 $ 81.2 $ 76.2 $ 42.2 $ 34.7 $ 29.6 $ 138.6
Cash flows from
operating activities.. 37.1 68.4 53.7 (85.6) 16.9 (30.3) 39.2
Cash flows from
investing activities.. (23.8) (19.8) (21.2) (134.1) 212.0 (7.5) (81.4)
Cash flows from
financing activities.. (38.7) (1.1) (5.4) 174.7 30.0 30.0 (6.1)
Ratio of earnings to
fixed charges (e)..... (f) (f) 1.56x (f) (f) (f) 2.60x
Expenditures for
turnaround............ $ 2.7 $ 20.6 $ 11.2 $ 6.5 $ 13.9 $ 7.2 $ 31.2
Expenditures for
property, plant and
equipment............. 59.5 67.9 100.3 42.1 45.0 23.3 54.0
Refinery acquisition
expenditures.......... -- -- 13.5 71.8 -- -- --
OPERATING DATA:
Refining Division:
Port Arthur Refinery
(acquired February 27,
1995)
Production (m
bbls/day)............. -- -- -- 207.7 210.8 212.0 208.5
Gross margin (per bbl)
(a)................... -- -- -- $ 2.37 $ 2.78 $ 2.49 $ 3.84
Operating expenses (per
bbl) (a).............. -- -- -- 1.90 2.13 2.06 2.23
Blue Island, Hartford
and other refining
Production (m
bbls/day)............. 142.4 134.7 140.3 136.5 134.2 136.2 141.4
Gross margin (per bbl)
(a)................... $ 3.03 $ 3.24 $ 3.48 $ 2.64 $ 2.53 $ 2.66 $ 3.94
Operating expenses (per
bbl) (a).............. 2.17 2.12 2.28 2.61 2.58 2.44 2.40
Refining contribution
to operating income
(mm).................. N/A 42.5 46.5 11.1 24.2 16.0 132.9
Retail Division:
Number of stores
(average) (g)......... 885 860 834 852 823 828 815
Gasoline volume (mm
gals)................. 956.7 1,014.8 1,028.5 1,063.8 1,031.9 777.7 771.1
Gasoline volume (m gals
pmps)................. 90.1 98.6 102.8 104.1 104.5 104.4 106.3
Gasoline gross margin
(cents/gal)........... 10.0c 11.1c 10.9c 11.4c 10.4c 10.6c 10.3c
Convenience product
sales (mm)............ $ 203.4 $ 218.0 $ 231.6 $ 252.6 $ 251.7 $ 193.7 $ 214.3
Convenience product
sales (mpmps)......... 19.2 21.2 23.1 24.7 25.5 26.0 29.2
Convenience product
gross margin and other
income (mm)........... 47.7 54.8 57.2 62.9 65.8 50.3 55.7
Convenience product
gross margin (mpmps).. 4.5 5.3 5.7 6.1 6.6 6.7 7.6
Operating expenses (mm)
(a)................... 96.0 100.1 104.6 121.6 126.2 94.4 99.3
Retail contribution to
operating income
(mm).................. N/A 52.9 45.9 45.4 25.0 24.4 18.1
</TABLE>
16
<PAGE>
- --------
(a) Certain reclassifications were made to prior periods to conform to current
period presentation.
(b) Amortization includes amortization of turnaround costs and organizational
costs.
(c) Interest and financing costs, net, included amortization of debt issuance
costs of $2.9 million, $1.2 million, $1.2 million, $5.2 million and $6.5
million for the years ended December 31, 1992, 1993, 1994, 1995 and 1996,
and $4.9 million and $5.3 million for the nine months ended September 30,
1996 and 1997, respectively. Interest and financing costs, net, also
included interest on all indebtedness, net of capitalized interest and
interest income.
(d) Earnings before interest, taxes, depreciation and amortization ("EBITDA")
is a commonly used non-GAAP financial measure but should not be construed
as an alternative to operating income or cash flows from operating
activities (as determined in accordance with generally accepted accounting
principles ("GAAP")). EBITDA, as adjusted, does not reflect cash necessary
or available to fund cash requirements. EBITDA, as adjusted, in 1993 and
1994 excluded the write-off in 1993 and the recovery in 1994 of a $26.5
million inventory valuation adjustment.
(e) The ratio of earnings to fixed charges is computed by dividing (i) earnings
before income taxes (adjusted to recognize only distributed earnings from
less than 50% owned persons accounted for under the equity method) plus
fixed charges, excluding capitalized interest by (ii) fixed charges,
excluding capitalized interest. Fixed charges consisted of interest on
indebtedness, including amortization of discount and debt issuance costs
and the estimated interest components (one-third) of rental and lease
expense. On a pro forma basis as adjusted to give effect to the Equity
Recapitalization, the Debt Refinancing and Repayment, the Special Dividend
and fees and expenses associated with the Equity Recapitalization, earnings
would have been insufficient to cover fixed charges by an estimated $47.7
million and $64.6 million for the nine months ended September 30, 1996 and
the year ended December 31, 1996. The ratio of earnings to fixed charges
for the nine months ended September 30, 1997 would have been 2.25x on a
similar basis.
(f) As a result of the losses for the years ended December 31, 1992, 1993, 1995
and 1996, and for the nine months ended September 30, 1996, earnings were
insufficient to cover fixed charges by $2.0 million, $1.7 million, $44.0
million, $53.6 million, and $39.5 million respectively.
(g) Ten stores did not sell fuel in 1997.
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RISK FACTORS
The New Notes involve certain risks. Prospective purchasers of the New Notes
should consider the following risk factors, as well as the other information
contained in this Prospectus.
SUBSTANTIAL LEVERAGE, HISTORY OF NET LOSSES AND INSUFFICIENCY OF EARNINGS TO
COVER FIXED CHARGES
The Company has consolidated indebtedness that is substantial in relation to
its stockholder's equity. As of September 30, 1997, the Company had
outstanding unsubordinated long-term indebtedness (including current portions)
of approximately $418.4 million. As of September 30, 1997, on a pro forma
basis after giving effect to the Special Dividend, the consummation of the
Debt Offering and the Term Loan, the application of the net proceeds
therefrom, and the payment of fees and expenses in connection with the Equity
Recapitalization, the Company would have had outstanding long-term
indebtedness (including current portions) of approximately $593.4 million and
stockholder's equity of approximately $356.8 million. See "Capitalization."
The Credit Agreement, the Loan Agreement, the Indentures and the Company's 9
1/2% Notes permit the incurrence of additional indebtedness by the Company
subject to certain limitations specified therein.
The Company had a net loss of $25.5 million and $38.5 million for the years
ended December 31, 1995 and December 31, 1996, respectively. As a result of
the losses for the years ended December 31, 1992, 1995 and 1996 and results
for the year ended December 31, 1993, earnings were insufficient to cover
fixed charges by $2.0 million, $44.0 million, $53.6 million and $1.7 million,
respectively. The Company may experience net losses in the future.
The level of the Company's indebtedness could have several important
consequences for holders of the New Notes, including, but not limited to, the
following: (i) a significant portion of the Company's cash flow from
operations will be dedicated to debt service and will not be available for
other purposes; (ii) the Company's ability to obtain additional financing in
the future for working capital, capital expenditures, acquisitions, general
corporate or other purposes may be limited; (iii) the Company's leveraged
position and the covenants contained in the Indentures, the Credit Agreement
and the Loan Agreement could limit the Company's ability to compete, as well
as its ability to expand and make capital improvements, and (iv) the Company's
level of indebtedness could make it more vulnerable to economic downturns and
more sensitive to volatility in the petroleum industry, limit its ability to
withstand competitive pressures and reduce its flexibility in responding to
changing business and economic conditions.
The Company's ability to pay interest on the New Notes and to satisfy its
debt obligations will depend upon its future operating performance, which will
be affected by prevailing economic conditions and financial, business and
other factors, certain of which are beyond its control. The Company
anticipates that available cash, together with borrowings under the Credit
Agreement and other sources of liquidity will be adequate to meet the
Company's anticipated requirements for working capital, capital expenditures,
interest payments and scheduled principal payments through at least the end of
1999. There can be no assurance, however, that the Company will continue to
generate sufficient cash flow from operations in the future to service its
debt and make necessary capital expenditures. If unable to do so, the Company
may be required to reduce or delay planned capital expenditures, seek
additional financing, dispose of certain assets and/or seek to refinance some
or all of its debt. There can be no assurance that any of these alternatives
could be effected, if at all, on satisfactory terms.
Additionally, if the Company were to sustain a decline in its operating
results or available cash, it could experience difficulty in complying with
the covenants contained in the Credit Agreement, the Loan Agreement, or the
Indentures or any other agreements governing future indebtedness of the
Company. The failure to comply with such covenants could result in an event of
default under these agreements, thereby permitting acceleration of such
indebtedness as well as indebtedness under other instruments that contain
cross-acceleration and cross-default provisions.
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In addition, the Company's sole stockholder, Clark USA, has substantial
indebtedness. As of September 30, 1997, on a pro forma, stand-alone basis
after giving effect to the consummation of the Equity Recapitalization, the
Special Dividend, the repurchase of the Zero Coupon Notes, the Term Loan and
the Debt Offering, Clark USA would have had outstanding long-term indebtedness
of approximately $175.0 million, and Exchangeable Preferred Stock with an
aggregate liquidation preference of $63.0 million. Clark USA has no
significant independent operations and relies on receipt of funds from the
Company to meet its debt and dividend obligations. Failure of Clark USA to
meet its debt and dividend obligations could have a material adverse effect on
the Company.
VOLATILITY OF REFINING AND MARKETING MARGINS
The Company's earnings and cash flow from operations are primarily dependent
upon processing crude oil and selling quantities of refined products at
refining and marketing margins sufficient to cover fixed and variable
expenses. Oil refining is a complex process that is subject to scheduled and
unscheduled downtime.
Crude oil costs and refined product prices depend on numerous factors beyond
the Company's control, including the supply of, and demand for, crude oil,
gasoline and other refined products which, in turn, depend on, among other
factors, changes in domestic and foreign economies, political affairs and
production levels, the availability of imports, the marketing of competitive
fuels, the extent of government regulation and expected and actual weather
conditions. The prices received by the Company for its refined products are
affected by regional factors such as product pipeline capacity, local market
conditions and the level of operations of competing refineries. A large, rapid
increase in crude oil prices would adversely affect the Company's operating
margins if the increased cost of raw materials could not be passed on to the
Company's customers. Alternatively, a large rapid decrease in crude oil prices
may adversely affect the Company's operating margins since feedstock costs are
fixed on average two to three weeks prior to the manufacture and sale of the
finished products. The Company currently purchases approximately 80% of its
crude oil requirements in the spot market, where prices are subject to market
fluctuations. Because of the Port Arthur refinery's U.S. Gulf Coast location
and the two Illinois refineries' locations on major crude oil pipelines, the
Company believes that adequate supplies of crude oil will be available in the
spot market. No assurance can be given, however, that the Company will be able
to negotiate favorable prices for crude oil on the spot market or that
adequate supplies will be available during times of shortages. See "Business--
Refining--Supply and Distribution." In recent years, crude oil costs and
prices of refined products have fluctuated substantially. Accordingly, the
Company's earnings are subject to substantial fluctuations, as reflected by
losses incurred in the fiscal years of 1992, 1995 and 1996. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations." On
occasion, the Company utilizes U.S. Gulf Coast based derivatives, such as
forward future and option contracts on crack spreads with respect to a portion
of the production of the Port Arthur refinery. While this hedging strategy is
intended to provide an acceptable profit margin on a portion of the Port
Arthur refinery production, the use of such a strategy could limit the
Company's ability to participate in an improvement in Gulf Coast crack
spreads. See "Business--Refining--Inventory Management."
INTEREST RATES
The Credit Agreement and the Loan Agreement provide for interest at rates
that fluctuate quarterly and could increase. An increase in interest rates
will increase the Company's interest expense and adversely affect the
Company's income and cash flow available to make payments on the New Notes and
the Company's other indebtedness. See "Description of Certain Debt
Instruments."
COMPETITION
The refining and marketing segment of the oil industry is highly
competitive. Many of the Company's principal competitors are integrated
multinational oil companies that are substantially larger
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and better known than the Company. Because of their diversity, integration of
operations, larger capitalization and greater resources, the major oil
companies may be better able to withstand volatile market conditions, compete
on the basis of price and more readily obtain crude oil in times of shortages.
See "Business--Competition."
LIQUIDITY
The Company's liquidity (consisting of cash, cash equivalents and short-term
investments) as of September 30, 1997 was $285.9 million. In addition, the
Company's revolving line of credit had $400.0 million available (subject to
customary borrowing conditions) for the issuance of letters of credit and
short-term cash borrowings (subject to a $50.0 million sublimit). On a pro
forma basis after giving effect to the Special Dividend, the Term Loan, the
Debt Offering, the application of the net proceeds therefrom and the payment
of fees and expenses in connection with the Equity Recapitalization, the
Company's cash and short-term investments as of such date would have been
$220.0 million. As a result of the increased indebtedness of the Company
resulting from the Debt Offering and the Term Loan, annual interest expense
will increase. There are a number of other factors which may have a material
effect on the Company's liquidity, including the following:
The Company's short-term working capital requirements (primarily letter of
credit issuances to support crude oil requirements) fluctuate with the pricing
and sourcing of crude oil. Historically, the Company's internally generated
cash flows have been sufficient to meet its needs. The Company's Credit
Agreement is a revolving line of credit for short-term cash borrowings and for
the issuance of letters of credit in an amount equal to the lesser of $400.0
million or a borrowing base calculated with reference to cash and cash
equivalents, eligible investments, eligible receivables and eligible petroleum
inventories. As of September 30, 1997, the maximum commitment under the
Company's Credit Agreement was $400.0 million, of which $238.0 million was
used for letters of credit; there were no direct borrowings as of such date.
The Credit Agreement will expire December 31, 1999. To the extent the Company
is unable to refinance its working capital facility on a timely basis and on
satisfactory terms, there can be no assurance that the Company will have
adequate liquidity. In addition, the Company is required to comply with
certain financial covenants contained in the Credit Agreement. There can be no
assurance that the Company will remain in compliance with such covenants if
industry conditions weaken and continue for an extended period of time. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources," "--Volatility of Refining and
Marketing Margins" and Note 7 "Working Capital Facility" to the Consolidated
Financial Statements.
The Company also has a number of longer term needs for cash. The Company
estimates that mandatory capital expenditures, including environmental and
regulatory expenditures and other nondiscretionary expenditures, from 1997
through 1999 will be approximately $65.0 million per year. While the Company
expects that cash flows from operations will be sufficient to support such
capital expenditures, there can be no assurance in this regard. The Company
links discretionary capital spending to cash flow generated and, as of
September 30, 1997, did not have any material long-term commitments for
discretionary capital expenditures. If cash flows from operations are
insufficient to support such mandatory and discretionary capital expenditures,
the Company may be required to seek additional financing or postpone such
capital expenditures. There can be no assurance that any such additional
financing could be obtained or, if obtained, that the terms of any such
financing would be satisfactory to the Company.
The Company's 9 1/2% Notes and the Term Loan become due in 2004. The Company
may not have sufficient funds to repay in full the entire amount of such
obligations when they become due and would therefore be required to refinance
all or a portion of such obligations at or prior to their maturity.
In connection with the Port Arthur Refinery acquisition, the Company agreed
to make contingent payments to Chevron of up to $125.0 million over a five-
year period beginning in February 1995 in the
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event that certain refining industry margin indicators exceed certain
escalating levels. Such contingent payments were not payable based upon these
industry margin indicators for the first three measurement periods through
September 30, 1995, 1996 and 1997. The Company believes that, even if such
contingent payments would be required to be made, they would not have a
material adverse effect on the Company's financial position or results of
operations since the Company would also benefit from such increased margins.
RESTRICTIONS IMPOSED BY TERMS OF INDEBTEDNESS
The Indentures, the Credit Agreement and the Loan Agreement contain certain
covenants that restrict, among other things, the ability of the Company to
incur additional indebtedness, incur liens, pay dividends or make certain
other restricted payments, consummate certain asset sales or asset swaps,
enter into certain transactions with affiliates, impose restrictions on the
ability of a subsidiary to pay dividends or make certain payments, enter into
sale and leaseback transactions, conduct businesses other than their current
business, merge or consolidate with any other person or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of
their assets. The Credit Agreement requires the Company to satisfy certain
financial condition tests. The ability of the Company to meet these financial
condition tests can be affected by events beyond its control, and there can be
no assurance that the Company will meet those tests. A breach of any of these
covenants could result in a default under the Credit Agreement, the Loan
Agreement or the Indentures. Upon an occurrence of an event of default under
the Credit Agreement, the Loan Agreement or the Indentures, the lenders
thereunder could elect to declare all amounts outstanding thereunder, together
with accrued interest, to be immediately due and payable. In the case of the
Credit Agreement, if the Company were unable to repay those amounts, the
lenders thereunder could proceed against the collateral granted to them to
secure that indebtedness. If the Credit Agreement indebtedness were to be
accelerated, there can be no assurance that the assets of the Company would be
sufficient to repay in full that indebtedness and the other indebtedness of
the Company. See "Description of Certain Debt Instruments."
SUBORDINATED AND UNSECURED STATUS OF NEW SENIOR SUBORDINATED NOTES
The New Senior Subordinated Notes will be unsecured and subordinated in
right of payment to all existing and future Senior Debt of the Company. By
reason of such subordination, in the event of an insolvency, liquidation or
other reorganization of the Company, the Senior Debt must be paid in full
before the principal of or the interest on the New Senior Subordinated Notes
may be paid. In addition, under certain circumstances, no payments may be made
with respect to the principal of or interest on the New Senior Subordinated
Notes if a default exists with respect to certain Senior Debt. Accordingly,
there may be insufficient assets remaining after payment of prior claims to
pay amounts due on the New Senior Subordinated Notes. See "Description of the
New Notes--Ranking."
CARRYOVER TAX ATTRIBUTES--RESTRICTIONS ON AVAILABILITY
The Company files a consolidated U.S. federal income tax return with Clark
USA. A substantial portion of the carryover tax attributes of the Clark USA
consolidated tax return group (the "Group") was contributed by the Company.
The members of the Group, including the Company, have entered into a tax
sharing agreement with Clark USA which provides for cash payments in the event
carryover tax attributes are used to reduce the Group's consolidated tax
liability.
At December 31, 1996, the Group had available to it approximately $200.0
million (Company--$172.0 million) of net operating loss carryforwards for
regular federal income tax purposes, and approximately $90.0 million
(Company--$70.0 million) of net operating loss carryforwards for federal
alternative minimum tax ("AMT") purposes (together, the "NOLs"). In addition,
the Group had available to it approximately $14.0 million (Company--$13.0
million) in various tax credit carryforwards. The
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Group and the Company anticipate that they will generate additional regular
tax net operating loss carryforwards and AMT net operating loss carryforwards
in their tax year ending December 31, 1997. These NOLs would expire beginning
in 2009 through 2012. The Internal Revenue Service (the "IRS") has not
examined the Group's tax returns for all of the years in which the Group
reported NOLs and tax credit carryforwards, and these amounts could therefore
be subject to adjustment.
Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended
(the "Code"), however, restrictions on the utilization of NOLs or credit
carryovers (the "382 Limit") will apply if there is an "ownership change" of a
corporation entitled to use such carryovers. The Blackstone Transaction
resulted in an "ownership change" of the Group for this purpose. Following the
date of this ownership change (the "change date"), the Group will be permitted
to utilize only a specified portion of its NOLs and credit carryovers in any
taxable year or portion thereof following the ownership change. While the
Group has not finally determined the amount of NOLs which it will be permitted
to utilize annually in periods after the change date, the 382 Limit could
significantly reduce the Company's ability to fully utilize the benefit of
such NOLs.
CHANGE OF CONTROL PROVISIONS IN NEW NOTES AND EXISTING INDEBTEDNESS
The Change of Control feature of the New Notes may, in certain
circumstances, make it more difficult or discourage a takeover of Clark USA
and, as a result, may make removal of incumbent management more difficult. The
Change of Control purchase feature, however, is not the result of the
Company's knowledge of any specific effort to accumulate Clark USA's stock or
to obtain control of Clark USA or the Company by means of a merger, tender
offer, solicitation or otherwise, or part of a plan by management to adopt a
series of antitakeover provisions. Instead, the Change of Control purchase
feature is a result of negotiations between the Company and the Initial
Purchasers. Clark USA has no present intention to engage in a transaction
involving a Change of Control, although it is possible that Clark USA could
decide to do so in the future.
The Blackstone Transaction constitutes a "change of control" under the
indenture which governs the 9 1/2% Notes. In addition, under the indenture for
the $175,000,000 of 10 7/8% Senior Notes due 2005 (the "10 7/8% Notes") of
Clark USA, in the event a Rating Decline (as defined therein) accompanies the
change of control resulting from the Blackstone Transaction, a similar
repurchase offer for the 10 7/8% Notes must be made by Clark USA. Pursuant to
such indentures, the Company or Clark USA, as the case may be, is required to
offer to purchase the 9 1/2% Notes and the 10 7/8% Notes, respectively, at
101% of the aggregate principal amount thereof, plus accrued and unpaid
interest, if any, to the repurchase date. As of the date hereof, there are
$175 million aggregate principal amount of 9 1/2% Notes outstanding and
$175,000,000 aggregate principal amount of 10 7/8% Notes outstanding. There
can be no assurance that the holders of a material portion of the 9 1/2% Notes
and 10 7/8% Notes (in the event of a Rating Decline) will not tender their 9
1/2% Notes and 10 7/8% Notes, respectively, in response to the required
repurchase offer. In the event a material portion of the 9 1/2% Notes and 10
7/8% Notes is tendered, the Company or Clark USA must obtain new financing to
the extent necessary to satisfy the repurchase obligation. A failure to obtain
the required financing on acceptable terms would have a material adverse
effect on the Company and the New Notes.
ENVIRONMENTAL LIABILITIES AND GOVERNMENTAL REGULATIONS
The Company's operations are subject to comprehensive and frequently
changing federal, state and local environmental laws and regulations. These
laws, and the regulations promulgated thereunder, set forth stringent
environmental standards for the Company's operations and provide for civil and
criminal penalties for violations. Any new environmental initiatives, more
vigorous regulatory enforcement policies or stricter interpretation of
existing laws could have a material adverse effect on the financial condition
or results of operations of the Company. Any such development could require
significant additional expenditures to achieve compliance with such
requirements or policies. See
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"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources," "Business--Environmental
Matters" and "Business--Legal Proceedings."
The Company's operations also are subject to liability for the investigation
and cleanup of environmental contamination at properties that it owns and
operates and at off-site locations where the Company arranged for the disposal
of hazardous substances. The Company is involved in several proceedings
relating to its liability for the investigation and cleanup of such sites.
There can be no assurance that the Company will not become involved in further
litigation or other proceedings or that, if the Company were to be held
responsible for damages in any litigation or proceedings (including existing
ones), such costs would be covered by insurance or would not be material. See
"Business-- Environmental Matters" and "Business--Legal Proceedings." In
addition, the Company believes that there is extensive contamination at the
site on which the Port Arthur Refinery is located. Pursuant to the purchase
agreement governing the Port Arthur Refinery acquisition (the "Purchase
Agreement"), Chevron retained primary responsibility for remediation of most
pre-closing contamination and the Company retained responsibility for the
remediation under the active operating units (the "Excluded Areas"). If
Chevron should be unable to meet its obligations under the Purchase Agreement
regarding remediation of contamination on the remainder of the site, on
account of bankruptcy or otherwise, the Company may become responsible for
such remediation.
In addition to liability for the cleanup of environmental contamination, the
Company is also subject to liability for violations of environmental, health
and safety laws that regulate its current operations. The Illinois Attorney
General, the U.S. Attorney and the United States Environmental Protection
Agency (the "EPA") have filed or have threatened to file a number of
enforcement actions relating to the Blue Island refinery. The Hartford
refinery is also the subject of a Clean Air Act enforcement by the EPA. See
"Business--Environmental" and "Business--Legal Proceedings."
While it is not possible at this time to estimate the ultimate amount of
liability with respect to the currently identified environmental matters
described above, the Company is of the opinion that the aggregate amount of
such liability will not have a material adverse effect on its financial
position; however, an adverse outcome of any one or more of these matters
could have a material effect on quarterly or annual operating results or cash
flows when resolved in a future period.
The Company's operations are large and complex. The numerous environmental
regulations to which the Company is subject are complicated, sometimes
ambiguous, and often changing. In addition, the Company may not have detected
certain violations of environmental laws and regulations because the
conditions that constitute such violations may not be apparent. It is
therefore possible that certain of the Company's operations are not currently
in compliance with state or federal environmental laws and regulations.
Accordingly, the Company may be required to make additional expenditures to
comply with existing environmental requirements. Such expenditures, along with
fines or other penalties for noncompliance with environmental requirements,
could have a material adverse effect on the Company's financial condition,
results of operations, cash flow or liquidity.
Cigarette sales account for approximately 56% of the Company's convenience
product sales. In recent years, governmental entities in the U.S. at all
levels have taken or have proposed actions that may have the effect of
reducing sales of cigarettes in general or sales of cigarettes through
convenience stores. A significant reduction in the consumption of cigarettes
or in the ability of convenience stores to market cigarettes, may have a
significant, adverse effect on the Company's convenience product sales.
INFLUENCE OF PRINCIPAL STOCKHOLDER
Blackstone beneficially owns approximately 73.3% of the total voting power
of all classes of Clark USA's capital stock. Currently, three of Clark USA's
six directors and the Company's five directors are
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affiliated with Blackstone. Accordingly, Blackstone is in a position to exert
a controlling influence over Clark USA and the Company. The relationship with
Blackstone creates the potential for conflicts of interest between the Company
and Blackstone. See "Management--Security Ownership of Certain Owners and
Management" and "Certain Transactions."
LACK OF PUBLIC MARKET
The New Notes are being offered to the holders of the Old Notes. The Old
Notes were issued to a small number of sophisticated investors on November 21,
1997. There is no existing trading market for the New Notes, and there can be
no assurance regarding the future development of a market for the New Notes or
the ability of holders of the New Notes to sell their New Notes or the price
at which such holders may be able to sell their Old Notes. If such a market
were to develop, the New Notes could trade at prices that may be higher or
lower than the initial offering price of the Old Notes depending on many
factors, including prevailing dividend and/or interest rates, the Company's
operating results and the market for similar securities. The Initial
Purchasers have advised the Company that they currently intend to make a
market in each series of the New Notes. The Initial Purchasers are not
obligated to do so, however, and any market-making with respect to the New
Notes may be discontinued at any time without notice. Therefore, there can be
no assurance as to the liquidity of any trading market for the New Notes or
that an active public market for any series of the New Notes will develop. The
Company does not intend to apply for listing or quotation of the New Notes on
any securities exchange or stock market.
Historically, the market for investment grade debt has been subject to
disruptions that have caused substantial volatility in the prices of such
securities. There can be no assurance that the market for the New Notes will
not be subject to similar disruptions. Any such disruptions may have an
adverse effect on holders of the New Notes.
CONSEQUENCES TO NON-TENDERING HOLDERS OF OLD NOTES
Upon consummation of the Exchange Offer, the Company will have no further
obligation to register the Old Notes. Thereafter, any Holder of Old Notes who
does not tender its Old Notes in the Exchange Offer, including any Holder
which is an "affiliate" (as that term is defined in Rule 405 of the Securities
Act) of the Company which cannot tender its Old Notes in the Exchange Offer,
will continue to hold restricted securities which may not be offered, sold or
otherwise transferred, pledged or hypothecated except pursuant to Rule 144 and
Rule 144A under the Securities Act or pursuant to any other exemption from
registration under the Securities Act relating to the disposition of
securities, provided that an opinion of counsel is furnished to the Company
that such an exemption is available.
USE OF PROCEEDS
The Exchange Offer is intended to satisfy certain obligations of the Company
under the Registration Agreement. The Company will not receive any cash
proceeds from the issuance of the New Notes offered in the Exchange Offer. In
consideration for issuing the New Notes, the Company will receive in exchange
Old Notes in like principal amount, the form and terms of which are the same
in all material respects as the form and terms of the New Notes except that
the New Notes have been registered under the Securities Act and, therefore, do
not include certain rights to registration thereunder. The Old Notes
surrendered in exchange for New Notes will be retired and canceled and cannot
be reissued. Accordingly, issuance of the New Notes will not result in any
increase in the indebtedness of the Company.
The net proceeds of the Debt Offering, approximately $266.3 million (after
discounts and expenses), were used to substantially replenish the Company's
cash reserves and have been made available for general corporate purposes. In
addition, a portion of the net proceeds will be used to redeem on or about
December 24, 1997 all of the Company's outstanding 10 1/2% Notes.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Old Notes were sold by the Company on November 21, 1997 to the Initial
Purchasers, which placed the Old Notes with institutional investors. In
connection therewith, the Company entered into the Registration Agreement,
which required that, within 90 days following the issuance of the Old Notes,
the Company file with the Commission a registration statement under the
Securities Act with respect to an issue of new notes of the Company identical
in all material respects to the Old Notes, use its best efforts to cause such
registration statement to become effective under the Securities Act and, upon
the effectiveness of that registration statement, offer to the holders of the
Old Notes the opportunity to exchange their Old Notes for a like principal
amount of New Notes, which will be issued without a restrictive legend and may
be reoffered and resold by the holder without restrictions or limitations
under the Securities Act. A copy of the Registration Agreement has been filed
as an exhibit to the Registration Statement of which this Prospectus is a
part. The term "Holder" with respect to the Exchange Offer means any person in
whose name Old Notes are registered on the books of the Company or any other
person who has obtained a properly completed bond power from the registered
holder.
Based on an interpretation by the staff of the Commission set forth in no-
action letters issued to third parties, the Company believes that New Notes
issued pursuant to the Exchange Offer in exchange for Old Notes may be offered
for resale, resold and otherwise transferred by any Holder of such New Notes
(other than any such Holder which is an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act,
provided that such New Notes are acquired in the ordinary course of such
Holder's business and such Holder has no arrangement or understanding with any
person to participate in the distribution of such New Notes. Persons wishing
to exchange Old Notes in the Exchange Offer must represent to the Company that
such conditions have been met. Any Holder who tenders in the Exchange Offer
for the purpose of participating in a distribution of the New Notes could not
rely on such interpretation by the staff of the Commission and must comply
with the registration and prospectus delivery requirements of the Securities
Act in connection with a secondary resale transaction. In addition, any such
resale transaction should be covered by an effective registration statement
containing the selling security holders information required by Item 507 of
Regulation S-K of the Securities Act. Further, any Holder who may be deemed an
"affiliate" of the Company cannot rely on the interpretation by the staff of
the Commission set forth in the above-referenced no-action letters with
respect to resales of the New Notes without compliance with the registration
and prospectus delivery requirements of the Securities Act.
In addition, each broker-dealer that receives New Notes for its own account
in exchange for Old Notes, where such Old Notes were acquired by such broker-
dealer as a result of market-making activities or other trading activities,
must acknowledge that it will deliver a prospectus in connection with any
resale of such New Notes. See "Plan of Distribution."
As a result of the filing and the effectiveness of the Registration
Statement and the consummation of the Exchange Offer, the Company's obligation
to make certain semi-annual payments with respect to the Old Notes will be
terminated. The Old Notes were issued to a small number of sophisticated
investors on November 21, 1997 and there is no public market for them at
present. To the extent Old Notes are tendered and accepted in the exchange,
the principal amount of outstanding Old Notes will decrease with a resulting
decrease in the liquidity in the market therefor. Following the consummation
of the Exchange Offer, Holders of Old Notes will continue to be subject to
certain restrictions on transfer. Accordingly, the liquidity of the market for
the Old Notes could be adversely affected.
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TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Exchange
Offer, the Company will accept any and all Old Notes validly tendered and not
withdrawn prior to 5:00 p.m., New York City time, on the Expiration Date. The
Company will issue $1,000 principal amount at maturity of New Notes in
exchange for each $1,000 principal amount of outstanding Old Notes accepted in
the Exchange Offer. Holders may tender some or all of their Old Notes pursuant
to the Exchange Offer. However, Old Notes may be tendered only in integral
multiples of $1,000.
The form and terms of the New Notes will be identical in all material
respects to the form and terms of the Old Notes except that the New Notes have
been registered under the Securities Act and hence will not bear legends
restricting the transfer thereof. The New Notes will evidence the same debt as
the Old Notes and will be entitled to the benefits of the Indenture.
As of the date hereof, $275,000,000 aggregate principal amount at maturity
of the Old Notes are outstanding and there are registered Holders. This
Prospectus, together with the Letter of Transmittal, is being sent to all such
registered Holders as of , 1998.
Holders of Old Notes do not have any appraisal or dissenters' rights under
the General Corporation Law of Delaware or the Indenture in connection with
the Exchange Offer. The Company intends to conduct the Exchange Offer in
accordance with the applicable requirements of the Exchange Act and the rules
and regulations of the Commission thereunder.
The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering Holders
for the purpose of receiving the New Notes from the Company.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Old Notes will be returned,
without expense, to the tendering Holder thereof as promptly as practicable
after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Old
Notes pursuant to the Exchange Offer. The Company will pay all charges and
expenses, other than certain applicable taxes, in connection with the Exchange
Offer. See "--Use of Proceeds."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1998, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will make a public
announcement thereof, each prior to 9:00 a.m., New York City time, on the next
business day after the previously scheduled expiration date.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Old Notes, to extend the Exchange Offer or, if any of the
conditions set forth below under "Conditions" shall not have been satisfied,
to terminate the Exchange Offer, by giving oral or written notice of such
delay, extension or termination to the Exchange Agent or (ii) to amend the
terms of the Exchange Offer in any manner. Any such delay in acceptance,
extension, termination or amendment will be followed as promptly as
practicable by a public announcement thereof. If the Exchange Offer is amended
in a manner determined by the Company to constitute a material change, the
Company will promptly disclose such amendment by means of a prospectus
supplement that will be distributed to the
26
<PAGE>
registered Holders, and the Company will extend the Exchange Offer for a
period of five (5) to ten (10) business days, depending upon the significance
of the amendment and the manner of disclosure to the registered Holders, if
the Exchange Offer would otherwise expire during such five (5) to ten (10)
business day period.
Without limiting the manner in which the Company may choose to make public
announcement of any delay, extension, termination or amendment of the Exchange
Offer, the Company shall have no obligation to publish, advertise, or
otherwise communicate any such public announcement, other than by making a
timely release to the Dow Jones News Service.
PROCEDURES FOR TENDERING
Only a Holder of Old Notes may tender such Old Notes in the Exchange Offer.
To tender in the Exchange Offer, a Holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile, or (in the case of a
book-entry transfer) an Agent's Message in lieu of the Letter of Transmittal,
together with the Old Notes and any other required documents, to the Exchange
Agent prior to 5:00 p.m., New York City time, on the Expiration Date. To be
tendered effectively, the Old Notes, Letter of Transmittal and other required
documents must be received by the Exchange Agent at the address set forth
below under "--Exchange Agent" prior to 5:00 p.m., New York City time, on the
Expiration Date. The term "Agent's Message" means a message, transmitted by
DTC to and received by the Depositary and forming a part of a book-entry
confirmation, which states that DTC has received an express acknowledgment
from the tendering participant, which acknowledgment states that such
participant has received and agrees to be bound by the Letter of Transmittal
and that the Company may enforce such Letter of Transmittal against such
participant.
Book-Entry Delivery of the Notes. Within two business days after the date of
this Offer to Purchase, the Depositary will establish an account with respect
to the Notes at DTC for purposes of the Offer. Any financial institution that
is a participant in the DTC system may make book-entry delivery of Notes by
causing DTC to transfer such Notes into the Depositary's account in accordance
with DTC's procedure for such transfer. Although delivery of Notes may be
effected through book entry at DTC, Letter of Transmittal (or facsimile
thereof), with any required signature guarantees, or (in the case of a book-
entry transfer) an Agent's Message in lieu of the Letter of Transmittal, and
any other required documents, must be transmitted to and received by the
Depositary at or prior to 5:00 p.m., New York City time, on the Expiration
Date at one of its addresses set forth on the back cover of this Offer.
Delivery of such documents to DTC does not constitute delivery to the
Depositary.
The tender by a Holder will constitute an agreement between such Holder and
the Company in accordance with the terms and subject to the conditions set
forth herein and in the Letter of Transmittal.
The method of delivery of Old Notes and the Letter of Transmittal and all
other required documents to the Exchange Agent is at the election and risk of
the Holder. Instead of delivery by mail, it is recommended that Holders use an
overnight or hand delivery service. In all cases, sufficient time should be
allowed to assure delivery to the Exchange Agent before the Expiration Date.
No Letter of Transmittal or Old Notes should be sent to the Company. Holders
may request their respective brokers, dealers, commercial banks, trust
companies or nominees to effect the above transactions for such Holders.
Any beneficial owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to
tender should contact the registered Holder promptly and instruct such
registered Holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's own behalf, such owner must,
prior to completing
27
<PAGE>
and executing the Letter of Transmittal and delivering such owner's Old Notes,
either make appropriate arrangements to register ownership of the Old Notes in
such owner's name or obtain a properly completed bond power from the
registered Holder. The transfer of registered ownership may take considerable
time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Old Notes tendered pursuant thereto are tendered (i) by a
registered Holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal
or (ii) for the account of an Eligible Institution. In the event that
signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, are required to be guaranteed, such guarantee must be by a member firm
of a registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office
or correspondent in the United States or an "eligible guarantor institution"
within the meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible
Institution").
If the Letter of Transmittal is signed by a person other than the registered
Holder of any Old Notes listed therein, such Old Notes must be endorsed or
accompanied by a properly completed bond power, signed by such registered
Holder as such registered Holder's name appears on such Old Notes.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted with the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Old Notes will be determined
by the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Old
Notes not properly tendered or any Old Notes the Company's acceptance of which
would, in the opinion of counsel for the Company, be unlawful. The Company
also reserves the right to waive any defects, irregularities or conditions of
tender as to particular Old Notes. The Company's interpretation of the terms
and conditions of the Exchange Offer (including the instructions in the Letter
of Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Old Notes must be
cured within such time as the Company shall determine. Although the Company
intends to notify Holders of defects or irregularities with respect to tenders
of Old Notes, neither the Company, the Exchange Agent nor any other person
shall incur any liability for failure to give such notification. Tenders of
Old Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Old Notes received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering Holders, unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration Date.
In addition, the Company reserves the right in its sole discretion to
purchase or make offers for any Old Notes that remain outstanding subsequent
to the Expiration Date or, as set forth below under "--Conditions," to
terminate the Exchange Offer and, to the extent permitted by applicable law,
purchase Old Notes in the open market, in privately negotiated transactions or
otherwise. The terms of any such purchases or offers could differ from the
terms of the Exchange Offer.
By tendering, each Holder will represent to the Company that, among other
things, the New Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the person receiving such New
Notes, whether or not such person is the Holder, that neither the Holder nor
any such other person has an arrangement or understanding with any person to
participate in the
28
<PAGE>
distribution of such New Notes and that neither the Holder nor any such other
person is an "affiliate," as defined under Rule 405 of the Securities Act, of
the Company. If the Holder is a broker-dealer that will receive New Notes for
its own account in exchange for Old Notes that were acquired as a result of
market-making activities or other trading activities, such Holder by tendering
will acknowledge that it will deliver a prospectus in connection with any
resale of such New Notes. See "Plan of Distribution."
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, the Letter
of Transmittal or any other required documents to the Exchange Agent prior to
the Expiration Date, may affect a tender if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the Holder, the certificate number(s)
of such Old Notes and the principal amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that, within five
New York Stock Exchange trading days after the Expiration Date, the Letter
of Transmittal (or facsimile thereof) together with the certificate(s)
representing the Old Notes to be tendered in proper form for transfer (or a
confirmation of a book-transfer into the Exchange Agent's account at DTC of
Old Notes delivered electronically) and any other documents required by the
Letter of Transmittal will be deposited by the Eligible Institution with
the Exchange Agent; and
(c) Such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificate(s) representing all tendered
Old Notes in proper form for transfer to be tendered in proper form for
transfer (or a confirmation of a book-transfer into the Exchange Agent's
account at DTC of Old Notes delivered electronically) and all other
documents required by the Letter of Transmittal are received by the
Exchange Agent within five (5) New York Stock Exchange trading days after
the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to Holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.
To withdraw a tender of Old Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time,
on the Expiration Date. Any such notice of withdrawal must (i) specify the
name of the person having deposited the Old Notes to be withdrawn (the
"Depositor"), (ii) identify the Old Notes to be withdrawn (including the
certificate number or numbers and principal amount of such Old Notes), (iii)
be signed by the Holder in the same manner as the original signature on the
Letter of Transmittal by which such Old Notes were tendered (including any
required signature guarantees) or be accompanied by documents of transfer
sufficient to have the Trustee with respect to the Old Notes register the
transfer of such Old Notes into the name of the person withdrawing the tender,
and (iv) specify the name in which any such Old Notes are to be registered, if
different from that of the Depositor. All questions as to the validity, form
and eligibility (including time of receipt) of such notices will be determined
by the Company in its sole discretion, which determination shall be final and
binding on all parties. Any Old Notes so withdrawn will be deemed not to have
been validly tendered for purposes of the Exchange Offer and no New Notes will
be issued with respect thereto
29
<PAGE>
unless the Old Notes so withdrawn are validly retendered. Properly withdrawn
Old Notes may be retendered by following one of the procedures described above
under "--Procedures for Tendering" at any time prior to the Expiration Date.
Any Old Notes which have been tendered but which are not accepted for
payment due to withdrawal, rejection of tender or termination of the Exchange
Offer will be returned as soon as practicable to the Holder thereof without
cost to such Holder.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange Old Notes for, any New Notes,
and may terminate the Exchange Offer as provided herein before the acceptance
of such Old Notes, if:
(a) any action or proceeding is instituted or threatened in any court or
by or before any governmental agency with respect to the Exchange Offer
which, in the sole judgment of the Company, might materially impair the
ability of the Company to proceed with the Exchange Offer or materially
impair the contemplated benefits of the Exchange Offer to the Company, or
any material adverse development has occurred in any existing action or
proceeding with respect to the Company or any of its subsidiaries; or
(b) any change, or any development involving a prospective change, in the
business or financial affairs of the Company or any of its subsidiaries has
occurred which, in the sole judgment of the Company, might materially
impair the ability of the Company to proceed with the Exchange Offer or
materially impair the contemplated benefits of the Exchange Offer to the
Company; or
(c) any law, statute, rule or regulation is proposed, adopted or enacted,
which, in the sole judgment of the Company, might materially impair the
ability of the Company to proceed with the Exchange Offer or materially
impair the contemplated benefits of the Exchange Offer to the Company; or
(d) any governmental approval has not been obtained, which approval the
Company shall, in its sole discretion, deem necessary for the consummation
of the Exchange Offer as contemplated hereby.
If the Company determines in its reasonable discretion that any of the
conditions are not satisfied, the Company may (i) refuse to accept any Old
Notes and return all tendered Old Notes to the tendering Holders, (ii) extend
the Exchange Offer and retain all Old Notes tendered prior to the expiration
of the Exchange Offer, subject, however, to the rights of Holders to withdraw
such Old Notes (see "--Withdrawal of Tenders"), or (iii) waive such
unsatisfied conditions with respect to the Exchange Offer and accept all
properly tendered Old Notes which have not been withdrawn. If such waiver
constitutes a material change to the Exchange Offer, the Company will promptly
disclose such waiver by means of a prospectus supplement that will be
distributed to the registered Holders, and the Company will extend the
Exchange Offer for a period of five (5) to ten (10) business days, depending
upon the significance of the waiver and the manner of disclosure to the
registered Holders, if the Exchange Offer would otherwise expire during such
five (5) to ten (10) business day period.
30
<PAGE>
EXCHANGE AGENT
Marine Midland Bank has been appointed as Exchange Agent for the exchange of
New Senior Subordinated Notes for Old Senior Subordinated Notes pursuant to
the Exchange Offer. Questions and requests for assistance, requests for
additional copies of this Prospectus or of the Letter of Transmittal and
requests for Notices of Guaranteed Delivery should be directed to the Exchange
Agent addressed as follows:
By Registered or Certified Mail: By Overnight Courier:
Attn: Corporate Trust Operations Attn: Corporate Trust Operations
Marine Midland Bank Marine Midland Bank
140 Broadway, Level A 140 Broadway, Level A
New York, New York 10005-1180 New York, New York 10005-1180
Attention: Corporate Trust Operations Attention: Corporate Trust Operations
By Hand:
Marine Midland Bank
140 Broadway, Level A
New York, New York 10005-1180
By Facsimile:
(212) 658-2292
Bankers Trust Company has been appointed as Exchange Agent for the exchange
of New Senior Notes for Old Senior Notes, pursuant to the Exchange Offer.
Questions and requests for assistance, requests for additional copies of this
Prospectus or of the Letter of Transmittal and requests for Notices of
Guaranteed Delivery should be directed to the Exchange Agent addressed as
follows:
By Registered or Certified Mail: By Overnight Courier:
BT Services Tennessee, Inc. BT Services Tennessee, Inc.
Reorganization Unit Corporate Trust & Agency Group
P.O. Box 292737 Reorganization Unit
Nashville, Tennessee 37229-2737 648 Grassmere Park Road
Nashville, Tennessee 37211
By Hand:
Attn: Reorganization Department
Bankers Trust Company
Corporate Trust & Agency Group
Receipt & Delivery Window
123 Washington Street, 1st Floor
New York, New York 10006
By Facsimile:
(615) 835-3701
31
<PAGE>
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telephone or in person by officers and regular
employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay
the Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection therewith
and will pay the reasonable fees and expenses of one firm acting as counsel
for the Holders of Old Notes should such Holders deem it advisable to appoint
such counsel.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company and are estimated in the aggregate to be approximately
$300,000.00. Such expenses include fees and expenses of the Exchange Agent and
Trustee, accounting and legal fees and printing costs, among others.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Old Notes pursuant to the Exchange Offer. If, however, certificates
representing New Notes or Old Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be issued in the name
of, any person other than the registered Holder of the Old Notes tendered, or
if tendered Old Notes are registered in the name of any person other than the
person signing the Letter of Transmittal, or if a transfer tax is imposed for
any reason other than the exchange of Old Notes pursuant to the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered Holder or any other persons) will be payable by the tendering
Holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering Holder.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Old Notes
as reflected in the Company's accounting records on the date of the exchange.
Accordingly, no gain or loss for accounting purposes will be recognized upon
consummation of the Exchange Offer. The expenses of the Exchange Offer will be
amortized over the term of the New Notes.
32
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
September 30, 1997, and as adjusted to give effect to the Special Dividend,
the payment of fees and expenses in connection with the Equity
Recapitalization, the borrowing of $125.0 million pursuant to the Term Loan
and the Debt Offering and the application of a portion of the net proceeds
therefrom to redeem the 10 1/2% Notes. The table should be read in conjunction
with the Consolidated Financial Statements of the Company, and the notes
thereto, appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30,
1997
-----------------
AS
ACTUAL ADJUSTED
-------- --------
(IN MILLIONS)
<S> <C> <C>
CASH, CASH EQUIVALENTS AND SHORT TERM INVESTMENTS.......... $ 285.9 $220.0
======== ======
LONG-TERM DEBT(A):
10 1/2% Notes............................................ $ 225.0 $ --
9 1/2% Notes............................................. 175.0 175.0
Term Loan................................................ -- 125.0
New Senior Notes......................................... -- 100.0
New Senior Subordinated Notes............................ -- 175.0
Capital leases and other................................. 15.3 15.3
-------- ------
Total long-term debt................................... $ 415.3 $590.3
-------- ------
STOCKHOLDER'S EQUITY:
Common, $0.01 par value (100 shares issued and
outstanding)............................................ $ -- $ --
Paid-in-capital.......................................... 464.2 249.2(b)
Retained earnings........................................ 126.3 107.6(c)
-------- ------
Total stockholder's equity............................. $ 590.5 $356.8
-------- ------
Total capitalization................................... $1,005.8 $947.1
======== ======
</TABLE>
- --------
(a) Does not reflect the utilization of $238.0 million at September 30, 1997
under the Credit Agreement to support outstanding letters of credit. The 9
1/2% Notes will be subject to a repurchase offer by the Company as a
result of the Blackstone Transaction. See "Risk Factors--Change of Control
Provisions in New Notes and Existing Indebtedness."
(b) Includes a return of capital to Clark USA of $215.0 million which enabled
it to consummate the Tender Offer and redeem any Zero Coupon Notes not
tendered.
(c) Includes an extraordinary charge of $9.7 million associated with the Debt
Offering for redemption premiums and unamortized deferred financing costs
and $9.0 million of fees and estimated expenses in connection with the
Equity Recapitalization. See "Certain Transactions."
33
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
The selected consolidated financial data set forth below for the Company as
of December 31, 1995 and 1996 and for each of the three years in the period
ended December 31, 1996 are derived from the audited financial statements
included elsewhere herein. The selected financial data set forth below for the
Company as of December 31, 1992, 1993, and 1994 and for each of the two years
in the period ended December 31, 1993 are derived from the audited financial
statements not included elsewhere herein. This table should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Consolidated Financial Statements and
related notes included herein. The selected historical data for the nine
months ended September 30, 1996 and 1997 is unaudited.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------- -----------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- -------- ----------- ----------
(IN MILLIONS, EXCEPT RATIOS AND OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS
DATA:
Net sales and operating
revenues.............. $2,253.0 $2,263.4 $2,440.0 $4,486.1 $5,072.7 $3,724.4 $3,296.4
Cost of sales.......... 1,952.4 1,936.6 2,092.5 4,018.3 4,560.0 3,346.3 2,791.4
Operating expenses
(a)................... 217.3 204.6 219.9 373.3 418.9 304.6 319.0
General and
administrative
expenses (a).......... 38.3 41.0 51.4 52.3 59.1 43.9 47.4
Inventory (recovery of)
write-down to market
value................. -- 26.5 (26.5) -- -- -- --
Depreciation and
amortization (b)...... 30.4 35.3 37.3 43.5 48.4 37.0 44.3
-------- -------- -------- -------- -------- -------- --------
Operating income
(loss)................ $ 14.6 $ 19.4 $ 65.4 $ (1.3) $ (13.7) $ (7.4) $ 94.3
Interest and financing
costs, net (c)........ 26.4 29.9 37.6 39.9 38.7 31.2 26.3
Other income (expense)
(d)................... 14.7 11.4 -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Earnings (loss) from
continuing operations
before taxes,
extraordinary items
and cumulative effect
of change in
accounting
principles............ $ 2.9 $ 0.9 $ 27.8 $ (41.2) $ (52.4) $ (38.6) $ 68.0
Income tax provision
(benefit)............. (0.4) (0.5) 9.7 (15.7) (13.9) (14.7) 11.7
-------- -------- -------- -------- -------- -------- --------
Earnings (loss) from
continuing operations
before extraordinary
items and cumulative
effect of change in
accounting
principles............ $ 3.3 $ 1.4 $ 18.1 $ (25.5) $ (38.5) $ (23.9) $ 56.3
======== ======== ======== ======== ======== ======== ========
BALANCE SHEET DATA:
Cash, cash equivalents
and short-term
investments........... $ 218.3 $ 212.1 $ 134.1 $ 106.6 $ 334.3 $ 79.4 $ 285.9
Total assets........... 800.0 829.1 859.5 1,188.3 1,393.3 1,129.9 1,375.9
Long-term debt......... 401.5 401.0 400.7 420.4 417.6 417.2 415.3
Stockholder's equity... 154.2 146.0 162.9 304.1 534.1 313.6 590.5
SELECTED FINANCIAL DATA:
EBITDA, as adjusted
(e)................... $ 45.0 $ 81.2 $ 76.2 $ 42.2 $ 34.7 $ 29.6 $ 138.6
Cash flows from
operating activities.. 37.1 68.4 53.7 (85.6) 16.9 (30.3) 39.2
Cash flows from
investing activities.. (23.8) (19.8) (21.2) (134.1) 212.0 (7.5) (81.4)
Cash flows from
financing activities.. (38.7) (1.1) (5.4) 174.7 30.0 30.0 (6.1)
Ratio of earnings to
fixed charges (f)..... (g) (g) 1.56x (g) (g) (g) 2.60x
Expenditures for
turnaround............ 2.7 20.6 11.2 6.5 13.9 7.2 31.2
Expenditures for
property, plant and
equipment............. 59.5 67.9 100.3 42.1 45.0 23.3 54.0
Refinery acquisition
expenditures.......... -- -- 13.5 71.8 -- -- --
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------------- -------------
1992 1993 1994 1995 1996 1996 1997
------ ------- ------- ------- ------- ------ ------
(IN MILLIONS, EXCEPT RATIOS AND OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Refining Division
Port Arthur Refinery
(acquired February 27,
1995)
Production (m
bbls/day).............. -- -- -- 207.7 210.8 212.0 208.5
Gross margin (per bbl)
(a).................... -- -- -- $ 2.37 $ 2.78 $ 2.49 $ 3.84
Operating expenses (per
bbl) (a)............... -- -- -- 1.90 2.13 2.06 2.23
Blue Island, Hartford
and other refining
Production (m
bbls/day).............. 142.4 134.7 140.3 136.5 134.2 136.2 141.4
Gross margin (per bbl).. $ 3.03 $ 3.24 $ 3.48 $ 2.64 $ 2.53 $ 2.66 $ 3.94
Operating expenses (per
bbl) (a)............... 2.17 2.12 2.28 2.61 2.58 2.44 2.40
Refining contribution to
operating income (mm).. N/A 42.5 46.5 11.1 24.2 16.0 132.9
Retail Division:
Number of stores
(average) (h).......... 885 860 834 852 823 828 815
Gasoline volume (mm
gals).................. 956.7 1,014.8 1,028.5 1,063.8 1,031.9 777.7 771.1
Gasoline volume (m gals
pmps).................. 90.1 98.6 102.8 104.1 104.5 104.4 106.3
Gasoline gross margin
(cents/gal)............ 10.0c 11.1c 10.9c 11.4c 10.4c 10.6c 10.3c
Convenience product
sales (mm)............. $203.4 $ 218.0 $ 231.6 $ 252.6 $ 251.7 $193.7 $214.3
Convenience product
sales (pmps)........... 19.2 21.2 23.1 24.7 25.5 26.0 29.2
Convenience product
gross margin and other
income (mm)............ 47.7 54.8 57.2 62.9 65.8 50.3 55.7
Convenience product
gross margin (pmps).... 4.5 5.3 5.7 6.1 6.6 6.7 7.6
Operating expenses (mm)
(a).................... 96.0 100.1 104.6 121.6 126.2 94.4 99.3
Retail contribution to
operating income (mm).. N/A 52.9 45.9 45.4 25.0 24.4 18.1
</TABLE>
- --------
(a) Certain reclassifications have been made to prior periods to conform to
current period presentation.
(b) Amortization included amortization of turnaround costs and organizational
costs.
(c) Interest and financing costs, net, included amortization of debt issuance
costs of $2.9 million, $1.2 million, $1.2 million, $5.2 million and $6.5
million for the years ended December 31, 1992, 1993, 1994, 1995 and 1996,
and $4.9 million and $5.3 million for the nine months ended September 30,
1996 and 1997, respectively. Interest and financing costs, net, also
included interest on all indebtedness, net of capitalized interest and
interest income.
(d) Other expense in 1994 included financing costs associated with a withdrawn
debt offering. Other income in 1993 included the final settlement of
litigation with Drexel Burnham Lambert Incorporated ("Drexel") of $8.5
million and a gain from the sale of noncore stores of $2.9 million. Other
income in 1992 included the settlement of litigation with Apex Oil Company
("Apex") and Drexel $9.2 million and $5.5 million, respectively.
(e) Earnings before interest, taxes, depreciation and amortization ("EBITDA")
is a commonly used non-GAAP financial measure but should not be construed
as an alternative to operating income or cash flows from operating
activities as determined in accordance with GAAP. EBITDA, as adjusted,
does not reflect cash necessary or available to fund cash requirements.
EBITDA, as adjusted, in 1993 and 1994 excluded the write-off in 1993 and
the recovery in 1994 of a $26.5 million inventory valuation adjustment.
(f) The ratio of earnings to fixed charges is computed by dividing (i)
earnings before income taxes (adjusted to recognize only distributed
earnings from less than 50% owned persons accounted for under the equity
method) plus fixed charges, excluding capitalized interest by (ii) fixed
charges, excluding capitalized interest. Fixed charges consisted of
interest on indebtedness, including amortization of discount and debt
issuance costs and the estimated interest components (one-third) of rental
and lease expense. On a pro forma basis as adjusted to give effect to the
Equity Recapitalization, the Debt Refinancing and Repayment, the Special
Dividend and the fees and expenses associated with the Equity
Recapitalization, earnings would have been insufficient to cover fixed
charges by an estimated $47.7 million and $64.6 million for the nine
months ended September 30, 1996 and the year ended December 31, 1996,
respectively. The ratio of earnings to fixed charges for the nine months
ended September 30, 1997 would have been 2.25x on a similar basis.
(g) As a result of the losses for the years ended December 31, 1992, 1993,
1995 and 1996, and for the nine months ended September 30, 1996 earnings
were insufficient to cover fixed charges by $2.0 million, $1.7 million,
$44.0 million, $53.6 million and $39.5 million respectively.
(h) Ten stores included in 1997 did not sell fuel.
35
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion should be read in conjunction with the Consolidated
Financial Statements and notes thereto appearing elsewhere in this Prospectus.
RESULTS OF OPERATIONS
Overview
The Company's results are significantly affected by a variety of factors
beyond its control, including the supply of, and demand for, crude oil,
gasoline and other refined products which, in turn, depend on, among other
factors, changes in domestic and foreign economies, weather conditions,
domestic and foreign political affairs and production levels, the availability
of imports, the marketing of competitive fuels and the extent of government
regulation. Although margins are significantly affected by industry and
regional factors, the Company can influence its margins through the efficiency
of its operations. While the Company's net sales and operating revenues
fluctuate significantly with movements in industry crude oil prices, such
prices do not generally have a direct long-term relationship to net earnings.
Crude oil price movements may impact net earnings in the short term because of
fixed crude oil purchase commitments which average approximately five million
barrels. See "--Refining." The effect of changes in crude oil prices on the
Company's operating results is determined more by the rate at which the prices
of refined products adjust to reflect such changes. The Company believes that,
in general, low crude oil prices indirectly benefit operating results over the
longer term due to increased demand and decreased working capital
requirements. Conversely, the Company believes that high crude oil prices
generally result in decreased demand and increased working capital
requirements over the long term. Increased refinery production is typically
associated with improved results of operations, while reduced production,
which generally occurs during scheduled refinery maintenance turnarounds,
negatively affects results of operations.
The following table illustrates the potential pre-tax earnings impact based
on historical operating rates estimated by the Company resulting from changes
in: (i) sweet crude oil cracking margins--the spread between gasoline and
diesel fuel prices and input (e.g., a benchmark light sweet crude oil) costs;
(ii) sweet/sour differentials--the spread between a benchmark light sour crude
oil and a benchmark light sweet crude oil; (iii) heavy/light differentials--
the spread between a benchmark light sweet crude oil and a benchmark heavy
sour crude oil; and (iv) retail margins--the spread between product prices at
the retail level and wholesale product costs.
<TABLE>
<CAPTION>
PRE-
TAX EARNINGS IMPACT ON THE COMPANY(A)
----------------------------------------
BEFORE PORT AFTER PORT
ARTHUR ARTHUR
EARNINGS SENSITIVITY CHANGE ACQUISITION ACQUISITION
- -------------------- ---------------- ----------- -----------
<S> <C> <C> <C>
Refining margins
Sweet crude cracking margin......... $0.10 per barrel $ 5 million $12 million
Sweet sour differentials............ 0.10 per barrel 3 million 9 million
Heavy light differentials........... 0.10 per barrel 1 million 2 million
Retail margins........................ $0.01 per gallon $10 million $10 million
</TABLE>
- --------
(a) Based on an assumed production of approximately 212,000 bpd for the Port
Arthur refinery and 140,000 bpd for the Illinois refineries.
36
<PAGE>
Nine Months Ended September 30, 1997 Compared to Nine Months Ended September
30, 1996:
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
--------------------------
1996 1997
------------ ------------
(IN MILLIONS, UNAUDITED)
<S> <C> <C>
FINANCIAL RESULTS:
Net sales and operating revenues.................... $ 3,724.4 $ 3,296.4
Cost of sales....................................... 3,346.3 2,791.4
Operating expenses(a)............................... 304.6 319.0
General and administrative expenses(a).............. 43.9 47.4
Depreciation and amortization....................... 37.0 44.3
Interest expense and financing costs................ 36.4 36.6
Interest and finance income......................... 5.2 10.3
------------ ------------
Earnings (loss) before income taxes................. (38.6) 68.0
Income tax (provision) benefit...................... 14.7 (11.7)
------------ ------------
Net earnings (loss)................................. $ (23.9) $56.3
============ ============
OPERATING INCOME:
Refining contribution to operating income........... $ 16.0 $ 132.9
Retail contribution to operating income............. 24.4 18.1
Corporate general and administrative expenses....... 10.8 12.4
------------ ------------
29.6 138.6
Depreciation and amortization....................... 37.0 44.3
------------ ------------
Operating income (loss)............................. $ (7.4) $ 94.3
============ ============
</TABLE>
- --------
(a) Certain reclassifications have been made to prior periods to conform to
current period presentation.
The Company reported consecutive record net quarterly earnings of $42.6
million and $51.2 million for the second and third quarters of 1997,
respectively, which compared to net losses of $1.0 million and $9.3 million in
the comparable periods of 1996. For the nine months ended September 30, 1997,
the Company recorded net earnings of $56.3 million which was improved over a
net loss of $23.9 million in the year-earlier period. The Company recorded
EBITDA of $138.6 million for the first nine months of 1997 versus $29.6
million in the same period of 1996. Refining division results improved
significantly in the second and third quarters of 1997 over the comparable
periods in the previous year and over the first quarter of 1997 due to good
unit reliability and an improvement in refining industry fundamentals,
particularly crude oil quality differentials. A significant fall in crude oil
prices and the hypothetical cost of lost production associated with a major
maintenance turnaround reduced pre-tax earnings in the first nine months of
1997 by an estimated $42.5 million. An increase in crude oil prices generated
a pre-tax gain of $20.4 million in the first nine months of 1996. After
adjusting for these material items, the Company would have generated EBITDA of
$181.1 million in the first nine months of 1997 versus $9.2 million in the
same period of 1996. The Company recorded an income tax provision of $11.7
million for the first nine months of 1997 primarily for the settlement of
prior-period audit examinations as determined under the Company's tax sharing
agreement with Clark USA. As compared to 1996, the Company recorded a lower
tax provision for current-year earnings due to its cumulative tax loss
carryforward position. See additional operating cash flow disclosures in
Selected Consolidated Financial and Other Data.
Net sales and operating revenues decreased approximately 11% in the first
nine months of 1997 as compared to the prior year. This decrease was
principally the result of the crude oil price decline, noted above, that
reduced both sales and cost of goods sold. In addition, the major maintenance
turnaround at the Port Arthur refinery reduced the Company's production and
sales of refined products.
37
<PAGE>
REFINING
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
-----------------------
1996 1997
----------- -----------
(IN MILLIONS,
EXCEPT PER BARREL DATA)
<S> <C> <C>
REFINING DIVISION OPERATING STATISTICS:
PORT ARTHUR REFINERY
Crude oil throughput (m bbls/day).................. 201.7 201.3(a)
Production (m bbls/day)............................ 212.0 208.5
Gross margin ($ per barrel of production).......... $ 2.49 $ 3.84
Operating expenses................................. 119.7 127.1
Net margin......................................... $ 25.0 $ 91.5
BLUE ISLAND, HARTFORD AND OTHER REFINING
Crude oil throughput (m bbls/day).................. 135.1 135.6
Production (m bbls/day)............................ 136.2 141.4
Gross margin ($ per barrel of production).......... $ 2.66 $ 3.94
Operating expenses................................. 91.1 92.6
Net margin......................................... $ 8.2 $ 59.1
Divisional general and administrative expenses....... 17.2 17.7
Contribution to earnings............................. $ 16.0 $ 132.9
</TABLE>
- --------
(a) 1997 crude oil throughput and production reflected scheduled downtime on
most processing units for approximately one month during a first quarter
maintenance turnaround.
Despite the large negative impact from the fall in crude oil prices and the
major maintenance turnaround at the Port Arthur refinery discussed in more
detail below, refining contribution for the nine months ended September 30,
1997 was $132.9 million in 1997 versus $16.0 million in 1996. Earnings for the
first nine months of 1997 increased due to improved yields and throughput and
wider crude oil quality differentials. Crude oil quality differential
indicators for light sour crude oil improved from $1.06 per barrel to $1.71
per barrel and the benefit for heavy sour crude oil improved from $4.75 per
barrel to $5.63 per barrel from the first nine months of 1996 to the same
period of 1997. The Company believes these crude oil quality differential
indicators improved primarily due to increased availability of Canadian light
and heavy sour crude oil from the Express and Interprovincial pipelines,
higher levels of industry refinery maintenance turnarounds and milder winter
weather in the first quarter of 1997. Hartford refinery results particularly
benefited from improved access to lower-cost Canadian heavy crude oil. Port
Arthur refinery results were also buoyed by the operational benefits realized
from the first quarter maintenance turnaround. On a comparative basis,
refining gross margin in the first nine months of 1996 was negatively impacted
by crude oil market volatility and backwardation that raised the cost of the
Company's feedstocks.
The fall in crude oil prices and the hypothetical cost of lost production
associated with a major maintenance turnaround reduced pre-tax earnings for
the nine months ended September 30, 1997 by an estimated $42.5 million. A
decrease in crude oil prices of approximately $4.75 per barrel in 1997 had a
negative impact on the Company's pre-tax earnings of approximately $27.2
million, resulting from the fact that feedstock acquisition costs are fixed on
average two to three weeks prior to the manufacture and sale of the finished
products. The Company does not currently hedge this price risk because of the
cost of entering into appropriate hedge-related derivatives, especially in a
backwardated market. In the first nine months of 1996, this policy resulted in
a gain of $20.4 million because crude oil prices increased over $4.80 per
barrel in that period. The Company successfully completed an extensive planned
maintenance turnaround on most units at its Port Arthur refinery in the first
quarter of 1997. The opportunity cost of lost production while essentially the
entire refinery was out of service for one month was approximately $15.3
million. After adjusting for these material items, the refining division would
have contributed $175.4 million to operating income in the first nine months
of 1997 (1996--loss of $4.4 million).
38
<PAGE>
Port Arthur refinery crude oil throughput and production reached record and
near record levels in the second and third quarters of 1997, but were
relatively flat compared to 1996 levels on a year-to-date basis due to the
planned maintenance turnaround in the first quarter of 1997. Port Arthur
refinery operating expenses for the first nine months of 1997 were higher than
the previous year principally because of higher natural gas prices and higher
incentive compensation due to strong earnings. Natural gas is consumed as a
fuel in the refining process.
RETAIL
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
----------------------
1996 1997
---------- ----------
(IN MILLIONS, EXCEPT
PER GALLON AND
PER STORE DATA)
<S> <C> <C>
RETAIL DIVISION OPERATING STATISTICS:
Gasoline volume (mm gals).............................. 777.7 771.1
Gasoline gross margin (cents/gal)...................... 10.6c 10.3c
Gasoline gross margin.................................. $ 82.3 $ 79.0
Convenience product sales.............................. $ 193.7 $ 214.3
Convenience product margin and other income............ 50.3 55.7
Gain on asset sales.................................... $ 1.8 $ --
Operating expenses (a)................................. 94.4 99.3
Divisional general and administrative expenses (a)..... 15.6 17.3
Contribution to operating income....................... $ 24.4 $ 18.1
PER MONTH PER STORE:
Company operated stores (average) (b).................. 828 815
Gasoline volume (m gals)............................... 104.4 106.4
Convenience product sales (thousands).................. $ 26.0 $ 29.2
Convenience product gross margin (thousands)........... 6.7 7.6
</TABLE>
- --------
(a) Certain reclassifications have been made to prior periods to conform to
current period presentation.
(b) Ten stores included in 1997 did not sell fuel.
Retail division contribution to operating income of $8.0 million in the
third quarter of 1997 exceeded its contribution in each of the previous four
quarters. Retail contribution to operating income decreased to $18.1 million
in the first nine months of 1997 from $24.4 million in the same period of
1996. Retail contribution declined on a year-to-date basis primarily because
of weaker same store retail fuel margins in the first half of 1997 and a $1.8
million gain on the sale of stores in the prior year. This was partially
offset by the fuel and convenience product margin contribution from the 48
Michigan stores acquired in early 1997. Retail margins have historically
benefited when crude oil prices fall, but the benefit of the crude oil price
decline in the first half of 1997 was not fully realized because wholesale
prices did not fall as much as crude oil prices and due to highly competitive
retail markets. This trend of tighter retail margins started in the last half
of 1996, but reflected improvement in September 1997 when fuel margins
averaged over 12c per gallon. Certain store operating measures did show
improvement in 1997, including a 13% improvement in convenience product
margins per store on 12% higher sales. Operating expenses increased
principally because of lease expenses and higher operating costs for larger
stores acquired in the last year.
OTHER FINANCIAL HIGHLIGHTS
Corporate and divisional general and administrative expenses increased in
the first nine months of 1997 over the comparable period in 1996 principally
because of accruals for higher incentive compensation resulting from the
Company's stronger earnings.
39
<PAGE>
Interest and finance income for the first nine months of 1997 decreased over
the comparable period of 1996 principally because of interest earned on higher
cash balances in 1997, resulting from the contribution of an advance crude oil
purchase receivable by Clark USA in late 1996 that was subsequently converted
to cash.
Depreciation and amortization expense increased for the nine months ended
September 30, 1997 over the same period in 1996 principally because of the
amortization on the 1997 first quarter Port Arthur refinery maintenance
turnaround.
In the early 1990s the Company invested $25.0 million in a project initiated
to produce low-sulfur diesel fuel at the Hartford refinery which was delayed
in 1992 based on internal and third-party analyses that indicated an
oversupply of low-sulfur diesel fuel capacity in the Company's markets. Based
on these analyses, the Company projected relatively narrow price differentials
between low- and high-sulfur diesel products. This projection has thus far
been borne out. High-sulfur diesel fuel is utilized by the railroad, marine
and farm industries. In December 1997, the Company determined that equipment
purchased for the DHDS Project could be better utilized for other projects at
its Hartford and Port Arthur refineries, rather than remaining idle until low-
and high-sulfur diesel fuel differentials widened sufficiently to justify
completing the DHDS Project. As a result, in the fourth quarter of 1997 the
Company expects to record a charge to earnings of approximately $15.0 million
principally for engineering costs specific to the DHDS Project.
The Company operates many computer programs that use only two digits to
identify a year. If these programs are not modified or replaced by the year
2000, such applications could fail or create erroneous results. Some
applications have already been replaced or modified. The Company has hired
outside consultants to assist it in evaluating the scope of the remaining
required program conversions or replacements. Based on preliminary
information, the Company estimates the cost of such remaining program
conversions or replacements to be approximately $5 to $10 million.
1996 compared with 1995 and 1994:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1994 1995 1996
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
FINANCIAL RESULTS: (a)
Net sales and operating revenues.................. $2,440.0 $4,486.1 $5,072.7
Cost of sales..................................... 2,092.5 4,018.3 4,560.0
Operating expenses (b)............................ 219.9 373.3 418.9
General and administrative expenses (b)........... 50.3 52.3 59.1
Depreciation and amortization..................... 37.3 43.5 48.4
Interest and financing costs, net................. 32.1 39.9 38.7
-------- -------- --------
Loss before income taxes (c)...................... 7.9 (41.2) (52.4)
Income tax benefit (c)............................ 2.2 (15.7) (13.9)
-------- -------- --------
Loss before unusual items (c)..................... 5.7 (25.5) (38.5)
Unusual items, after taxes (c).................... 12.4 -- --
-------- -------- --------
Net earnings (loss)............................... $ 18.1 $ (25.5) $ (38.5)
======== ======== ========
OPERATING INCOME:
Refining contribution to operating income......... $ 46.5 $ 11.1 $ 24.2
Retail contribution to operating income........... 45.9 45.4 25.0
Corporate general and administrative expenses..... 15.1 14.3 14.5
Depreciation and amortization..................... 37.3 43.5 48.4
Unusual items (c)................................. 25.4 -- --
-------- -------- --------
Operating income (loss)........................... $ 65.4 $ (1.3) $ 13.7
======== ======== ========
</TABLE>
- --------
(a) This table provides supplementary data in a format that is not intended to
represent an income statement presented in accordance with GAAP.
(b) Certain reclassifications have been made to prior periods to conform to
current period presentation.
(c) The Company considers certain items in 1994 and 1996 to be "unusual."
Detail on these items is presented below.
The Company reported a net loss of $38.5 million in 1996 compared with a net
loss of $25.5 million in 1995 and net earnings of $18.1 million in 1994.
Improvements in productivity and fundamental refining industry indicators for
crack spreads and crude oil quality differentials in 1996 were offset by the
impact of rising, volatile and high crude oil prices. Narrow crude oil
differentials, an
40
<PAGE>
extremely warm 1994-1995 winter and the resulting oversupply of distillates,
and market uncertainty related to the introduction of RFG, reduced 1995
results from 1994 levels. The late February 1995 acquisition of the 212,000
barrel per day Port Arthur, Texas refinery increased net sales and operating
revenues, cost of goods sold, operating and general and administrative
expenses and depreciation and amortization. Net sales and operating revenues
and cost of goods sold were also higher in 1996 due to higher hydrocarbon
prices as reflected by 20% higher prices for benchmark WTI crude oil. Interest
and financing costs, net, increased in 1995 and 1996 over 1994 principally
because of costs associated with a larger working capital facility to support
the Port Arthur refinery and capital leases.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
----------------
1994 1995 1996
----- ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
UNUSUAL ITEMS:
Recovery of inventory market value write-down................ $26.5 $-- $--
Other........................................................ (1.1) -- --
----- ---- ----
Impact on operating income................................... 25.4 -- --
Gain on sale of advance crude oil purchase receivable........ -- -- --
Short-term investment losses................................. (5.4) -- --
Other........................................................ -- -- --
----- ---- ----
Total........................................................ $20.0 $-- $--
===== ==== ====
Net of income taxes............................................ $12.4 $-- $--
===== ==== ====
</TABLE>
Several items which are considered by management as "unusual" are excluded
throughout this discussion of the Company's results of operations. In 1996, in
accordance with the provisions of Statement of Financial Accounting Standards
No. 109, the Company recorded a valuation allowance on its deferred income tax
assets of approximately $6.1 million (not included in the table above). See
Note 12 "Income Taxes" to the Consolidated Financial Statements. A noncash
accounting charge of $26.5 million was taken in the fourth quarter of 1993 to
reflect the decline in the value of petroleum inventories below carrying value
caused by a substantial drop in petroleum prices. Crude oil and related
refined product prices rose in 1994, allowing the Company to recover the
original charge. Accordingly, a reversal of the inventory write-down to market
was recorded in 1994. In 1994, the Company realized losses on the sale of
short-term investments due to an increase in market interest rates.
REFINING
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1994 1995 1996
------- ------- -------
(IN MILLIONS, EXCEPT
OPERATING DATA)
<S> <C> <C> <C>
OPERATING STATISTICS:
PORT ARTHUR REFINERY (ACQUIRED FEBRUARY 27, 1995)
Crude oil throughput (m bbls/day).................... -- 198.9 199.8
Production (m bbls/day).............................. -- 207.7 210.8
Gross margin (per barrel of production) (a).......... -- $ 2.37 $ 2.78
Operating expenses (per barrel of production) (a).... -- 1.90 2.13
Net margin (a)....................................... -- $ 30.0 $ 49.6
BLUE ISLAND, HARTFORD AND OTHER REFINING
Crude oil throughput (m bbls/day).................... 138.2 133.6 132.7
Production (m bbls/day).............................. 140.3 136.5 134.2
Gross margin (per barrel of production) (a).......... $ 3.48 $ 2.64 $ 2.53
Operating expenses (per barrel of production) (a).... 2.28 2.61 2.58
Net margin (a)....................................... $ 61.4 $ 1.5 $ (2.3)
Divisional general and administrative expenses (a)..... 14.9 20.4 23.1
Contribution to operating income (a)................... $ 46.5 $ 11.1 $ 24.2
</TABLE>
- --------
(a) Certain reclassifications have been made to prior periods to conform to
current period presentation.
41
<PAGE>
Refining division contribution to operating income in 1996 was $24.2
million, more than double 1995 levels ($11.1 million), but below 1994 results
($46.5 million). Contribution improved over 1995 principally because of an
improvement in the Port Arthur refinery gross margin resulting from
improvements in operating rates, reliability and yields. The Hartford refinery
realized the benefit from a capital project designed to recover additional
higher value products from processing units. Certain key refining market
indicators also improved in 1996, including gasoline and distillate margins
and crude oil quality differentials. More normal winter weather, and
corresponding demand, contributed to a 2.4% increase in fuel demand from 1995
to 1996. Rising crude oil prices added an estimated $25.3 million to gross
margin. However, these positive market trends were more than offset by reduced
by-product margins and the increased cost of crude oil acquisition activities
caused by volatile and high absolute crude oil prices. Refining results for
1995 were below 1994 levels, as refining margins were particularly weak in
1995 and late 1994 due to the warmest Northern Hemisphere winter in 40 years,
which reduced demand for heating oil, and the transition to RFG. Several
geographical areas unexpectedly opted not to switch to RFG, which caused
confusion and concern in the marketplace, and caused gasoline prices to fall
relative to the price of crude oil. In addition, unscheduled downtime at the
Blue Island refinery reduced gross margins by an estimated $5.5 million in
1995 and $3.1 million in 1996.
Operating expenses increased at the Port Arthur refinery from 1995 to 1996
principally due to increased refinery fuel costs associated with higher
natural gas prices. Operating expenses increased in 1995 over 1994 principally
due to the addition of the Port Arthur refinery and related terminal expenses
in early 1995 and expenses ($6.5 million) associated with unplanned downtime
at the Blue Island refinery. Reduced throughput at the Company's Illinois
refineries due to poor first quarter 1995 market conditions and scheduled and
unscheduled downtime also contributed to lower production and higher per-
barrel operating costs in 1996 and 1995 as compared with 1994. Divisional
general and administrative expenses increased in 1996 and 1995 principally
because of the inclusion of administrative functions located at the Port
Arthur refinery.
RETAIL
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1994 1995 1996
-------- -------- --------
(IN MILLIONS, EXCEPT
OPERATING DATA)
<S> <C> <C> <C>
OPERATING STATISTICS:
Gasoline volume (mm gals)......................... 1,028.5 1,063.8 1,031.9
Gasoline gross margin (cents/gal) (a)............. 10.9c 11.4c 10.4c
Gasoline gross margin (a)......................... $ 112.3 $ 121.7 $ 107.0
Convenience product sales......................... $ 231.6 $ 252.6 $ 251.7
Convenience product gross margin and other
income........................................... 57.2 62.9 65.8
Operating expenses (a)............................ $ 104.6 $ 121.6 $ 126.2
Divisional general and administrative expenses.... 19.0 17.6 21.6
Contribution to operating income (a).............. $ 45.9 $ 45.4 $ 25.0
PER MONTH PER STORE:
Company operated stores (average)................. 834 852 823
Gasoline volume (m gals).......................... 102.8 104.1 104.5
Convenience product sales (m)..................... $ 23.1 $ 24.7 $ 25.5
Convenience product gross margin (m).............. 5.7 6.1 6.6
</TABLE>
- --------
(a) Certain reclassifications have been made to prior periods to conform to
current period presentation.
42
<PAGE>
The retail division contributed $25.0 million to operating income in 1996
(1995--$45.4 million; 1994--$45.9 million). The retail division contribution
was below 1995 levels due mostly to a sharp drop in retail gasoline margins.
This resulted from an increase in wholesale gasoline costs associated with
rising and higher crude oil prices that was not fully captured in retail
selling prices due to an extremely competitive Midwest retail market
environment. This was particularly the case in the last half of 1996. In
addition, high retail prices impaired sales of higher-margin premium gasoline
grades. Gross margins on convenience product sales and monthly convenience
product sales and gross margins per store improved over the last three years
due to the addition of larger stores and an improved mix of higher-margin On
The Go(R) (noncigarette) products. Operating and general and administrative
expenses increased in 1996 and 1995 over 1994 principally due to operating
leases and other costs related to new store acquisitions and increased costs
related to the expansion of Clark's credit card programs. Year-over-year
credit card sales increased 31% in 1996 and 41% in 1995.
During 1996 and 1997, the retail network continued to be upgraded in the
Company's core Great Lakes markets. This was achieved by acquiring 10 high-
volume stores in the Chicago market, introducing a branded marketer program
and closing underperforming stores. A further 48-store acquisition was
completed in Michigan in January 1997. In 1995, the Company acquired through
an operating lease 35 retail stores in Central Illinois. In late 1994, the
Company similarly acquired 25 stores in Chicago. Four additional stores
related to the Chicago acquisition were added in 1996. Consistent with the
Company's strategy to exit noncore markets, the Company divested 41 stores in
the Kansas, Western Missouri and Minnesota markets in late 1995 and early
1996, and 22 Dayton, Ohio stores were converted to branded marketer locations
in early 1997. As part of its overall growth strategy, the Company expects to
continue to consider retail store growth in both existing and new markets
while also evaluating underperforming markets for possible divestiture. The
Company is actively considering the sale of approximately 150 stores in
outlying noncore locations.
OTHER FINANCIAL MATTERS
Depreciation and amortization expenses increased in 1996 and 1995
principally because of the Port Arthur refinery acquisition and 1994 capital
expenditures.
Interest and financing costs, net, in 1996 were below 1995 principally due
to increased interest income on larger invested balances. Net costs increased
in 1996 and 1995 as compared to 1994 primarily because of higher amortization
associated with the Company's larger working capital facility, which was
increased to support the crude oil supply needs of the Port Arthur Refinery,
higher amortization of bondholder consent payments paid in connection with the
acquisition of the Port Arthur Refinery and capital leases. See Note 8 "Long-
Term Debt" to the Consolidated Financial Statements.
In December 1995, Clark USA completed separate transactions with Oxy and
Gulf Resources Corporation ("Gulf"). Pursuant to a merger agreement and a
series of related agreements with Oxy, Clark USA acquired the right to receive
the equivalent of 17.661 million barrels of WTI to be delivered over six years
according to a defined schedule (the "Oxy Transaction"). This contract was
sold at a gain in 1996 for $235.4 million. Pursuant to a merger agreement and
a series of related agreements with Gulf, Clark USA acquired the right to
receive 3.164 million barrels of certain royalty oil to be received by Gulf
pursuant to certain agreements with the Government of the Congo (the "Gulf
Transaction"). The crude oil was to be delivered over six years according to a
minimum schedule of (in millions of barrels) 0.72, 0.62, 0.56, 0.48, 0.42 and
0.36 in 1996, 1997, 1998, 1999, 2000 and 2001, respectively. Gulf has not made
their required deliveries since July 1996.
OUTLOOK
Since most of the Company's products are commodities, supply and demand for
crude oil and refined products have a significant impact on the Company's
results. Demand for fuel products has
43
<PAGE>
grown by an average of 2% since 1992, primarily as a result of increased miles
driven and little improvement in the fuel efficiency of the U.S. automobile
fleet. The Company believes that capital spending in the refining sector is
highly correlated to refining industry profitability. As a result of the high
capital spending levels of the early 1990s, the industry's ability to produce
refined products exceeded demand in recent years. Since then, industry
refinery capital spending has declined. The Company expects that there will
continue to be volatility in refining margins and the Company's earnings
because of the seasonal nature of refined product demand and the commodity
nature of the Company's refined products.
In the short term, retail margins generally are squeezed in periods of rapid
oil price increases, as was the case in 1996, and widen as prices stabilize or
fall. Prices for crude oil have fallen substantially since the end of 1996. In
the long term, the Company believes margins are driven by market share and
concentration. The Company believes that, over the last five years, the
Company's Midwest market has averaged among the lowest margins in the U.S. due
to its relatively high level of fragmentation. Historically, the Company has
recorded seasonally lower earnings in the fourth and first quarters of
calendar years due to lower demand for refined products.
LIQUIDITY AND CAPITAL RESOURCES
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------- -----------------
1994 1995 1996 1996 1997
------- ------- ------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
FINANCIAL POSITION:
Cash and short-term investments.... $134.1 $106.6 $334.3 $ 79.4 $285.9
Working capital.................... 130.4 193.1 399.5 197.2 421.8
Property, plant and equipment...... 429.8 549.3 555.7 543.4 572.8
Long-term debt..................... 400.7 420.4 417.6 417.2 415.3
Stockholder's equity............... 162.9 304.1 534.1 313.6 590.5
Operating cash flow................ 46.0 7.6 (4.5) 2.4 105.9
</TABLE>
Net cash generated by operating activities, excluding working capital
changes ("Operating Cash Flow"), for the nine months ended September 30, 1997
was $105.9 million compared to $2.4 million in the year-earlier period.
Working capital as of September 30, 1997 was $421.8 million, a 2.29-to-1
current ratio, versus $399.5 million as of December 31, 1996, a 2.00-to-1
current ratio. Working capital as of September 30, 1997 increased from the end
of 1996 because of increased operating contribution, partially offset by a
retail store acquisition that was financed with cash and the capital cost of
the Port Arthur refinery turnaround.
Operating Cash Flow for the year ended December 31, 1996 was negative $4.5
million compared with cash flow of $7.6 million in 1995 and $46.0 million in
1994. Operating Cash Flow declined from 1994 to 1996 principally because of
the weaker refining margin environment and a decline in retail gasoline
margins in 1996. Working capital as of December 31, 1996 was $399.5 million, a
2.00-to-1 current ratio, versus $193.1 million as of December 31, 1995, a
1.48-to-1 current ratio and $130.4 million as of December 31, 1994, a 1.52-to-
1 current ratio. Working capital increased in 1996 as a result of the sale of
one of Clark USA's advance crude oil purchase receivables for net cash
proceeds of $235.4 million. An increase was realized in 1995 due to the Port
Arthur Refinery acquisition and partial financing with equity of the
refinery's working capital requirements.
As part of its overall inventory management and crude acquisition
strategies, the Company routinely buys and sells, in varying degrees, crude
oil in the spot market. Such ongoing activities carry various payment terms
and require the Company to maintain adequate liquidity and working capital
facilities. The Company's short-term working capital requirements (primarily
letter of credit issuances
44
<PAGE>
to support crude oil requirements) fluctuate with the pricing and sourcing of
crude oil. Historically, the Company's internally generated cash flows have
been sufficient to meet its needs. The Credit Agreement is used for the
issuance of letters of credit primarily for the purchase of crude oil and
other feedstocks and refined products.
On September 25, 1997, the Company entered into a Credit Agreement which
provides for borrowings and the issuance of letters of credit of up to the
lesser of $400.0 million or the amount of the borrowing base calculated with
respect to the Company's cash and cash equivalents, eligible investments,
eligible receivables and eligible petroleum inventories. Direct borrowings are
limited to the principal amount of $50.0 million. Borrowings under the Credit
Agreement are secured by a lien on substantially all of the Company's cash and
cash equivalents, receivables, crude oil, refined product and other
inventories and trademarks and other intellectual property. As of September
30, 1997, there were no direct borrowings under the Credit Agreement. The
Company was in compliance with all covenants of the Credit Agreement as of
September 30, 1997. See "Description of Certain Debt Instruments--Credit
Agreement."
The Credit Agreement contains covenants and conditions which, among other
things, limit dividends, indebtedness, liens, investments, contingent
obligations and capital expenditures, and require the Company to maintain its
property and insurance, to pay all taxes and comply with all laws, and to
provide periodic information and conduct periodic audits on behalf of the
lenders. Clark is also required to comply with certain financial covenants.
The financial covenants are: (i) maintenance of working capital of at least
$150.0 million at all times; (ii) maintenance of a tangible net worth (as
defined) of at least $300.0 million; and (iii) maintenance of minimum levels
of balance sheet cash (as defined) of $50.0 million at all times. The
covenants also provide for a cumulative cash flow test, as defined in the
Credit Agreement, that, from March 31, 1997, shall not be less than or equal
to zero at all times. The Credit Agreement also limits the amount of future
additional indebtedness outside of the cumulative cash flow covenant that may
be incurred by the Company in an amount equal to $25.0 million.
Cash flows used in and from investing activities (excluding short-term
investment activities which the Company manages similar to cash and cash
equivalents) are primarily affected by acquisitions and capital expenditures,
including refinery maintenance turnarounds. Cash flows used in investing
activities (excluding short-term investment activities) in the first nine
months of 1997 were $81.5 million as compared to $26.6 million in the year-
earlier period. The higher investing activities in 1997 resulted principally
from the Port Arthur refinery turnaround ($30.0 million) and the acquisition
and subsequent image conversion of 48 retail stores in Michigan ($21.0
million). Refinery capital expenditures totaled $17.6 million in the first
nine months of 1997 (1996--$12.5 million), most of which related to
discretionary and nondiscretionary projects undertaken in conjunction with the
Port Arthur refinery turnaround. Retail capital expenditures for the first
nine months of 1997, excluding the Michigan acquisition, totaled $13.9 million
(1996--$10.5 million) and were principally for underground storage tank-
related work.
Cash flows provided by investing activities (excluding short-term
investments) in 1996 were $180.9 million as compared to cash flow used in 1995
and 1994 of $118.5 million and $119.0 million, respectively. In 1996, Clark
USA contributed capital to the Company in the form of the Oxy advance crude
oil purchase receivable which was immediately sold for $235.4 million. Cash
flows used in investing activities of $71.8 million in 1995 was related to the
acquisition of the Port Arthur Refinery. Otherwise, capital spending was
reduced in 1995 and 1996 from 1994 levels in line with the Company's
philosophy to link capital expenditures to cash flow. Capital expenditures for
property, plant and equipment totaled $45.0 million in 1996 (1995--$42.1
million; 1994--$100.3 million) and expenditures for refinery maintenance
turnarounds totaled $13.9 million (1995--$6.5 million; 1994--$11.2 million).
Capital expenditures were reduced in 1996 and 1995 in response to lower
Operating Cash Flow. Refining division capital expenditures were $19.4 million
in 1996 (1995--$15.8 million;
45
<PAGE>
1994--$59.7 million). Approximately one-half of 1996 expenditures were
discretionary, with the balance and most of 1995 expenditures primarily for
mandatory maintenance and environmental expenditures. In 1994, projects
included adding the capability to produce RFG at the Blue Island refinery and
a revamp of the FCC and alkylation units at the Hartford refinery. Retail
capital expenditures in 1996 totaled $24.6 million (1995--$25.2 million;
1994--$38.2 million). Approximately one-half of 1996 and 1995 expenditures
were for regulatory compliance, principally underground storage tank-related
work and vapor recovery. The remainder of 1996 and 1995 retail capital
expenditures were discretionary and primarily related to new store
acquisitions, a reimaging program and miscellaneous store equipment. In 1994,
approximately one-third of retail division capital expenditures were for
regulatory compliance, with the balance for discretionary projects such as
reimaging locations, canopies, expansion of store interior selling space and
systems automation.
In February 1995, the Company acquired the Port Arthur Refinery from Chevron
for approximately $70.0 million, plus inventory and spare parts for
approximately $122.0 million (a $5.0 million deposit was paid in 1994), and
the assumption of certain liabilities estimated at $19.4 million. The purchase
agreement also provided for contingent payments to Chevron of up to $125.0
million over a five-year period from the closing date of the Port Arthur
refinery acquisition in the event that refining industry margin indicators
exceed certain escalating levels. The Company believes that even if such
contingent payments would be required, they would not have a material adverse
effect on the Company's results of operations since the Company would also
benefit from such increased margins. Such contingent payments were not payable
for the three measurement periods ended September 30, 1995, 1996 and 1997, and
based on these industry margin indicators from inception through September 30,
1997, the Company had a cumulative benefit of approximately $25.0 million
applicable to future calculations.
The Company classifies its capital expenditures into two categories,
mandatory and discretionary. Mandatory maintenance capital expenditures are
required to maintain safe and reliable operations, and mandatory environmental
expenditures are required to comply with regulations pertaining to ground,
water and air contamination and occupational safety and health issues. The
Company estimates that total mandatory expenditures through 2000 will average
approximately $55.0 million per year in the refining division and $10.0
million per year in the retail division. Costs to comply with future
regulations cannot be estimated.
Expenditures to comply with reformulated and low-sulfur fuels regulations
are primarily discretionary, subject to market conditions and economic
justification. These fuel programs impose restrictions on properties of fuels
to be refined and marketed, including those pertaining to gasoline volatility,
oxygenate content, detergent addition and sulfur content. The regulations
regarding these fuel properties vary in markets in which the Company operates,
based on attainment of air quality standards and the time of the year. The
Company's Port Arthur, Blue Island and Hartford refineries have the capability
to produce approximately 60%, 60%, and 25%, respectively, of their gasoline
production in RFG. Each refinery's maximum RFG production may be limited based
on the clean fuels attainment of Clark's total refining system. The Port
Arthur refinery has the capability to produce 100% low-sulfur diesel fuel.
The Company has a philosophy to link total capital expenditures to cash
generated from operations. The Company has a total capital and refinery
maintenance turnaround expenditure budget of $100.0 million to $110.0 million
for 1997. This amount includes approximately $21.0 million, net, related to
the January 1997 acquisition and subsequent image conversion of 48 retail
stores in Michigan, and expenditures of approximately $30 million related to a
major maintenance turnaround at the Port Arthur refinery in the first quarter
of 1997. Total capital expenditures may be under budget if cash flow is less
than expected, and higher than budget if cash flow is better than expected.
Cash flow used in financing activities was $30.0 million in 1996 and $174.7
million in 1995 compared to a use of $5.4 million in 1994. In 1995, financing
activities reflected the partial financing of
46
<PAGE>
the Port Arthur Refinery acquisition with the sale of stock (the balance was
financed with cash on hand), fees related to the larger working capital
facility associated with the expanded working capital needs of the Company
following the Port Arthur Refinery acquisition and two capital leases
associated with the sale and leaseback of certain refinery equipment at the
Hartford and Port Arthur refineries. In 1994, expenditures were made in
connection with the acquisition of a new working capital facility.
On November 3, 1997, Blackstone acquired the 13,500,000 shares of Common
Stock of Clark USA previously held by TrizecHahn and certain of its
subsidiaries, as a result of which Blackstone obtained a 65% equity interest
(73.3% voting interest) in Clark USA.
Prior to the consummation of the Debt Offering, the Company paid the Special
Dividend of $215.0 million to Clark USA in order for it to repurchase for
$206.6 million, $259.2 million (value at maturity) of its Zero Coupon Notes
pursuant to the Tender Offer. Clark USA intends to redeem all of its remaining
outstanding Zero Coupon Notes on or about February 15, 1998. As a result of
the Debt Offering and the Term Loan, the Company has higher levels of debt
outstanding and is required to make increased annual interest payments. In
addition, as a result of the Special Dividend, the application of the net
proceeds from the Debt Offering and the Term Loan and the payment of fees and
expenses in connection with the Equity Recapitalization, the Company's cash
and short-term investments were reduced by approximately $65.9 million and its
stockholder's equity was reduced to approximately $356.8 million. Finally, as
a result of the Blackstone Transaction, the $175.0 million of 9 1/2% Notes,
and (in the event of a Rating Decline) the 10 7/8% Notes of Clark USA, are
subject to a repurchase offer. See "Risk Factors--Change of Control Provisions
in Notes and Existing Indebtedness."
Funds generated from operating activities together with existing cash, cash
equivalents and short-term investments are expected to be adequate to fund
existing requirements for working capital and capital expenditure programs for
the next year. Due to the commodity nature of its products, the Company's
operating results are subject to rapid and wide fluctuations. While the
Company believes that its maintenance of large cash, cash equivalents and
short-term investment balances and other operating philosophies will be
sufficient to provide the Company with adequate liquidity through the next
year, there can be no assurance that refining industry conditions will not be
worse than anticipated. Due to the sale of one of the advance crude oil
purchase receivables, the Company had higher cash, cash equivalents and short-
term investments as of September 30, 1997, than it has historically
maintained. These balances are available for investment in current operations,
debt reduction or acquisitions. Future working capital needs, discretionary
capital expenditures, environmentally mandated spending and acquisitions may
require additional debt or equity capital.
47
<PAGE>
QUARTERLY FINANCIAL INFORMATION
(UNAUDITED)
The following quarterly financial information has been prepared from the
financial records of the Company without audit, and reflects all adjustments
which are, in the opinion of management, necessary for fair presentation of
the results of operations for the interim periods presented.
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C>
1997
Net sales.......................... $ 999.0 $1,173.7 $1,123.6
Gross profit....................... 105.4 192.7 206.9
Operating income (loss)............ (29.3) 59.0 64.6
Net earnings (loss)................ (37.4) 42.6 51.2
1996
Net sales.......................... $1,140.2 $1,334.7 $1,249.5 $1,348.3
Gross profit....................... 115.0 134.8 128.3 134.6
Operating income (loss)............ (12.1) 9.0 (4.3) (6.3)
Net earnings (loss)................ (13.6) (1.0) (9.3) (14.6)
1995
Net sales.......................... $ 827.3 $1,337.8 $1,211.8 $1,109.2
Gross profit....................... 67.7 132.6 148.8 118.7
Operating income (loss)............ (26.5) 9.7 22.4 (6.9)
Net earnings (loss)................ (21.9) 0.0 7.8 (11.4)
</TABLE>
48
<PAGE>
BUSINESS
COMPANY OVERVIEW
The Company is the sixth-largest independent refiner and marketer of
petroleum products in the United States, with one Texas refinery and two
Illinois refineries representing over 350,000 bpd of rated crude oil
throughput capacity. The Company is also currently the seventh-largest direct
operator of gasoline and convenience stores in the U.S., with over 800 retail
outlets in 10 Midwestern states. The Company's retail network has conducted
operations under the Clark brand name for 65 years. The Company also markets
gasoline, diesel fuel and other petroleum products on a wholesale branded and
unbranded basis.
The Company is a Delaware corporation, with its principal executive offices
located at 8182 Maryland Avenue, St. Louis, Missouri 63105, telephone number
(314) 854-9696.
COMPANY HISTORY
All of the outstanding common stock of the Company is owned by Clark USA.
Clark USA was formed in November 1988 by TrizecHahn and AOC Limited
Partnership ("AOC L.P.") to hold all of the capital stock of the Company and
certain other assets. Pursuant to a stockholder agreement (the "Stockholder
Agreement") among AOC L.P., TrizecHahn, Clark USA and the Company, TrizecHahn
purchased 60% of the equity capital of Clark USA and AOC L.P. purchased the
remaining 40% interest. The Company's primary business assets were acquired on
November 22, 1988 out of bankruptcy proceedings. The assets acquired consisted
of (i) substantially all of the assets of Apex Oil Company, Inc., a Wisconsin
corporation (formerly OC Oil & Refining Corporation and prior thereto Clark
Oil & Refining Corporation, a Wisconsin corporation) and its subsidiaries
("Old Clark") and (ii) certain other assets and liabilities of the
Novelly/Goldstein Partnership (formerly Apex Oil Company), a Missouri general
partnership ("Apex"), the indirect owner of Old Clark and an affiliate of AOC
L.P.
On December 30, 1992, TrizecHahn and Clark USA entered into a Stock Purchase
and Redemption Agreement (the "AOC Stock Purchase Agreement") with AOC L.P. to
purchase and redeem all of the shares and options to purchase shares of Clark
USA owned by AOC L.P., resulting in TrizecHahn owning 100% of the outstanding
equity of Clark USA at that time.
On February 27, 1995, Clark USA sold $135 million of common stock to a
wholly owned subsidiary of TrizecHahn. The TrizecHahn subsidiary immediately
resold $120 million of such stock to Tiger, representing an equity ownership
interest of 40% of Clark USA at that time. As a result of these sales of
common stock, the Company received an equity contribution of $150 million from
Clark USA and used these proceeds along with existing cash to acquire from
Chevron the Port Arthur Refinery for approximately $70 million, plus
approximately $122 million for inventory and spare parts, and the assumption
of certain liabilities estimated at $19.4 million. The Company is also
obligated under certain circumstances to pay to Chevron contingent payments
(the "Chevron Contingent Payments") pursuant to a formula based on refining
industry margin indicators and the volume of crude oil processed at the Port
Arthur refinery over a five-year period. The maximum total amount of the
Chevron Contingent Payments is $125 million. The Port Arthur refinery
increased the Company's crude oil throughput capacity by over 140% and
expanded its market to the Gulf Coast of the U.S.
In December 1995, an affiliate of Oxy acquired approximately 19% of the
equity in Clark USA in exchange for the delivery of certain amounts of crude
oil over a six-year period ending in 2001. Clark USA contributed the Oxy
advance crude oil purchase receivable to the Company in October 1996 and the
Company sold the receivable for net cash proceeds of $235.4 million. Also, in
December 1995 subsidiaries of Gulf acquired approximately 4% of the equity in
Clark USA in exchange for their agreement to deliver certain amounts of
royalty oil over a six-year period ending in 2001. See "Business--The Advance
Crude Oil Purchase Receivable Transactions."
49
<PAGE>
On October 1, 1997, Clark USA and its stockholders completed an equity
recapitalization whereby all previously issued shares of Class A Common Stock
of Clark USA held by the Tiger Funds of Tiger (then representing approximately
31% of the total voting power of all classes of Clark USA stock) were
reclassified into Class E Common Stock. TrizecHahn then purchased all of the
Class E Common Stock for $7.00 per share in cash, resulting in a total
purchase price of $63.0 million. All of such shares of Class E Common Stock
were subsequently reclassified into 63,000 shares of Exchangeable Preferred
Stock of Clark USA and sold to institutional investors.
In addition, the shares of common stock of Clark USA owned by Oxy were
exchanged for an equal number of shares of Class F Common Stock having voting
rights limited as a class to the lesser of (a) the aggregate voting power of
such shares on a one-vote-per-share basis and (b) 19.9% of the total voting
power of all classes of Clark USA's voting stock. The Class F Common Stock is
convertible at any time to Common Stock of Clark USA, on a one-for-one basis,
at the option of any holder other than Oxy and its affiliates. Clark USA also
issued to Oxy an additional 545,455 shares of Class F Common Stock in full
satisfaction of Clark USA's obligation to issue shares under its then existing
Stockholders' Agreement with Oxy.
On November 3, 1997, Blackstone acquired the 13,500,000 shares of Common
Stock of Clark USA previously held by TrizecHahn and certain of its
subsidiaries, as a result of which Blackstone obtained a 65% equity interest
(73.3% voting interest) in Clark USA.
BUSINESS STRATEGY
The Company's business strategy focuses on improving productivity,
optimizing capital investments, promoting an entrepreneurial culture and
growing both its refining and marketing operations to strengthen the Company's
business and financial profile. This strategy is designed to address the
commodity-based nature of the oil refining and marketing industry in which the
Company operates.
. Improving Productivity. The Company continues to implement relatively
low-cost projects in its refining and marketing operations designed to
increase production, sales volumes and production yields and to improve
sales mix while reducing input costs and operating expenses. Improvements
at the Port Arthur refinery, increased yields and crude oil throughput
capability at its Illinois refineries and improved monthly fuel volumes,
convenience product sales and margins in the retail division are examples
of these types of initiatives.
. Optimizing Capital Investment. The Company seeks to optimize capital
investments by linking discretionary capital spending to internally
generated cash flow, focusing its efforts first on those productivity
initiatives that require no capital investment and then those which have
relatively short payback periods. As an example, in response to weak 1995
and 1996 industry refining market conditions, discretionary capital
expenditures were scaled back significantly from historical levels. Due to
improved results and a more robust refining industry environment, the
Company is now implementing several high-payback discretionary capital
projects.
. Promoting Entrepreneurial Culture. The Company emphasizes an
entrepreneurial management approach which uses employee incentives to
enhance financial performance and safety. All of the Company's employees
participate in its performance management, profit sharing or other
incentive plans. In addition, the Company has adopted a stock incentive
plan for certain key employees. Blackstone intends to put in place a
management incentive program designed to increase management's ownership of
Clark USA stock through direct purchases and options tied to the financial
performance of the Company.
. Growing Through Opportunistic Acquisitions. The Company intends to
continue to expand its refining and marketing operations through
opportunistic acquisitions which can benefit from its
50
<PAGE>
business strategy, create critical mass, increase market share or access
new markets. Since 1994, the Company more than doubled its refining
capacity by acquiring the Port Arthur Refinery and strengthened its
Northern Illinois and Southern Michigan presence by adding 122 retail
stores in these core markets. Blackstone is committed to this strategy.
. Strengthening the Balance Sheet. The Company and Clark USA will continue
to seek to improve their capital structure. The financing of the Port
Arthur refinery acquisition principally with equity contributed by Clark
USA and the partial financing of the advance crude oil purchase receivable
lowered the Company's leverage in 1995 and 1996. The Company's subsequent
monetization of the advanced crude oil purchase receivable significantly
improved the Company's liquidity. As of September 30, 1997, the Company had
total cash balances of $286 million. The Equity Recapitalization and the
Debt Refinancing and Repayment are designed to strengthen the balance sheet
of Clark USA and its subsidiaries by extending debt maturities, increasing
prepayment flexibility and lowering the overall borrowing cost.
REFINING
Overview
The refining division currently operates one refinery in Texas and two
refineries in Illinois with a combined crude oil throughput capacity of
approximately 350,000 bpd. The Company also owns 16 product terminals located
in its Midwest and Gulf Coast market areas, a crude oil and LPG terminal
associated with the Port Arthur refinery and crude oil and product pipeline
interests. The Company's refining crude oil throughput capacity ranks it as
one of the six largest independent refining and marketing companies in the
U.S.
Strategy
Since the refining division operates in a commodity-based market environment
in which market prices for crude oil and refined products fluctuate
significantly, the refining division's business strategy focuses on those
areas it can control. The refining industry is capital intensive and has not
provided adequate returns in recent years. The Company believes this
environment provides the opportunity to implement a contrarian approach. The
refining division's strategy is consistent with the Company's overall business
strategy and includes the following key elements:
. Improving Productivity. The refining division focuses on initiatives
requiring little or no capital investment that increase production, improve
product yields and recoveries or reduce operating costs. Comprehensive
plant-level programs focus on comparisons to industry benchmark studies as
a tool to develop strategies that improve plant reliability.
. Optimizing Capital Investments. Refining capital expenditures are linked
to cash flow generated from operations. The Company emphasizes an
entrepreneurial approach to discretionary expenditures, and to perceived
mandatory expenditures, such as those required to comply with reformulated
and low-sulfur fuels regulations. The Company may seek to comply with
regulations through the use of alternative markets for existing products if
adequate returns on investment are not assured. Most discretionary capital
expenditures in the past three years have had payback periods of less than
four years.
. Promoting Entrepreneurial Culture. Refining division employees are
involved in a team-based approach aimed at improving operations. All
employees participate in some form of gain-sharing program. The Company
believes this philosophy has significantly contributed to past productivity
gains.
. Growth. As part of its growth strategy, the refining division seeks
attractive assets that may be acquired at favorable valuations. The Port
Arthur Refinery acquisition is an example of this type of strategy. The
Company believes current industry conditions may offer similar
opportunities in the future.
51
<PAGE>
Port Arthur Refinery
The Port Arthur refinery is located in Port Arthur, Texas and is situated on
an approximately 4,000 acre site. The refinery has a rated crude oil
throughput capacity of approximately 212,000 bpd and the ability to process
100% sour crude oil, including up to 20% heavy crude oil, and has coking
capabilities. Heavy sour crude oil has historically been available at
substantially lower cost when compared to light sweet crude oil such as WTI.
The Port Arthur refinery has the ability to produce jet fuel, 100% low-sulfur
diesel fuel, 55% summer RFG and 75% winter RFG. The refinery's Texas Gulf
Coast location provides access to numerous cost effective domestic and
international crude oil sources, and its products can be sold in the
Midcontinent and Eastern U.S. as well as in export markets.
Since acquiring the Port Arthur Refinery in early 1995, the Company has
increased crude oil throughput capability from approximately 178,000 bpd to
its current 212,000 bpd and has lowered operating expenses by approximately
50c per barrel. From the date of the acquisition through September 30, 1997,
the Port Arthur Refinery has generated EBITDA of approximately $171.0 million.
The Company has engaged in discussions with numerous parties concerning
possible investments at the Port Arthur refinery. No agreement has been
reached with any other party concerning the form, structure, scope, size,
financing, timing or other aspects of any of such possible investments or
capital improvements. There can be no assurances that any such investments or
capital improvements will or will not be made.
The feedstocks and production of the Port Arthur refinery for the ten months
it was owned in 1995 and for the full year 1996 and the nine months ended
September 30, 1996 and 1997 were as follows:
PORT ARTHUR REFINERY FEEDSTOCKS AND PRODUCTION
<TABLE>
<CAPTION>
TEN MONTHS NINE MONTHS ENDED
ENDED YEAR ENDED SEPTEMBER 30,
DECEMBER 31, DECEMBER 31, --------------------------
1995 1996 1996 1997(A)
------------ ------------ ------------ ------------
BBLS % BBLS % BBLS % BBLS %
------ ----- ------ ----- ------ ----- ------ -----
(BARRELS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FEEDSTOCKS
Light Sweet Crude Oil.. 22,268 35.0% 11,018 14.5% 12,272 21.3% 7,374 13.0%
Light Sour Crude Oil... 31,518 49.5 36,855 48.3 27,503 47.7 23,895 42.0
Heavy Sweet Crude Oil.. -- -- 23,920 31.4 14,934 25.9 4,993 8.8
Heavy Sour Crude Oil... 7,488 11.8 1,327 1.7 537 0.9 18,677 32.8
Unfinished &
Blendstocks........... 2,349 3.7 3,128 4.1 2,387 4.1 1,919 3.4
------ ----- ------ ----- ------ ----- ------ -----
Total.................. 63,623 100.0% 76,248 100.0% 57,633 100.0% 56,858 100.0%
====== ===== ====== ===== ====== ===== ====== =====
PRODUCTION
Gasoline
Unleaded............... 13,966 21.8 20,840 27.0 16,174 27.8 13,531 23.8
Premium Unleaded....... 13,030 20.4 12,258 15.9 9,240 15.9 8,558 15.0
------ ----- ------ ----- ------ ----- ------ -----
26,996 42.2 33,098 42.9 25,414 43.7 22,089 38.8
Other Products
Low-Sulfur Diesel
Fuel.................. 14,739 23.1 17,443 22.6 12,729 21.9 14,721 25.9
Jet Fuel............... 9,047 14.1 11,166 14.5 8,488 14.6 6,611 11.6
Petrochemical
Products.............. 5,382 8.4 6,751 8.7 4,591 7.9 6,782 11.9
Others................. 7,794 12.2 8,703 11.3 6,869 11.8 6,717 11.8
------ ----- ------ ----- ------ ----- ------ -----
36,962 57.8 44,063 57.1 32,677 56.3 34,831 61.2
------ ----- ------ ----- ------ ----- ------ -----
Total.................. 63,958 100.0% 77,162 100.0% 58,091 100.0% 56,920 100.0%
====== ===== ====== ===== ====== ===== ====== =====
Output/Day............. 207.7 210.8 212.0 208.5
</TABLE>
- --------
(a) Feedstocks and production in 1997 reflect maintenance turnaround downtime
of approximately one month on selected units.
52
<PAGE>
Illinois Refineries
The Company's Illinois refineries, Blue Island (near Chicago, Illinois) and
Hartford (near St. Louis, Missouri), are supplied by common carrier crude oil
pipelines and are located on inland waterways with barge access. The
refineries have access to multiple sources of foreign and domestic crude oil
and benefit from crude oil input flexibility. Recent pipeline expansions,
including the new capacity of the Express Pipeline and expanded capacity on
the Interprovincial Pipeline, have served to increase the availability of
lower-cost crude oil to the Company's Illinois refineries. The two refineries
are connected by product pipelines, increasing flexibility relative to stand-
alone operations. The Company's product terminals allow efficient distribution
of refinery production through pipeline systems. The Company believes that the
Midwest location of these refineries provides relatively high refining margins
and less volatility than comparable operations located in other regions of the
U.S. on a historical basis principally because demand for refined products has
exceeded production in the region. This excess demand has historically been
satisfied by imports from other regions, providing Midwest refineries with a
transportation advantage.
Blue Island Refinery
The Blue Island refinery is located in Blue Island, Illinois, approximately
17 miles south of Chicago. The refinery is situated on a 170-acre site,
bounded by the town of Blue Island and the Calumet-Sag Canal. The facility was
initially constructed in 1945 and, through a series of improvements and
expansions, has reached a crude oil capacity of 75,000 bpd, although actual
average monthly throughput rates are sustained at levels in excess of rated
capacity during certain times of the year. Blue Island has among the highest
capabilities to produce gasoline relative to the other refineries in its
market area and through productivity initiatives has achieved the flexibility
to produce up to 60% RFG and some low-sulfur diesel fuel when market prices
warrant and based on the clean fuels attainment of Clark's total refining
system. During most of the year, gasoline is the most profitable refinery
product.
Since 1992, the Company has increased the crude oil throughput capability at
the Blue Island refinery by approximately 10,000 bpd, introduced light sour
crude oil as a lower-cost feedstock, improved the FCC unit operation and
introduced the capability to produce RFG.
The feedstocks and production of the Blue Island refinery for the years
ended December 31, 1994, 1995 and 1996 and the nine months ended September 30,
1996 and 1997 were as follows:
BLUE ISLAND REFINERY FEEDSTOCKS AND PRODUCTION
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994 1995(A) 1996(A) 1996 1997
------------ ------------ ------------ ------------ ------------
BBLS % BBLS % BBLS % BBLS % BBLS %
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
(BARRELS IN THOUSANDS)
FEEDSTOCKS
Light Sweet Crude Oil.. 20,780 71.3% 18,975 74.0% 21,203 84.2% 16,583 82.9% 15,163 75.2%
Light Sour Crude Oil... 7,120 24.5 6,318 24.6 3,860 15.3 3,045 15.2 4,649 23.1
Unfinished &
Blendstocks........... 1,233 4.2 347 1.4 132 0.5 379 1.9 341 1.7
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total.................. 29,133 100.0% 25,640 100.0% 25,195 100.0% 20,007 100.0% 20,153 100.0%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
PRODUCTION
Gasoline
Unleaded............... 12,571 43.7 12,737 50.1 12,497 50.9 10,107 51.1 10,572 52.4
Premium Unleaded....... 5,558 19.3 3,540 13.9 2,922 11.6 2,461 12.4 2,322 11.5
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
18,129 63.0 16,277 64.0 15,419 62.5 12,568 63.5 12,894 63.9
Other Products
Diesel Fuel............ 6,376 22.1 5,133 20.2 5,690 22.5 4,175 21.1 4,151 20.6
Others................. 4,293 14.9 4,016 15.8 3,755 15.0 3,047 15.4 3,114 15.5
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
10,669 37.0 9,149 36.0 9,445 37.5 7,222 36.5 7,265 36.1
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total.................. 28,798 100.0% 25,426 100.0% 24,864 100.0% 19,790 100.0% 20,159 100.0%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
Output/Day............. 78.9 69.7 68.0 72.2 73.8
</TABLE>
- --------
(a) Output during 1995 and 1996 was reduced by significant planned and
unplanned downtime.
53
<PAGE>
Hartford Refinery
The Hartford refinery is located in Hartford, Illinois, approximately 17
miles northeast of St. Louis. The refinery is situated on a 400-acre site. The
facility was initially constructed in 1941 and, through a series of
improvements and expansions, has reached a crude oil refining capacity of
approximately 65,000 bpd. The Hartford refinery includes a coker unit and,
consequently, has the ability to process a variety of crude oil including
lower cost, heavy sour crude oil into higher-value products such as gasoline
and diesel fuel. The Hartford refinery has the capability to process
approximately 50% heavy sour crude oil and 25% medium sour crude oil. This
upgrading capability allows the refinery to benefit from higher margins if
heavy sour crude oil is at a significant discount to light sweet crude oil.
Since 1992, the Company has increased the crude oil throughput capability at
the Hartford refinery by approximately 10,000 bpd, improved overall liquid
recovery by approximately 3%, improved FCC unit yields by approximately 3%,
increased higher-valued crude unit yields by approximately 2,000 bpd and
dramatically reduced combined "recordable" and "days away from work" rates
from 27 in 1990 to 4 in 1996.
The feedstocks and production of the Hartford refinery for the years ended
December 31, 1994, 1995 and 1996 and nine months ended September 30, 1996 and
1997 were as follows:
HARTFORD REFINERY FEEDSTOCKS AND PRODUCTION
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------------- --------------------------
1994(A) 1995 1996 1996 1997
------------ ------------ ------------ ------------ ------------
BBLS % BBLS % BBLS % BBLS % BBLS %
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
(BARRELS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FEEDSTOCKS
Light Sweet Crude Oil.. 6,037 26.2% 5,008 20.8% 3,725 15.5% 3,588 20.6% 1,991 10.7%
Light Sour Crude Oil... 7,696 33.4 13,520 56.0 19,588 81.4 13,793 79.1 11,035 59.6
Heavy Sweet Crude Oil.. -- -- -- -- -- -- -- -- 498 2.7
Heavy Sour Crude Oil... 8,800 38.2 4,960 20.6 179 0.7 7 0.0 3,666 19.8
Unfinished &
Blendstocks........... 506 2.2 637 2.6 567 2.4 50 0.3 1,341 7.2
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total.................. 23,039 100.0% 24,125 100.0% 24,059 100.0% 17,438 100.0% 18,531 100.0%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
PRODUCTION
Gasoline
Unleaded............... 9,777 43.6 11,497 47.2 10,882 44.9 7,714 44.0 9,014 48.8
Premium Unleaded....... 1,732 7.7 1,723 7.1 1,728 7.1 1,327 7.6 782 4.2
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
11,509 51.3 13,220 54.3 12,610 52.0 9,041 51.6 9,796 53.0
Other Products
High-Sulfur Diesel
Fuel.................. 7,801 34.8 8,090 33.2 8,950 36.9 6,513 37.1 5,773 31.3
Others................. 3,106 13.9 3,060 12.5 2,703 11.1 1,981 11.3 2,891 15.7
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
10,907 48.7 11,150 45.7 11,653 48.0 8,494 48.4 8,664 47.0
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total.................. 22,416 100.0% 24,370 100.0% 24,263 100.0% 17,535 100.0% 18,460 100.0%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
Output/Day............. 61.4 66.8 66.2 64.0 67.6
</TABLE>
- --------
(a) The 1994 results reflect maintenance turnaround downtime of approximately
one month on selected units.
Terminals and Pipelines
Refined products are distributed primarily through the Company's terminals,
company-owned and common carrier product pipelines and by leased barges over
the Mississippi, Illinois and Ohio rivers. The Company owns 14 product
terminals with a combined capacity of approximately 3.8 million barrels
throughout its upper Midwest market area. In addition to cost efficiencies in
supplying its retail network,
54
<PAGE>
the terminal distribution system allows efficient distribution of refinery
production. The Company also owns a crude oil and refined product terminal, a
refined products terminal and an LPG terminal with a combined capacity of
approximately 7.1 million barrels associated with the Port Arthur refinery in
Texas.
The Company enters into refined product exchange agreements with
unaffiliated companies to broaden its geographical distribution capabilities,
and products are also received through exchange terminals and distribution
points throughout the Central U.S.
The Company's pipeline interests, as of September 30, 1997, were as follows:
<TABLE>
<CAPTION>
PIPELINE TYPE INTEREST ROUTE
-------- ---- -------- -----
<S> <C> <C> <C>
Southcap Crude oil 36.0% St. James, LA to Patoka, IL
Chicap Crude oil 22.7 Patoka, IL to Mokena, IL
Clark Port Arthur Crude oil and products 100.0 Port Arthur and Beaumont, TX
Wolverine Products 9.5 Chicago, IL to Toledo, OH
West Shore Products 11.1 Chicago, IL to Green Bay, WI
</TABLE>
These pipelines operate as common carriers pursuant to published pipeline
tariffs, which also apply to use by the Company. The Company also owns a
proprietary refined products pipeline from the Blue Island refinery to its
terminal in Hammond, Indiana, and from the Port Arthur refinery to its LPG
terminal in Fannett, Texas. The Company has engaged an investment bank to
assist it in exploring the possibility of selling its interests in the
Southcap, Chicap, Wolverine and West Shore pipelines.
Supply and Distribution
The Company's integrated refining and marketing assets are strategically
located in the central U.S. in close proximity to a variety of supply and
distribution channels. As a result, the Company has the flexibility to acquire
economic domestic or foreign crude oil and has the ability to distribute its
products to its own system and to most domestic wholesale markets.
The Port Arthur refinery's Texas Gulf Coast location provides access to
numerous cost-effective domestic and international crude oil sources which can
be accessed by waterborne delivery or through the West Texas Gulf pipeline.
The Company's Illinois refineries are located on major inland water
transportation routes and are connected to various local, interstate and
Canadian common carrier pipelines. The Company has a minority interest in
several of these pipelines. The Blue Island refinery can receive Canadian
crude oil through the Lakehead Pipeline from Canada, foreign and domestic
crude oil through the Capline Pipeline system originating in the Louisiana
Gulf Coast region, and domestic crude oil originating in West Texas, Oklahoma
and the Rocky Mountains through the Arco Pipeline system. The Hartford
refinery has access to foreign and domestic crude oil supplies through the
Capline/Capwood Pipeline systems and access to Canadian crude oil through the
Express Pipeline and the Mobil/IPL pipeline system. Both refineries are
situated on major water transportation routes which provide flexibility to
receive crude oil or intermediate feedstocks by barge when economical.
The Company has several crude oil supply contracts that total approximately
100,000 bpd with several third-party suppliers including, P.M.I. Comercio
Internacional, S.A. de C.V., an affiliate of Petroleos Mexicanos, S.A. de
C.V.; Lagoven, an affiliate of Petroleos de Venezuela; and Gulf Canada. These
contracts are generally cancelable upon one to three months' notice by either
party, but are intended to remain in place for the foreseeable future. The
remainder of the Company's crude oil supply requirements are acquired on the
spot market from third-party foreign and domestic sources.
55
<PAGE>
In addition to gasoline, the Company's refineries produce other types of
refined products. No. 2 diesel fuel is used mainly as a fuel for diesel
burning engines. No. 2 diesel fuel production is moved via pipeline or barge
to the Company's 16 product terminals and is sold over the Company's terminal
truck racks or through refinery pipeline or barge movement. The Port Arthur
refinery produces jet fuel which is generally sold through pipelines. Other
production includes residual oils (slurry oil and vacuum tower bottoms) which
are used mainly for heavy industrial fuel (e.g., power generation) and in the
manufacturing of roofing flux or for asphalt used in highway paving. The
Company has agreements to sell to Chevron 24,000 bpd of gasoline and 1,000 bpd
of low-sulfur diesel from the Port Arthur refinery through February 28, 1999.
This contract is cancelable upon 90 days' notice by either party. The Company
supplies gasoline and diesel fuel to its retail system first, then distributes
products to its wholesale operations based on the highest average market
returns before being sold into the spot market.
The Company also has an agreement to exchange certain refined products and
chemicals with Chevron Chemical Company, which exchanged amounts averaged
approximately 25,000 bpd during 1995 and 1996. This contract is cancelable
upon 18 months' notice by either party or by mutual agreement.
The Port Arthur refinery's products can be sold in the Midcontinent and
Eastern U.S. as well as export markets. These markets can be accessed through
the Explorer, Texas Eastern and Colonial pipelines or by ship or barge. The
Company's Illinois refineries can distribute their products through various
common carrier and proprietary pipelines which connect the 14 Midwest product
terminals or by barge.
Inventory Management
The Company employs several strategies to minimize the impact on
profitability due to the volatility in feedstock costs and refined product
prices. These strategies generally involve the purchase and sale of exchange-
traded, energy-related futures and options with a duration of six months or
less. In addition, the Company to a lesser extent uses energy swap agreements
similar to those traded on the exchanges, such as crack spreads and crude oil
options, to better match the specific price movements in the Company's markets
as opposed to the delivery point of the exchange-traded contract. These
strategies are designed to minimize, on a short-term basis, the Company's
exposure to the risk of fluctuations in crude oil prices and refined product
margins. The number of barrels of crude oil and refined products covered by
such contracts varies from time to time. Such purchases and sales are closely
managed and subject to internally established risk standards. The results of
these hedging activities affect refining costs of sales and inventory costs.
The Company does not engage in speculative futures or derivative transactions.
The Company manages its total inventory position in a manner consistent with
a risk management policy which states that a normal operating inventory level
(base load) will not be offset using risk management techniques, while
material builds or draws from this normal level may be offset by appropriate
risk management strategies to protect against an adverse impact due to
unfavorable price moves. The Company's retail network also reduces overall
risk by providing ratable market sales which represent approximately 40% of
the refineries' gasoline production. In addition, the retail network benefits
from a reliable and cost-effective source of supply.
Due to the Port Arthur refinery's Gulf Coast location, the Company has the
opportunity to limit its exposure to price fluctuations on crude oil and
finished product production through the use of U.S. Gulf Coast-based energy
derivatives, such as forward futures and option contracts relating to Gulf
Coast crack spreads. There exists a market for Gulf Coast refinery crack
spreads based on published spot market product prices and exchange-traded
crude oil. Since the Company sells the majority of the Port Arthur refinery's
production into the Gulf Coast spot market, the Company believes that forward
future
56
<PAGE>
and option contracts related to crack spreads may be used effectively to hedge
refining margins. While the Company's hedging program is intended to provide a
more predictable profit margin on a portion of the Port Arthur refinery
production, the use of such a program could limit the Company's ability to
participate in an improvement in Gulf Coast crack spreads.
Clean Air Act/Reformulated Fuels
Under the Clean Air Act, the EPA promulgated regulations mandating low-
sulfur diesel fuel for all on-road consumers, and RFG for ozone non-attainment
areas, including Chicago, Milwaukee and Houston in the Company's direct market
area.
The Clean Air Act requires the EPA to review national ambient air quality
standards for certain pollutants every five years. In July 1997, after such a
review, the EPA adopted more stringent national standards for ground level
ozone (smog) and particulate matter (soot). These standards, when implemented,
are likely to increase significantly the number of nonattainment areas and
thus require additional pollution controls, more extensive use of RFG, and
possibly new diesel fuel standards. Efforts are being made to influence the
legislative branch to repeal the new standards under the Congressional Review
Act. A lawsuit filed by the U.S. Chamber of Commerce, the American Trucking
Association and the National Coalition of Petroleum Retailers is challenging
the implementation of these standards. As a result, it is too early to
determine what impact this rule could have on the Company.
Expenditures required to comply with reformulated fuels regulations are
primarily discretionary, subject to market conditions and economic
justification. The reformulated fuels programs impose restrictions on
properties of fuels to be refined and marketed, including those pertaining to
gasoline volatility, oxygenated content, detergent addition and sulfur
content. The regulations regarding these fuel properties vary in markets in
which the Company operates, based on attainment of air quality standards and
the time of the year. The Company's Port Arthur, Blue Island and Hartford
refineries have the capability to produce up to approximately 60%, 60%, and
25%, respectively, of their gasoline production in RFG. Each refinery's
maximum RFG production may be limited based on the clean fuels attainment of
Clark's total refining system. The Port Arthur refinery has the capability to
produce 100% low-sulfur diesel fuel.
Market Environment
The Company's feedstocks and refined products are principally commodities
and, as such, are significantly affected by a variety of factors beyond its
control, including the supply of, and demand for, crude oil, gasoline and
other refined products which, in turn, depend on, among other factors, changes
in domestic and foreign economies, weather conditions, political affairs,
crude oil production levels, the rate of industry investments, the
availability of imports, the marketing of competitive fuels and the extent of
government regulations.
The Company believes that it is well positioned to benefit from potential
long-term improvements in refining industry profitability. The Company
believes refining industry improvement may result from (i) increased demand
for gasoline and distillate fuel, (ii) domestic refinery crude oil
distillation utilization rates nearing maximum sustainable rates, (iii)
reduced growth in conversion capacity, and (iv) increased availability of
lower cost heavy sour crude oil. Conversion refers to the ability to extract
more higher valued products, such as gasoline and distillate fuel, out of the
same barrel of crude oil.
57
<PAGE>
The Company believes industry improvement has occurred since 1995 and
particularly in 1997 as indicated by the Company's record second and third
quarter EBITDA and improvement in certain key industry market indicators
listed in the table below:
<TABLE>
<CAPTION>
FOR THE
NINE MONTHS
ENDED
FOR THE YEAR SEPTEMBER
ENDED DECEMBER 31, 30,
----------------------- -----------
(IN DOLLARS PER BARREL)
1993 1994 1995 1996 1996 1997
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Gulf Coast 3/2/1........................... $2.85 $2.61 $2.38 $2.65 $2.64 $3.53
Chicago 3/2/1.............................. 3.40 3.86 3.14 4.02 4.18 4.53
Heavy sour crude oil discount.............. 6.40 4.75 4.03 4.78 4.75 5.63
Light sour crude oil discount.............. 1.60 0.95 1.02 1.24 1.06 1.71
</TABLE>
- --------
Source: Platt's
According to the U.S. Department of Energy, Energy Information
Administration ("EIA"), U.S. demand for gasoline and distillate fuel grew from
9.4 million bpd in 1980 to 11.3 million bpd in 1996, averaging growth of 1.3%
per year during this period. The Company believes this growth in U.S. demand
for gasoline and distillate fuel is principally due to increased economic
activity in the U.S. This growth reflects the expansion of the U.S. vehicle
fleet miles driven, increased seat-miles flown on U.S. airlines and reduced
improvement in vehicle miles per gallon due to consumer preference for light
trucks and sport-utility vehicles as indicated by statistics from the U.S.
Department of Transportation. The Company believes U.S. gasoline and
distillate fuel demand will continue to track U.S. economic activity.
Since 1980, U.S. crude oil distillation capacity decreased from 18.1 million
bpd to 15.3 million bpd in 1996, according to the Oil & Gas Journal, as 132
refineries closed between 1980 and 1996. However, during this period,
conversion capacity increased to meet the growing demand for transportation
fuels. From the early 1990s until 1996, growth in conversion capacity exceeded
demand growth. According to the Oil and Gas Journal and the American Petroleum
Institute, since the early 1990s, industry capital spending, especially non-
environmental capital spending, much of which was for increased conversion
capacity, has decreased as indicated in the table below. The Company believes
this decrease is due to reduced industry profitability caused by overcapacity.
The Company believes "excess" conversion capacity may have reached equilibrium
with demand in 1996.
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ---- ----
(IN BILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Total capital expenditures.................. $4.4 $6.1 $6.1 $5.4 $5.1 $4.9 $3.9
Environmental capital expenditures.......... 1.3 1.8 3.3 3.2 3.1 2.2 N/A
</TABLE>
According to the EIA, U.S. crude oil distillation utilization rates have
steadily increased from approximately 75% in 1980 to approximately 93% in
1996. The Company believes U.S. crude oil distillation utilization rates may
be approaching long-term sustainable maximums due to the requirement for
routine maintenance and the likelihood of unplanned downtime.
The Company believes that, due to the crude oil processing capabilities of
its refineries, it may benefit from increased availability of heavy sour crude
oil. Crude oil pipeline expansions into the U.S. Midwest in 1996 and 1997 have
increased the availability of Canadian heavy sour crude oil and thereby
improved competition for crude oil sales to Midwest refiners. Additionally,
industry studies indicate improved availability of heavy and light sour crude
oil over the next several years due to increased crude oil supply from several
Western Hemisphere sources, primarily Canada and Latin America.
58
<PAGE>
MARKETING
The Company markets gasoline and convenience products in ten Midwestern
states through a retail network of Company-operated stores and also markets
refined petroleum products through a wholesale program to distributors, chain
retailers and industrial consumers. Clark's retail presence is focused in the
Great Lakes region of the U.S. where Company-operated stores (813 as of
September 30, 1997) market value-oriented gasoline products, cigarettes and a
unique mix of On The Go(R) convenience products. The Company's wholesale
operation markets petroleum products in both the Midwest and Gulf Coast
regions of the U.S. In 1996, the Company sold approximately 1.0 billion
gallons of fuel and over $250 million of convenience products through
approximately 200 million retail transactions and sold an additional 1.1
billion gallons of fuel to wholesale customers ranging from Clark-branded
retailers to major transportation and commercial companies.
Retail Division
The Company's retail strategy is based on two primary objectives,
optimization and growth, and is intended to accomplish four strategic goals:
(i) optimize core market stores, (ii) realize value from nonstrategic stores,
(iii) grow earnings through acquisitions and new initiatives designed to
leverage existing expertise, product knowledge and market/brand strength, and
(iv) control operating and general and administrative expenses.
. Optimization. The retail division operating strategy centers around
optimizing the productivity of existing assets by maximizing overall gross
margin and controlling expenses. The Company believes that continued
improvements in existing processes and initiatives such as gasoline
pricing, growth of higher-margin premium gasoline grades and On The Go(R)
convenience product lines, and growth of other income/new concept
initiatives (such as lottery, money orders, fast food, car washes, etc.),
together with the proper management of controllable expenses, are the most
effective ways to improve core assets.
. Growth. In order to support its retail strategic objectives, the Company
performs thorough fundamental market analyses. The Company's analytical
system evaluates each existing and potential market to identify those that
it believes will produce the highest return on investment.
The retail division's optimization and growth strategy is consistent with
the Company's overall business strategy and includes the following key
elements:
. Improving Productivity. The retail division's goal is to achieve
significant productivity gains exclusive of external market factors.
Examples of key productivity initiatives include increasing gasoline and
convenience product sales volumes, improving gasoline pricing and shifting
product mixes to higher-margin products.
. Optimizing Capital Investments. Retail division capital expenditures are
linked to retail division earnings, with strict emphasis placed on
internally funding capital projects. Capital is primarily budgeted for
projects relating to environmental compliance plans and discretionary
productivity improvements.
. Promoting Entrepreneurial Culture. The retail division employs a
decentralized, team-oriented culture with training programs and employee
incentives designed to deliver premier customer service. The Company's
store managers have the flexibility to price gasoline and to select and
price convenience products, but also have the responsibility to achieve
acceptable results. The Company believes that customer satisfaction is
linked to employee satisfaction, and that its incentive systems and
feedback processes will contribute to the performance and motivation of its
workforce.
59
<PAGE>
In markets where the Company has a competitive strength on which to build or
where opportunities have been identified by preferred market analysis, the
Company will consider making opportunistic acquisitions to expand its market
share in existing markets as well as larger acquisitions to enter new markets.
The Company believes that continued growth through such acquisitions as the
122 stores acquired since 1994 contributes to building the Clark brand in core
markets. In markets where the Company has experienced value deterioration in
assets and the preferred market analysis has indicated no long-term market
potential exists, the Company will consider divesting retail locations if
favorable sale opportunities arise or if the Company determines the locations
would be more viable by conversion to branded jobber locations. The Company
sold 22 stores in early 1997 which were converted to branded jobber locations.
The Company is actively considering the sale of approximately 150 additional
stores in outlying noncore locations.
Retail Operations Overview
The Company's retail system began operations during the 1930s with the
opening of Old Clark's first store in Milwaukee, Wisconsin. Old Clark then
expanded throughout the Midwest. At its peak in the early 1970s, Old Clark had
more than 1800 retail stores and had established a strong market reputation
for the sale of high-octane gasoline at discount prices. In subsequent years,
Old Clark, in line with the general industry trends, rationalized its
operating stores by closing marginal locations. During the 1970s, the majority
of Old Clark's stores were dealer-operated. During the years 1973 through
1983, Old Clark assumed operation of most of its stores to ensure more direct
control of its marketing and distribution network.
As of September 30, 1997, the Company had 813 Company-operated retail
locations, all of which operated under the Clark brand name. The Company
believes a high proportion of Company-operated stores enables it to respond
more quickly and uniformly to changing market conditions than many of its
competitors, including major oil companies whose focus has generally been
operating their stores through dealer or jobber networks. Of these stores, 647
(80%) were located on Company-owned real estate and 166 (20%) were leased
locations.
Over the past several years, the Company has focused on building core
markets where it believes it can maintain or develop market share of 7.5% to
15% in order to leverage brand recognition, promotions and other marketing and
operating activities. In 1996, the Company's monthly gasoline sales per store
averaged 104,500 gallons, which exceeded the 1996 national industry average of
84,500 gallons, while monthly sales per square foot averaged approximately
$49.0 for convenience products versus the industry average of approximately
$24.0. The Company believes that it is in the first quartile in terms of
operating costs in its regions which provides it with an important competitive
advantage. Chicago, Central Illinois, Southern Michigan, Cleveland, Milwaukee
and Toledo are currently the Company's six highest volume core metropolitan
markets, with market shares of 5% to 18%. A current trend toward consolidation
in the refining and marketing sector is viewed positively by the Company due
to growth opportunities that may develop and the potential beneficial impact
that consolidation may have on longer term pricing.
Over the past few years the Company has also grown its market share in
several of its core markets through retail store acquisitions. In October
1994, the Company acquired 25 stores in metropolitan Chicago from State Oil
and in April 1995 acquired 35 stores in Central Illinois from Illico
Independent Oil Company. In 1996, the Company acquired four additional stores
from State Oil and 10 high-volume Chicago locations from Bell Fuels, Inc. The
latter acquisition increased the Company's market share in Chicago from
approximately 9% to 10%. In January 1997, the Company acquired 48 stores in
Southern Michigan from Silcorp, Ltd. This transaction increased the Company's
Southern Michigan market share from approximately 5% to 7%.
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Simultaneous with growing the Company's market share in core markets through
acquisitions, the Company continues to evaluate its remaining noncore markets
for possible divestiture. In the past few years, the Company has divested
approximately 100 stores in its Indiana, Kansas, Kentucky, Minnesota, Missouri
and Ohio markets. The Company is actively considering the sale of
approximately 150 stores in outlying noncore locations.
The geographic distribution of Company-operated retail stores by state as of
September 30, 1997, was as follows:
GEOGRAPHICAL DISTRIBUTION OF RETAIL STORES
<TABLE>
<S> <C>
Illinois............................................................. 267
Michigan............................................................. 210
Ohio................................................................. 144
Indiana.............................................................. 79
Wisconsin............................................................ 70
Missouri............................................................. 28
Other States (a)..................................................... 15
---
Total................................................................ 813
===
</TABLE>
- --------
(a) Iowa, Kentucky, Pennsylvania and West Virginia.
The Company also continues to optimize its retail stores through
productivity achieved from improved operations, profit-enhancing capital
expenditures and the addition of incremental new concept and other income
initiatives. From 1993 to 1996, the Company transformed the image of its
retail network by converting it from a 1950s look to a new vibrant color
scheme. In 1993, the Company initiated a strategy to increase the sales of On
The Go(R) products to reduce the Company's reliance on cigarette sales. This
was accomplished by remodeling store interiors and adding soda fountain
machines and interior beverage coolers. In an effort to continue to improve
gasoline volume, pricing and growth of higher-margin premium gasoline grades
and On The Go(R) convenience product lines, the Company continues to upgrade
the equipment for core market stores including canopies and multiple product
dispensers ("MPDs"). Currently, approximately 90% of stores have canopies and
approximately 70% of stores have MPDs. It is believed that MPDs improve
volumes and margins by enabling the Company to market a more profitable
midgrade gasoline product without the large capital expenditures required for
additional underground storage tanks. The installation of canopies enhances
gasoline volumes with better lighting and shelter from adverse weather
conditions. In 1996, the Company began adding "pay-at-the-pump" credit card
technology and as of September 30, 1997, had 66 locations with this service,
and will continue to evaluate the addition of similar technology at additional
locations, as well as other income initiatives, including car washes and
branded fast food.
As a result of the above initiatives and recent acquisitions, the Company
has, from 1992 to 1996, improved monthly fuel volume per store by 16% to
104,500 gallons, increased monthly convenience product sales per store by 33%
to $25,500, increased the mix of On The Go(R) convenience products from 32% to
42% of total convenience product sales, and improved monthly convenience
product gross margin per store by 47% to $6,600.
The Company has implemented a number of environmental projects at its retail
stores. These projects include the ongoing response to the September 1988
regulations that provided for a 10-year transition period through 1998, and
are related to the design, construction, installation, repair and testing of
underground storage tanks ("UST") and the requirement of the Clean Air Act to
install Stage II vapor recovery systems at certain retail stores. The Company
has UST leak detection devices
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installed at nearly all retail locations. Approximately 71% of current
locations meet the December 1998 federal UST compliance standards. In many
cases, state funds are available to cover a portion of the cost of complying
with the UST standards. The Company estimates that mandatory retail capital
expenditures for environmental and regulatory compliance for 1997 and 1998,
net of costs recovered from state funds, will be approximately $23.0 million.
Costs for complying with future regulations cannot be estimated.
Market Environment
The sale of gasoline at the retail level is considered a mature industry as
consumption has historically increased at 1% to 2% per year, and industry
studies indicate that many markets have reached saturation in terms of the
number of retail outlets and fuel dispensing capability. The retail markets in
which Clark operates are highly competitive. Many well-capitalized major oil
companies and numerous independent marketers have made substantial investments
in their retail assets. Historically, this competitive environment has caused
retail gasoline margins in the Company's Midwest markets to be among the
lowest in the country.
The Company believes that the increased sale of convenience products and
fast food and the expanded offering of other services like car washes and pay-
at-the-pump technology will be the primary avenues for individual site growth
in the industry. Industry studies also indicate that the retail markets have
been characterized by several significant trends including (i) increased
rationalization of stores and consolidation of companies, (ii) changing
consumer demand to emphasize convenience and value, (iii) the impact of
governmental regulations on product offerings and services, and (iv) during
1996 and 1997, unstable gasoline unit margins due to crude oil and related
wholesale and retail price volatility.
. Rationalization/Consolidation. During the past several years, major oil
companies have rationalized their retail systems to gain efficiencies.
These companies divested nonstrategic locations to focus on areas near
strategic supply sources, which has put a higher concentration of market
share in fewer geographic regions for many of these companies. In addition,
smaller operators have closed marginal and unprofitable locations due to
the investment requirements to meet the 1998 UST environmental compliance
deadline. More recently, oil companies and convenience store chains have
sought to consolidate through mergers, acquisitions and joint ventures. The
lack of availability of favorable new locations, the high cost of
construction of new facilities and the opportunity to achieve significant
cost reduction and brand building synergies make this attractive for many
companies.
. Changing Consumer Demand. Industry studies indicate that consumer buying
behavior continues to reflect the effect of increasing demands on consumer
time and money. Consumers have generally become time-constrained, value-
minded buyers who expect quality goods at reasonable prices.
. Government Regulations. The gasoline and convenience store industry is
subject to significant governmental regulations. The environmental
requirements for Stage II vapor recovery and UST upgrades have been
partially responsible for the closing of more than 22,000 retail stores or
close to 11% of U.S. outlets over the seven-year period of 1991 to 1997.
This trend is expected to continue through 1998. It is anticipated that
these regulations may also cause many companies with vehicle fleet programs
to abandon on-site fueling in favor of retail fueling. Most recently, the
Food and Drug Administration has initiated a series of regulations intended
to stop the sale of tobacco products to minors. Such regulations, if
enacted, may impact the way such tobacco products are marketed throughout
the country.
. Volatile Wholesale Costs. The volatility of crude oil and wholesale costs
can materially affect the profitability of retail gasoline operations.
Typically, there is a delay between changes in wholesale product costs and
changes in retail gasoline prices that prevents operators from
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maintaining stable gasoline margins. During periods of rapidly rising
wholesale costs, margins are usually compressed. Conversely, during periods
of falling wholesale costs, margins usually expand.
Wholesale Division
The Company's wholesale division strategy is to leverage its strengths in
the distribution and marketing of petroleum and On The Go(R) products to
create value through commercial relationships with minimal capital investment.
The wholesale division strategy is designed to create value by focusing on
distinct channels of trade and offering products and services that meet the
unique needs of targeted customers. Wholesale marketing can be divided into
four primary functions: (i) fuel sales to commercial and transportation end-
users, (ii) fuel sales to reseller-distributors, (iii) branded franchise
marketing, and (iv) new business franchise marketing.
The Company currently sells gasoline and diesel fuel on an unbranded basis
to approximately 500 distributors and chain retailers. The Company believes
these sales offer higher profitability than spot market alternatives.
Wholesale sales are also made to the transportation and commercial sectors,
including airlines, railroads, barge lines and other industrial end-users. In
1996, the Company continued growth of a new branded jobber program and as of
September 30, 1997, had 61 outlets owned and operated by branded jobbers. As
part of its new business franchise marketing initiative, the Company partnered
with a grocery chain to add four outlets on grocery store parking lots in late
1996 and 1997. The Company believes that a branded distributor program, new
business franchise marketing, and further focus on the transportation and
commercial sector offer significant opportunities for incremental sales
volumes and earnings in the future.
Fuel sales to all channels of trade focus on maximizing netback realizations
(revenue less all distribution and working capital investment costs). The
wholesale division continues to refine and integrate netback management tools
to identify the most attractive short-term sales opportunities as well as to
identify the most profitable markets over the long term. Channels of trade,
product, and market-specific strategies are continually refined and optimized
through this netback methodology. Efforts focus on improving returns and
optimizing the core Midwest system while expanding Gulf Coast marketing
activities around the supply of refined products available from the Port
Arthur refinery.
COMPETITION
The refining and marketing segment of the oil industry is highly
competitive. Many of the Company's principal competitors are integrated
multinational oil companies that are substantially larger and better known
than the Company. Because of their diversity, integration of operations,
larger capitalization and greater resources, these major oil companies may be
better able to withstand volatile market conditions, more effectively compete
on the basis of price and more readily obtain crude oil in times of shortages.
The principal competitive factors affecting the Company's refining division
are crude oil and other feedstock costs, refinery efficiency, refinery product
mix and product distribution and transportation costs. Certain of the
Company's larger competitors have refineries which are larger and, as a
result, could have lower per-barrel costs or high margins per barrel of
throughput. The Company has no crude oil reserves and is not engaged in
exploration and production activities. The Company obtains nearly all of its
crude oil requirements on the spot market from unaffiliated sources. The
Company believes that it will be able to obtain adequate crude oil and other
feedstocks at generally competitive prices for the foreseeable future.
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The principal competitive factors affecting the Company's retail marketing
division are locations of stores, product price and quality, appearance and
cleanliness of stores, brand identification and market share. Competition from
large, integrated oil and gas companies, as well as convenience stores which
sell motor fuel, is expected to continue. The principal competitive factors
affecting the Company's wholesale marketing business are product price and
quality, reliability and availability of supply and location of distribution
points.
THE OXY ADVANCE CRUDE OIL PURCHASE RECEIVABLE TRANSACTION
Pursuant to a merger agreement and a series of related agreements with
affiliates of Oxy in December 1995, the Company acquired the right to receive
the equivalent of 17.661 million barrels of WTI to be delivered over six years
according to a defined schedule. In connection with this transaction, Clark
USA issued common stock valued at approximately $120.0 million, or $20 per
share (6,000,000 shares), and paid $100.0 million in cash to Oxy. Clark USA
contributed the Oxy advance crude oil purchase receivable to the Company in
October 1996 and the Company sold the receivable for net cash proceeds of
$235.4 million.
ENVIRONMENTAL MATTERS
Compliance Matters
Operators of refineries and gasoline stores are subject to comprehensive and
frequently changing federal, state and local environmental laws and
regulations, including those governing emissions of air pollutants, discharges
of wastewater and stormwater, and the handling and disposal of nonhazardous
and hazardous waste. Federal, state and local laws and regulations
establishing numerous requirements and providing penalties for violations
thereof affect nearly all of the operations of the Company. Included among
such laws and regulations are the Clean Air Act, the Clean Water Act, the
Resource Conservation and Recovery Act and the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"). Also
significantly affecting the Company are the rules and regulations of the
Occupational Safety and Health Administration. Many of these laws authorize
the imposition of civil and criminal sanctions upon companies that fail to
comply with applicable statutory or regulatory requirements. As discussed
below, federal and state agencies have filed various enforcement actions
alleging that the Company has violated a number of environmental laws and
regulations. The Company nevertheless believes that, in all material respects,
its existing operations are in compliance with such laws and regulations.
The Company's operations are large and complex. The numerous environmental
regulations to which the Company is subject are complicated, sometimes
ambiguous, and often changing. In addition, the Company may not have detected
certain violations of environmental laws and regulations because the
conditions that constitute such violations may not be apparent. It is
therefore possible that certain of the Company's operations are not currently
in compliance with state or federal environmental laws and regulations.
Accordingly, the Company may be required to make additional expenditures to
comply with existing environmental requirements. Such expenditures, along with
fines or other penalties for noncompliance with environmental requirements,
could have a material adverse effect on the Company's financial condition,
results of operations, cash flow or liquidity.
Regulations issued by the EPA in 1988 with respect to USTs require the
Company, over a period of up to ten years, to install, where not already in
place, detection devices and corrosion protection on all USTs and piping at
its retail gasoline outlets. The regulations also require periodic tightness
testing of USTs and piping. Commencing in 1998, operators will be required
under these regulations to install continuous monitoring systems for
underground tanks. In order to bring its retail stores into compliance with
these regulations, the Company estimates that capital expenditures of
approximately $23 million, net of costs recovered from state funds, will be
required for 1997 and 1998. See "--Marketing" and "--Retail Operations
Overview."
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The Company anticipates that, in addition to expenditures necessary to
comply with existing environmental requirements, it will incur costs in the
future to comply with new regulatory requirements arising from recently
enacted statutes (such as the Clean Air Act requirements relating to operating
permits and the control of hazardous air pollutants) and possibly with new
statutory requirements.
The Company cannot predict what environmental legislation or regulations
will be enacted in the future or how existing or future laws or regulations
will be administered or interpreted with respect to products or activities to
which they have not previously been applied. Compliance with more stringent
laws or regulations, as well as more vigorous enforcement policies of the
regulatory agencies or stricter interpretation of existing laws which may
develop in the future, could have an adverse effect on the financial position
or operations of the Company and could require substantial additional
expenditures by the Company for the installation and operation of pollution
control systems and equipment. See "--Legal Proceedings."
Remediation Matters
In addition to environmental laws that regulate the Company's ongoing
operations, Clark's various operations also are subject to liability for the
remediation of contaminated soil and groundwater. Under CERCLA and analogous
state laws, certain persons may be liable as a result of the release or
threatened release of hazardous substances (including petroleum) into the
environment. Such persons include the current owner or operator of property
where such releases or threatened releases have occurred, any persons who
owned or operated such property during the time that hazardous substances were
released at such property, and persons who arranged for the disposal of
hazardous substances at such property. Liability under CERCLA is strict.
Courts have also determined that liability under CERCLA is, in most cases
where the government is the plaintiff, joint and several, meaning that any
responsible party could be held liable for all costs necessary for
investigating and remediating a release or threatened release of hazardous
substances. As a practical matter, liability at most CERCLA (and similar)
sites is shared among all the solvent "potentially responsible parties"
("PRPs"). The most relevant factors in determining the probable liability of a
party at a CERCLA site usually are the cost of investigation and remediation,
the relative amount of hazardous substances contributed by the party to the
site and the number of solvent PRPs. While the Company maintains property and
casualty insurance in the normal course of its business, such insurance does
not typically cover remediation and certain other environmental expenses.
The release or discharge of petroleum and other hazardous materials can
occur at refineries, terminals and retail stores. The Company has identified a
variety of potential environmental issues at its refineries, terminals and
retail stores. In addition, each refinery has areas on-site which may contain
hazardous waste or hazardous substance contamination and which may have to be
addressed in the future at substantial cost. Many of the terminals may also
require remediation due to the age of tanks and facilities and as a result of
current or past activities at the terminal properties including several
significant spills and past on-site waste disposal practices.
Legal and Governmental Proceedings
As a result of its activities, Clark is the subject of a number of legal and
administrative proceedings relating to environmental matters. While it is not
possible at this time to estimate the ultimate amount of liability with
respect to the environmental matters described below, the Company is of the
opinion that the aggregate amount of any such liability will not have a
material adverse effect on its financial position. However, an adverse outcome
of any one or more of these matters could have a material effect on quarterly
or annual operating results or cash flows when resolved in a future period.
Hartford Groundwater Contamination. In late 1990, Clark and other area oil
companies were contacted by the Illinois Environmental Protection Agency
("IEPA") and the Illinois Attorney General regarding the presence of gasoline
contamination in the groundwater beneath the northern portion of
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the Village of Hartford, Illinois. As a result, Clark installed and is
operating a gasoline vapor recovery system in Hartford. No claim has been
filed by the state authorities.
Hartford Pollution Control Board Litigation. On June 7, 1995, Clark was served
with a complaint entitled People of the State of Illinois v. Clark Refining &
Marketing, Inc. PCB No. 95-163. This matter was substantially settled in 1996
for $235,000. One issue concerning the exempt status of Clark's wastewater
treatment system is being submitted to an Administrative Law Judge on a
stipulation of facts. No estimate of any liability with respect to this
remaining element of the complaint can be made at this time.
Hartford FCCU. The EPA has alleged violations of the Clean Air Act, and
regulations promulgated thereunder, in the operation and permitting of the
Hartford refinery fluid catalytic cracking unit ("FCCU") and alleged
modification of the FCCU. On May 19, 1997, the EPA served a Notice of
Violation on Clark, alleging that Clark violated the Prevention of Significant
Deterioration ("PSD") requirements of the Clean Air Act by modifying the FCCU
without obtaining a PSD construction permit and installing the best available
control technology. The government has also requested additional information
from Clark. Clark submitted the requested information and is cooperating with
the government in its investigation. No estimate can be made at this time of
Clark's potential liability, if any, as a result of this matter.
Blue Island Federal Enforcement. The Blue Island refinery is the subject of
several federal investigations concerning potential violations of a number of
environmental laws and regulations as discussed below. On September 30, 1996,
the EPA served a Notice of Violation and a Finding of Violation on Clark,
alleging that Clark is in violation of the Clean Air Act national emission
standard for hazardous air pollutants for benzene, and that Clark was in
violation of certain detection and record keeping requirements issued pursuant
to the Illinois state implementation plan. On August 21, 1997, the EPA served
a Finding of Violation on Clark alleging that the sulfur recovery plant at the
Blue Island refinery is in violation of the federal New Source Performance
Standard for refineries. No estimate can be made at this time of Clark's
potential liability, if any, as a result of these matters. Between January and
August 1997, the Company received five demand letters from the EPA each
requesting different information about a variety of water pollution, air
pollution and solid waste management practices and procedures. On March 3,
1997, the EPA initiated a multimedia investigation at the Blue Island
refinery. The investigation is proceeding in stages, including on-site visits
and requests for information. The Company is cooperating fully and has
responded to all requests. On March 25, 1997, Clark received a Grand Jury
subpoena requesting certain documents relating to wastewater discharges. Clark
is cooperating fully and has produced the documents responsive to the subpoena
and a subsequent supplemental subpoena. No estimate can be made whether any
potential for liability exists as a result of these investigations. However,
the results of these investigations may require significant capital
expenditures and may also result in fines and other penalties imposed on the
Company.
Blue Island State Enforcement. State authorities have also charged the Blue
Island refinery with numerous violations of environmental laws. People ex rel
Ryan v. Clark Refining & Marketing, Inc., Cir. Ct. Cook County, III., Case No.
95-CH-2311, is currently pending in the Circuit Court of Cook County,
Illinois. The first count of this lawsuit concerns a fire that occurred in the
Isomax unit at the Blue Island refinery on March 13, 1995, in which two
employees were killed and three other employees were injured. The second count
concerns a release of hydrogen fluoride ("HF") on May 16, 1995 from a catalyst
regeneration portion of the HF unit. At the request of the Illinois Attorney
General, and with Clark's consent, the Circuit Court of Cook County, Illinois
entered an order requiring Clark to implement certain HF release mitigation
and detection measures that are substantially complete. The next three counts
of the lawsuit concern releases into the air that occurred in the past three
years at the Blue Island refinery. One of those air emissions, which occurred
on October 7, 1994, is also the basis for Rosolowski, et al v. Clark Refining
& Marketing, Inc., Cir. Ct. Cook County, Ill., Case No. 95-L-01 4703.
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See "--Legal Proceedings." The next five counts of the lawsuit concern several
alleged releases of process wastewater and contaminated stormwater to the Cal
Sag Channel from the Blue Island refinery. Clark has filed an Answer denying
the material allegations in the lawsuit. Following an explosion on October 19,
1996, in a propane gas line at the Blue Island refinery, the State of Illinois
brought an action seeking a temporary restraining order requiring the refinery
to cease operations temporarily, pending a safety review. On November 8, 1996,
the court denied the requested order. No estimate of any liability with
respect to this matter can be made at this time.
On September 17, 1997, a crude oil tank experienced a leak resulting in the
discharge of crude oil and on November 2, 1997, gasoline leaked from a product
tank into the diked area around the tank. Both tanks were taken out of service
for inspection and repair and Clark notified appropriate government agencies.
On November 7, 1997, state authorities met with Clark to discuss these
incidents and overall storage tank inspection matters. These discussions are
ongoing and no estimate can be made of any liability with respect to the
outcome of the discussions at this time.
Ninth Avenue Site. On January 5, 1995, Clark received a Unilateral
Administrative Order from the EPA pursuant to CERCLA alleging that "Clark Oil
& Refining Corp." is a PRP with respect to shipments of hazardous substances
to a solid waste disposal site known as the Ninth Avenue Site, Gary, Indiana.
The alleged shipments all occurred prior to 1987. The Order instructs Clark
and the other approximately ninety PRPs to design and implement certain
remedial work at the site. Clark has informed the EPA that it is not a proper
party to this matter, because its purchase of certain assets of Old Clark was
"free and clear" of all Old Clark liabilities. Information provided with the
Order estimates that the remedial work may cost approximately $25 million,
although the cost could substantially exceed this estimate. No estimate of
Clark's liability can be made with respect to this proceeding at this time. In
addition, on December 28, 1994, Clark was served with a summons and complaint
brought by certain private parties seeking to recover all past and future
response costs with respect to the Ninth Avenue Site. Clark, along with
approximately eighty other parties, is alleged to be a PRP with respect to
that site on the basis of shipments of hazardous substances allegedly made
prior to 1987. Clark moved for summary judgment on the basis, among others,
that the action is barred by the "free and clear" order pursuant to which
Clark purchased certain assets of Old Clark. Clark's motion is pending. No
estimate of any liability with respect to this case can be made at this time.
St. Louis Terminal. In January 1994, a gasoline spill occurred at the Clark
St. Louis terminal. On April 13, 1995, Clark was served with two Grand Jury
Records Subpoenas issued by the Office of the United States Attorney in St.
Louis. In April 1997, the Company was advised of the termination of the United
States Attorney's investigation. In May 1997, the Company received
correspondence from the State of Missouri seeking to resolve any dispute
arising from the events of January 1994 and seeking the payment of a penalty
of less than $200,000.
Sashabaw Road. On May 5, 1993 Clark received correspondence from the Michigan
Department of Natural Resources ("MDNR") indicating that the MDNR believes
that Clark may be a PRP in connection with groundwater contamination in the
vicinity of one of its retail stores in the Sashabaw Road area north of
Woodhull Lake and Lake Oakland, Oakland County, Michigan. On July 22, 1994,
MDNR commenced suit against Clark and is currently seeking $300,000 to resolve
the matter. No estimate of any liability with respect to this matter can be
made at this time.
Port Arthur Refinery. The original refinery on the site of the Port Arthur
refinery began operating in 1904, prior to modern environmental laws and
methods of operation. While the Company believes, as a result, that there is
extensive contamination at the site, the Company is unable to estimate the
cost of remediating such contamination. Under the purchase agreement between
the Company and Chevron, Chevron will be obligated to perform the required
remediation of most pre-closing contamination, but the Company assumed
responsibility for environmental contamination beneath and within 25 to 100
feet of the facility's active processing units. Based on the estimates of
independent environmental consultants, the Company accrued approximately $7.5
million as part of the Port Arthur refinery acquisition for its cost of
remediation in this area. In addition, as a result of the acquisition,
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Clark may become jointly and severally liable under CERCLA for the costs of
investigation and remediation at the site. In the event that Chevron is unable
(as a result of bankruptcy or otherwise) or unwilling to perform the required
remediation at the site, Clark may be required to do so. The cost of any such
remediation could be substantial and could be beyond the Company's financial
ability. On June 24, 1997, Clark, Chevron and the State of Texas entered into
an Agreed Order that substantially confirms the relative obligations of Clark
and Chevron.
As of September 30, 1997, the Company has accrued a total of $15.8 million
for environmental-related obligations that may result from the matters noted
above and obligations associated with certain retail sites.
EMPLOYEES
As of September 30, 1997, the Company employed approximately 7,900 people,
approximately 1,000 of whom were covered by collective bargaining agreements
at the Blue Island, Hartford and Port Arthur refineries. The Hartford and Port
Arthur refinery contracts expire in February 1999 and the Blue Island refinery
contract expires in August 1999. In addition, the Company has union contracts
for certain employees at its Hammond, Indiana, and St. Louis, Missouri,
terminals which expire March 31, 1998, and March 5, 1998, respectively.
Relationships with the unions have been good and neither Old Clark nor the
Company has ever experienced a work stoppage as a result of labor
disagreements.
LEGAL PROCEEDINGS
Hartford Groundwater. Clark was named as the defendant in numerous lawsuits
filed in December 1991 in the Circuit Court of the Third Judicial District,
Madison County, Illinois, by plaintiff residents and property owners in the
Village of Hartford, Illinois. These suits sought damages for the presence of
gasoline in the soil and groundwater beneath plaintiff's properties. See
"Business; Properties--Environmental Matters." After many of these suits were
dismissed, the remaining suits were settled by Clark and the Shell Oil Company
at a total cost to Clark of less than $150,000.
Rosolowski et al v. Clark Refining & Marketing, Inc., et al. Cir. Ct. Cook
County, III., Case No. 95-L-014703, is a purported class action lawsuit, filed
on October 11, 1995, relating to an on-site electrical malfunction at Clark's
Blue Island refinery on October 7, 1994, which resulted in the release to the
atmosphere of used catalyst containing low levels of heavy metals, including
antimony, nickel and vanadium. This release resulted in the temporary
evacuation of certain areas near the refinery, including a high school, and
approximately 50 people were taken to area hospitals. Clark was previously
sued by one individual who claimed medical costs as a result of the incident;
that case was settled. The purported class action lawsuit was filed on behalf
of various named individuals and purported plaintiff classes, including
residents of Blue Island, Illinois, and students at Eisenhower High School,
alleging claims based on common law nuisance, negligence, willful and wanton
negligence and the Illinois Family Expense Act as a result of this incident.
Plaintiffs seek to recover damages in an unspecified amount for alleged
medical expenses, diminished property values, pain and suffering and other
damages. Plaintiffs also seek punitive damages in an unspecified amount.
Other Blue Island tort cases, alleging various losses due to emissions from
the Blue Island refinery were filed in September and October, 1996. These
cases, Boucher v. Clark Refining & Marketing, Inc.; Loranger v. Clark Refining
& Marketing, Inc.; Marciano v. Clark Refining & Marketing, Inc.; and Webb v.
Clark Refining & Marketing, Inc. all brought by named individuals, seek
damages of less than $100,000 each.
EEOC v. Clark Refining & Marketing, Inc., Case No. 94 C 2779, is currently
pending in the United States District Court for the Northern District of
Illinois. In this action, the Equal Employment Opportunity Commission (the
"EEOC") has alleged that Clark engaged in age discrimination in
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violation of the Age Discrimination in Employment Act through a "pattern and
practice" of discrimination against a class of former retail managers over the
age of forty. The EEOC has identified 40 former managers it believes have been
affected by the alleged pattern and practice. However, two of those managers
have since been dismissed from the case. The relief sought by the EEOC
includes reinstatement or reassignment of the individuals allegedly affected,
payment of back wages and benefits, an injunction prohibiting employment
practices which discriminate on the basis of age and institution of practices
to eradicate the effects of any past discriminatory practices.
On May 5, 1997, a complaint, entitled AOC L.P. et al., vs. TrizecHahn
Corporation, et al., Case No. 97 CH 05543, naming Clark USA as a defendant was
filed in the Circuit Court of Cook County, Illinois. The Complaint seeks $21
million, plus continuing interest, related to the sale of equity by Clark USA
to finance the Port Arthur refinery acquisition. The plaintiff alleges that
sale of such equity triggered a contingent payment to AOC L.P. (the "AOC L.P.
Contingent Payment") pursuant to the agreement related to the December 1992
purchase and redemption of its minority interest. Clark USA believes no
payment is required. The AOC L.P. Contingent Payment is an amount which will
not exceed in the aggregate $33.9 million and is contractually payable 89% by
Clark USA and 11% by TrizecHahn. TrizecHahn has indemnified Clark USA for any
AOC L.P. Contingent Payment in excess of $7 million.
On May 23, 1995, Clark was served with a Petition entitled Anderson, et al
v. Chevron and Clark, filed in Jefferson County, Texas, by 24 individual
plaintiffs who were Chevron employees and who did not receive offers of
employment from Clark at the time of the purchase of the Port Arthur Refinery.
Chevron and the outplacement service retained by Chevron are also named as
defendants. An Amended Petition has now been filed increasing the number of
plaintiffs to 40. Clark filed an Answer denying all material allegations of
the Amended Petition. Subsequent to the filing of the lawsuit, the plaintiffs
have each filed individual charges with the EEOC and the Texas Commission of
Human Rights.
While it is not possible at this time to estimate the ultimate amount of
liability with respect to the legal proceedings described above, the Company
is of the opinion that the aggregate amount of any such liability will not
have a material adverse effect on its financial position; however, an adverse
outcome of any one or more of these matters could have a material effect on
quarterly or annual operating results or cash flows when resolved in a future
period.
The Company is also the subject of various environmental and other
governmental proceedings. See "Business; Properties--Environmental Matters."
In addition to the specific matters discussed above or under "Business;
Properties--Environmental Matters," the Company has also been named in various
other suits and claims. While it is not possible to estimate with certainty
the ultimate legal and financial liability with respect to these other legal
proceedings, the Company believes the outcome of these other suits and claims
will not have a material adverse effect on the Company's financial position,
operating results or cash flow.
69
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors, executive officers, Controller, Treasurer and Secretary of
the Company and their respective ages and positions are set forth in the table
below.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Paul D. Melnuk...... 43 President, Chief Executive Officer and Chief Operating
Officer; Director
Bradley D. Aldrich.. 43 Executive Vice President--Refining
Brandon K. 39 Executive Vice President--Marketing
Barnholt...........
Maura J. Clark...... 39 Executive Vice President--Corporate Development and
Chief Financial Officer
Edward J. Stiften... 43 Executive Vice President, Chief Administrative Officer
Marshall A. Cohen... 62 Director
David A. Stockman... 51 Director
John R. Woodard..... 33 Director
David I. Foley...... 30 Director
Dennis R. Eichholz.. 44 Controller and Treasurer
Katherine D. 40 Secretary
Knocke.............
</TABLE>
The board of directors of the Company currently consists of five directors
who serve until the next annual meeting of stockholders or until a successor
is duly elected. Directors do not receive any compensation for their services
as such. Executive officers of the Company serve at the discretion of the
board of directors of the Company.
Paul D. Melnuk has served as a director of the Company since October 1992,
as President and Chief Executive Officer of the Company since July 1992, as
Chief Operating Officer of the Company since December 1991, as President of
the Company from February 1992 through July 1992, as Executive Vice President
of the Company from December 1991 through February 1992, and has served in
various other capacities since November 1988. Mr. Melnuk has served as a
director and as President of Clark USA since September 1992, and as Vice
President and Treasurer of Clark USA from November 1988 through September
1992. Mr. Melnuk served as a director of TrizecHahn from March 1992 through
November 1996. Mr. Melnuk served as President and Chief Operating Officer of
TrizecHahn from March 1992 through April 1994, and as Executive Vice President
and Chief Financial Officer of TrizecHahn from May 1990 through February 1992.
Bradley D. Aldrich has served as Executive Vice President--Refining, since
December 1994. From August 1991 through November 1994, Mr. Aldrich served as
Vice President, Supply & Distribution for CF Industries, Inc., a chemical
fertilizer manufacturer and distributor. Mr. Aldrich previously served as
Manager, Light Oil Supply-North America of Conoco, Inc. from August 1989
through July 1991.
Brandon K. Barnholt has served as Executive Vice President--Marketing, since
February 1995, and served as Executive Vice President--Retail Marketing from
December 1993 through February 1995, as Vice President--Retail Marketing from
July 1992 through December 1993, and as Managing Director--Retail Marketing
from May 1992 through July 1992. Mr. Barnholt previously served as Retail
Marketing Manager of Conoco, Inc. from March 1991 through March 1992.
Maura J. Clark has served as Executive Vice President--Corporate Development
and Chief Financial Officer of the Company and Clark USA since August 1995.
Ms. Clark previously served as Vice President--Finance at North American Life
Assurance Company, a financial services company, from September 1993 through
July 1995. From May 1990 to September 1993, Ms. Clark served as
70
<PAGE>
Vice President--Corporate Finance and Corporate Development of North American
Trust Company (formerly First City Trust Company), a subsidiary of North
American Life Assurance Company.
Edward J. Stiften joined the Company in March 1997 as Executive Vice
President, Chief Administrative Officer. Mr. Stiften was previously in private
business from June 1995 through March 1997. Mr. Stiften served as Subsidiary
Executive Vice President and Acting General Manager of General Dynamics, Inc.
from October 1994 through May 1995, as Corporate Staff Vice President of
Internal Audit from February 1994 through October 1994 and as Corporate Staff
Vice President--Financial Analysis from December 1991 through January 1994.
Marshall A. Cohen has served as a director of the Company since November 3,
1997. Mr. Cohen has served as Counsel at Cassels Brook & Blackwell since
October 1996. Mr. Cohen previously served as President and Chief Executive
Officer of The Molson Companies Limited from November 1988 to September 1996.
David A. Stockman has served as a director of the Company since November 3,
1997. Mr. Stockman has been a member of the general partner of Blackstone
Group Holdings L.P. since 1988. Mr. Stockman is also a Co-Chairman of the
board of directors of Collins & Aikman Corporation and a director of Haynes
International, Inc. and Bar Technologies Inc.
John R. Woodard has served as a director of the Company since November 3,
1997. Mr. Woodard joined The Blackstone Group L.P. as a Managing Director in
1996. Prior thereto, he was a Vice President at Vestar Capital Partners from
1990 to 1996. He is a member of the board of directors of Prime Succession,
Inc.
David I. Foley has served as a director of the Company since November 3,
1997. Mr. Foley is an Associate at The Blackstone Group L.P., which he joined
in 1995. Prior to joining Blackstone, Mr. Foley was a member of AEA Investors,
Inc. and The Monitor Company. He currently serves on the board of directors of
Rose Hills Company.
Dennis R. Eichholz, who joined Clark in November 1988, has served as Vice
President--Controller of the Company and Controller and Treasurer of Clark USA
since February 1995. Mr. Eichholz has served as Vice President-Treasurer of
Clark since December 1991.
Katherine D. Knocke has served as Secretary of the Company and Clark USA
since April 1995. Ms. Knocke has served as in-house counsel of Clark since
August 1994. Ms. Knocke previously was employed as an associate with the St.
Louis law firm of Armstrong, Teasdale, Schlafly & Davis from September 1989
through August 1994.
Except as described above, there are no arrangements or understandings
between any director or executive officer and any other person pursuant to
which such person was elected or appointed as a director or executive officer.
There are no family relationships between any director or executive officer
and any other director or executive officer.
71
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth all cash compensation paid by the Company to
its Chief Executive Officer and its other executive officers whose total
annual compensation exceeded $100,000 for each of the years in the three-year
period ended December 31, 1996.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
------------------------ OTHER ANNUAL COMPENSATION ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS OPTION COMPENSATION(A)
- --------------------------- ---- --------- --------- ------------ ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Paul D. Melnuk........... 1996 $ 325,000 $ 130,000 -- -- $ 6,816
President and Chief 1995 326,836 75,000 -- 100,000(b) 5,479
Executive Officer 1994 325,893 150,000 -- -- 7,528
Bradley D. Aldrich....... 1996 211,779 47,500 -- -- 6,849
Executive Vice President 1995 176,224 42,500 -- 130,000(b)(c) --
--Refining 1994 6,731 60,000 -- -- --
Brandon K. Barnholt...... 1996 211,799 87,500 -- -- 6,802
Executive Vice President 1995 176,273 75,000 -- 50,000(b) 5,329
--Marketing 1994 171,846 100,000 -- -- 8,330
Maura J. Clark (d)....... 1996 36,779 47,500 -- -- --
Executive Vice President 1995 -- -- -- -- --
--Corporate Development 1994 -- -- -- -- --
and Chief Financial
Officer
</TABLE>
- --------
(a) Represents amount accrued for the account of such individuals under the
Company's Retirement Savings Plan (the "Savings Plan").
(b) Options issued pursuant to the Performance Plan as described below.
(c) Mr. Aldrich and Mr. Barnholt (granted in 1993) hold options to acquire
TrizecHahn Subordinate Voting Shares ("TrizecHahn Shares") received as
compensation from TrizecHahn for services performed for the Company under
the TrizecHahn Amended and Restated 1987 Stock Option Plan (the
"TrizecHahn Option Plan").
(d) In 1995 and 1996, Ms. Clark was an employee of TrizecHahn and served the
Company under a management consulting arrangement. Ms. Clark earned
approximately $175,000 in 1996 and $117,000 in 1995 under such
arrangement. As of January 1, 1997, Ms. Clark became an employee of the
Company. The amounts reflected in this table are for 1996 compensation
paid by the Company in 1997.
STOCK OPTIONS GRANTED DURING 1996
There were no options granted during 1996 to the named executive officers
under the Performance Plan (as defined) for services performed for the
Company.
YEAR-END OPTION VALUES
The following table sets forth information with respect to the number and
value of unexercised options to purchase common stock of Clark USA and
TrizecHahn Shares held by the executive officers named in the executive
compensation table as of December 31, 1996.
<TABLE>
<CAPTION>
SHARES ACQUIRED VALUE OF
ON EXERCISE VALUE NUMBER OF UNEXERCISED
DURING REALIZED UNEXERCISED IN-THE-MONEY
YEAR ENDED ON OPTIONS HELD OPTIONS HELD AT
NAME DECEMBER 31, 1996 EXERCISE AT DECEMBER 31, 1996 DECEMBER 31, 1996(A)
---- ----------------- -------- ------------------------- -------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Paul D. Melnuk(b)....... -- $ -- -- 100,000 $ -- $700,000
Bradley D. Aldrich...... -- -- 33,333 96,667 289,000 789,000
Brandon K. Barnholt..... 20,000 $184,700 70,000 50,000 742,000 350,000
</TABLE>
- --------
(a) For the TrizecHahn Shares the value is based upon the closing price on the
New York Stock Exchange--Composite Transactions on December 31, 1996. For
the common stock of Clark USA the value is based on the issuance price in
the Oxy Transaction and the Gulf Transaction.
(b) Mr. Melnuk also holds options to acquire TrizecHahn Shares received as
compensation for services provided to TrizecHahn.
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<PAGE>
SHORT-TERM PERFORMANCE PLAN
Employees of the Company participate in an annual incentive plan which
places at risk an incremental portion of their total compensation based on
Company, business unit and/or individual performance. The targeted at-risk
compensation increases with the ability of the individual to affect business
performance, ranging from 12% for support personnel to 200% for the Chief
Executive Officer. The other executive officers have the opportunity to earn
an annual incentive equal to 150% of the individual's base salary. The actual
award is determined based on financial performance as measured by return on
equity with individual and executive team performance evaluated against pre-
established operating objectives designed to achieve planned financial
results. For essentially all other employees, annual incentives are based on
specific performance indicators utilized to operate the business, principally
productivity and profitability measures.
LONG-TERM PERFORMANCE PLAN
The Company has adopted a Long-Term Performance Plan (the "Performance
Plan"). Under the Performance Plan, designated employees, including executive
officers, of the Company and its subsidiaries and other related entities are
eligible to receive awards in the form of stock options, stock appreciation
rights and stock grants. The Performance Plan is intended to promote the
growth and performance of the Company by encouraging employees to acquire an
ownership interest in the Company and to provide incentives for employee
performance. An aggregate of 1,250,000 shares of Common Stock may be awarded
under the Performance Plan, either from authorized, unissued shares which have
been reserved for such purpose or from shares purchased on the open market,
subject to adjustment in the event of a stock split, stock dividend,
recapitalization or similar change in the outstanding common stock of Clark
USA. As of September 30, 1997, 549,000 stock options have been issued under
the Performance Plan.
The Performance Plan is administered by the board of directors' Compensation
Committee of Clark USA. Subject to the provisions of the Performance Plan, the
Compensation Committee is authorized to determine who may participate in the
Performance Plan and the number and types of awards made to each participant,
and the terms, conditions and limitations applicable to each award. Awards may
be granted singularly, in combination or in tandem. Subject to certain
limitations, the board of directors is authorized to amend, modify or
terminate the Performance Plan to meet any changes in legal requirements or
for any other purpose permitted by law.
Payment of awards may be made in the form of cash, stock or combinations
thereof and may include such restrictions as the Compensation Committee shall
determine, including, in the case of stock, restrictions on transfer and
forfeiture provisions. The price at which shares of Common Stock may be
purchased under a stock option may not be less than the fair market value of
such shares on the date of grant. If permitted by the Compensation Committee,
such price may be paid by means of tendering Common Stock, or surrendering
another award, including restricted stock, valued at fair market value on the
date of exercise, or any combination thereof. Further, with Compensation
Committee approval, payments may be deferred, either in the form of
installments or as a future lump sum payment. Dividends or dividend equivalent
rights may be extended to and made part of any award denominated in stock,
subject to such terms, conditions and restrictions as the Compensation
Committee may establish. At the discretion of the Compensation Committee, a
participant may be offered an election to substitute an award for another
award or awards of the same or different type. Stock options initially have a
10-year term with a three-year vesting schedule and are not exercisable until
Clark USA's Common Stock is publicly traded.
If the employment of a participant terminates, subject to certain exceptions
for retirement, resignation, death or disability, all unexercised, deferred
and unpaid awards will be canceled
73
<PAGE>
immediately, unless the award agreement provides otherwise. Subject to certain
exceptions for death or disability, or employment by a governmental,
charitable or educational institution, no award or other benefit under the
Performance Plan is assignable or transferable, or payable to or exercisable
by, anyone other than the participant to whom it was granted.
In the event of a "Change of Control" of the Company, Clark USA or
TrizecHahn (as defined in the Performance Plan), with respect to awards held
by Performance Plan participants who have been employed by the Company for at
least six months, (a) all stock appreciation rights which have not been
granted in tandem with stock options will become exercisable in full, (b) the
restrictions applicable to all shares of restricted stock will lapse and such
shares will be deemed fully vested, (c) all stock awards will be deemed to be
earned in full, and (d) any participant who has been granted a stock option
which is not exercisable in full will be entitled, in lieu of the exercise of
such stock options, to obtain cash payment in an amount equal to the
difference between the option price of such stock option and the offer price
(in the case of a tender offer or exchange offer) or the value of common stock
covered by such stock option, determined as provided in the Performance Plan.
Under the Performance Plan, a "Change in Control" includes, without
limitation, with respect to the Company, Clark USA or TrizecHahn, (i) the
acquisition (other than by TrizecHahn) of beneficial ownership of 25% or more
of the voting power of its outstanding securities without the prior approval
of at least two-thirds of its directors then in office, (ii) a merger,
consolidation, proxy contest, sale of assets or reorganization which results
in directors previously in office constituting less than a majority of its
directors thereafter, or (iii) any change of at least a majority of its
directors during any period of two years. The Blackstone Transaction has
triggered the Change of Control provision under the Performance Plan. The
Company does not expect that the Change of Control will have a material impact
on the Performance Plan.
Blackstone intends to put in place a management incentive program designed
to increase management's ownership of Clark USA stock through direct purchases
and options tied to the financial performance of the Company.
CLARK SAVINGS PLAN
The Clark Savings Plan, which became effective in 1989, permits employees to
make before-tax and after-tax contributions and provides for employer
incentive matching contributions. Under the Savings Plan, each employee of the
Company (and such other related companies as may adopt the Savings Plan) who
has completed at least six months of service may become a participant.
Participants are permitted to make before-tax contributions to the Savings
Plan, effected through payroll deduction, of from 1% to 15% of their
compensation. The Company makes matching contributions equal to 200% of a
participant's before-tax contributions up to 3% of compensation. Participants
are also permitted to make after-tax contributions through payroll deduction,
of from 1% to 5% of compensation, which are not matched by employer
contributions; provided that before-tax contributions and after-tax
contributions, in the aggregate, may not exceed the lesser of 15% of
compensation or $9,500 in 1997. All employer contributions are vested at a
rate of 20% per year of service, becoming fully vested after five years of
service. Amounts in employees' accounts may be invested in a variety of
permitted investments, as directed by the employee, including TrizecHahn
Shares. Participants' vested accounts are distributable upon a participant's
disability, death, retirement or separation from service. Subject to certain
restrictions, employees may make loans or withdrawals of employee
contributions during the term of their employment.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Compensation of the Company's executive officers has historically been
determined by the Company's board of directors. Mr. Melnuk, the Company's
President and Chief Executive Officer, is a
74
<PAGE>
member of the Company's board of directors. Other than reimbursement of their
expenses, the Company's directors do not receive any compensation for their
services as directors. There are no interlocks between the Company and other
entities involving the Company's executive officers and board members who
serve as executive officers or board members of other entities, except with
respect to Blackstone.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with four of its senior
executives (the "Executive Employment Agreements") and a change of control
agreement with one of its senior executives (the "Change of Control
Agreement"). The Executive Employment Agreements have five-year terms, and
provide for automatic extension on an annual basis unless 90 days' notice of
cancellation is given by either party. The Executive Employment Agreements
provide that if a Change of Control occurs within two years prior to the
scheduled expiration date, then the expiration date will be automatically
extended until the second anniversary of the Change of Control date. The
Blackstone Transaction constitutes a Change of Control under the Executive
Employment Agreements and the Change of Control Agreement.
During the term of the Executive Employment Agreements, the employee is
precluded from soliciting or encouraging proposals regarding the acquisition
of Clark USA or its subsidiaries (or of another material part of the business
of Clark USA), absent explicit approval of the Chief Executive Officer of the
Company.
The Executive Employment Agreements provide separation benefits to the
employee if the employee's employment is terminated by the Company without
"Cause" prior to the expiration date of the agreement. "Cause" is defined to
include the employee's failure to substantially perform his or her duties,
willful misconduct that materially injures Clark USA or its affiliates, or
conviction of a criminal offense involving dishonesty or moral turpitude. The
Executive Employment Agreements also provide that if the employee resigns for
"Good Reason" prior to the expiration date of the agreement, the employee will
receive separation benefits. "Good Reason" is defined to include certain
demotions, reductions in compensation, and relocation.
The separation benefits payable under the Executive Employment Agreements
generally include a lump sum payment of three times annual salary and bonus,
acceleration of stock option exercisability, continuation of the Company's
life, medical, accident and disability arrangements for one year after
termination of employment (subject to the employee's continuing to pay the
employee share of the premiums), payment of the cost of job relocation
counseling, and payment of legal fees in connection with termination.
The Executive Employment Agreements also provide for gross-up payments to be
made to the employee to cover certain penalty taxes in connection with a
Change of Control.
The Change of Control Agreement provides for similar benefits; however, the
lump sum payment is two times annual salary and bonus, and instead of
providing for a parachute tax gross-up it limits any payments made under the
Change of Control Agreement so that the payments will not result in a
parachute payment as defined in Section 280g of the Code.
As a condition of receiving the separation benefits under the Executive
Employment Agreements and the Change of Control Agreement, an employee is
required to maintain the confidentiality of information relating to Clark USA
and its affiliates and to release Clark USA and its affiliates from certain
claims.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN OWNERS AND MANAGEMENT
All of the outstanding capital stock of the Company is owned by Clark USA.
All of such shares are pledged as collateral under the indenture governing
Clark USA's Zero Coupon Notes. It is expected that such pledge will be
released upon repurchase or redemption of all outstanding Zero Coupon Notes on
or about February 15, 1998.
The following table and the accompanying notes set forth certain information
concerning the beneficial ownership of the Common Stock and Class F Common
Stock of Clark USA, as of the date hereof: (i) each person who is known by the
Company to own beneficially more than 5% of the common stock of the Company,
(ii) each director and each executive officer who is the beneficial owner of
shares of common stock of Clark USA, and (iii) all directors and executive
officers as a group.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF TOTAL
NAME AND ADDRESS TITLE OF CLASS SHARES PERCENT OF CLASS VOTING POWER(A)
---------------- -------------- ---------- ---------------- ----------------
<S> <C> <C> <C> <C>
Blackstone Management
Associates III L.L.C. Common 13,500,000 91.5% 73.3%
(b).....................
345 Park Avenue
New York, NY 10154
Paul D. Melnuk ......... Common 37,509 (c) (c)
Occidental Petroleum Class F Common 6,101,010 100.0 19.9
Corporation.............
10889 Wilshire Boulevard
Los Angeles, California
90024
H. M. Salaam (d)........ Common 1,222,273 8.3 6.6
Gulf Resources
Corporation
24-26 Regent's Bridge
Gardens
London SW8 1HB England
All directors and
executive
officers as a group Common 13,537,509 91.7 73.5
(b).....................
</TABLE>
- --------
(a) Represents the total voting power of all shares of common stock
beneficially owned by the named stockholder.
(b) The 13,500,000 shares held by Blackstone are directly held by BCP/Clark
Holdings Corporation ("BCP/Clark Holdings"). All of the issued and
outstanding shares of BCP/Clark Holdings are held by Blackstone,
Blackstone Offshore Capital Partners III L.P. and Blackstone Family
Investment Partnership III L.P., of each of which Blackstone Management
Associates III L.L.C. is the general partner having voting and dispositive
power.
(c) Less than 1%.
(d) Gulf has informed the Company that H. M. Salaam, Gulf's chairman, may be
deemed to control Gulf.
CERTAIN TRANSACTIONS
TrizecHahn and the Company had certain agreements which provided certain
management services to each other from time to time. The Company established
trade credit with various suppliers of its petroleum requirements, requiring
the guarantee of TrizecHahn. Fees related to trade credit guarantees totaled
$0.1 million, $0.2 million and $0.2 million in 1994, 1995 and 1996,
respectively. All trade credit guarantees were terminated in August 1996.
76
<PAGE>
The Company paid premiums of $2.0 million in 1994 to HSM Insurance, Inc., an
affiliate of TrizecHahn for providing environmental impairment liability
insurance. No loss claims have been made under the policy. The policy was
terminated on December 31, 1994.
The business relationships described above between the Company and
TrizecHahn were on terms no less favorable in any respect than those which
could have been obtained through dealings with third parties.
Clark USA contributed $268.6 million of capital to the Company during 1996.
Clark USA contributed $33.6 million from the proceeds of debt issued in the
Oxy/Gulf transactions in January of 1996. In addition, $235.0 million was
contributed to the Company from the contribution and subsequent sale of the
Oxy advance crude oil purchase receivable and the associated hedge contracts
in October of 1996. During 1995, Clark USA contributed $165.6 million to the
Company. Upon the issuance of stock in the first quarter of 1995, Clark USA
contributed $150.0 million for the purchase of the Port Arthur facility and
also contributed $9.2 million for operating purposes. In addition, from the
proceeds of debt issued in the Oxy/Gulf transactions, Clark USA contributed
$6.4 million in December 1995 to the Company. In November 1997, the Company
paid the Special Dividend to Clark USA.
In connection with the Blackstone Transaction, affiliates of Blackstone
received fees of $7.0 million, and the Company will reimburse Blackstone for
all out-of-pocket expenses incurred in connection with the Blackstone
Transaction and the Debt Offering. In addition, pursuant to a monitoring
agreement, an affiliate of Blackstone will receive a monitoring fee equal to
$2.0 million per annum (subject to increase relating to inflation and in
respect of additional acquisitions by the Company). Affiliates of Blackstone
may in the future receive customary fees for advisory services rendered to the
Company. Such fees will be negotiated from time to time with the independent
members of the Company's Board of Directors on an arm's-length basis and will
be based on the services performed and the prevailing fees then charged by
third parties for comparable services.
DESCRIPTION OF THE NEW NOTES
GENERAL
The New Senior Notes will be issued pursuant to an indenture (the "Senior
Note Indenture") between the Company and Bankers Trust Company as trustee (the
"Senior Note Trustee"), as supplemented and amended from time to time. The New
Senior Subordinated Notes will be issued pursuant to an indenture (the "Senior
Subordinated Note Indenture" and, together with the Senior Note Indenture, the
"Indentures") between the Company and Marine Midland Bank, as trustee (the
"Senior Subordinated Note Trustee" and, together with the Senior Note Trustee,
the "Trustees"), as supplemented and amended from time to time. Each series of
New Notes is subject to all provisions of the Indenture under which it is
issued, and Holders of New Notes are referred to the Indentures for a complete
statement thereof. The following summary of certain provisions of the
Indentures and the Registration Agreement does not purport to be complete and
is qualified in its entirety by reference to the Indentures and the
Registration Agreement, including the definitions therein of certain terms
used below. A copy of each proposed form of Indenture and the Registration
Agreement is available from the Company upon request. The definitions of
certain terms used in the following summary are set forth below under "Certain
Definitions." For purposes of this section, the term the "Company" refers to
Clark only and does not include its subsidiaries.
As of the date of the Indentures, each of the Company's Subsidiaries will be
a Restricted Subsidiary and none of the series of the New Notes will be
assigned an investment grade rating. However, under certain circumstances, the
Company will be able to designate current or future
77
<PAGE>
Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries will not
be subject to many of the restrictive covenants set forth in the Indentures.
In addition, upon the assignment by S&P and Moody's of an Investment Grade
Rating to a series of the New Notes, the Company will not be subject to
certain restrictive covenants set forth in the applicable Indenture.
NEW SENIOR NOTES
The New Senior Notes will be senior unsecured obligations of the Company
limited in aggregate principal amount to $100.0 million and will mature on
November 15, 2007. Interest on the New Senior Notes will accrue at the rate of
8 3/8% per annum and will be payable semiannually in arrears on May 15 and
November 15, commencing on May 15, 1998, to Holders of record on the
immediately preceding May 1 and November 1, respectively.
NEW SENIOR SUBORDINATED NOTES
The New Senior Subordinated Notes will be senior subordinated unsecured
obligations of the Company and will mature on November 15, 2007. The New
Senior Subordinated Notes will be issued in an aggregate principal amount of
$175.0 million; however, the Senior Subordinated Note Indenture does not limit
the aggregate principal amount of New Senior Subordinated Notes that may be
issued thereunder from time to time in one or more series. Interest on the New
Senior Subordinated Notes will accrue at the rate of 8 7/8% per annum and will
be payable semiannually in arrears on May 15 and November 15, commencing on
May 15, 1998, to Holders of record on the immediately preceding May 1 and
November 1, respectively.
INTEREST AND SETTLEMENT
Interest on the New Notes will accrue from the most recent date on which
interest has been paid or, if no interest has been paid, from the Issue Date.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months. The New Notes will be payable both as to principal 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
interest may be made by check mailed to the Holders of the New Notes at their
addresses set forth in the register of Holders of New Notes. Until otherwise
designated by the Company, the Company's office or agency in New York will be
the office of the Trustee maintained for such purpose. The New Notes will be
issued in registered form, without coupons, and in minimum denominations of
$100,000 and integral multiples of $1,000 in excess thereof.
Settlement for the New Notes will be made in immediately available funds.
Payments by the Company in respect of the New Notes (including principal,
premium, if any, interest and Additional Interest, if any) will be made in
immediately available funds. Secondary trading in long-term notes and
debentures of corporate issuers is generally settled in clearing-house or
next-day funds. In contrast, the New Notes are expected to be eligible to
trade in the PORTAL Market and to trade in the Depository's Same-Day Funds
Settlement System, and any permitted secondary market trading activity in the
New Notes will, therefore, be required by the Depository to be settled in
immediately available funds. No assurance can be given as to the effect, if
any, of such settlement arrangements on trading activity in the New Notes.
RANKING AND SUBORDINATION
NEW SENIOR NOTES
The New Senior Notes will rank senior in right of payment to all
subordinated Indebtedness of the Company. The New Senior Notes will rank pari
passu in right of payment with all current and future senior borrowings of the
Company, including the 9 1/2% Notes and the Term Loan. The Company,
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however, is a party to the Credit Agreement and all borrowings under the
Credit Agreement are secured by a lien on substantially all of the Company's
cash and cash equivalents, receivables, crude oil, refined product and other
inventories and trademarks and other intellectual property. As of September
30, 1997, there was approximately $238.0 million outstanding under the Credit
Agreement in the form of letter of credit issuances and there were no
outstanding borrowings.
NEW SENIOR SUBORDINATED NOTES
The payment of principal of, premium, if any, and interest on the New Senior
Subordinated Notes will be subordinated in right of payment, as set forth in
the Senior Subordinated Note Indenture, to the prior payment in full in cash
of all Senior Debt, whether outstanding on the date of the Senior Subordinated
Note Indenture or thereafter incurred.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, an
assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities, the holders of Senior Debt will be entitled to receive
payment in full in cash of all Obligations due in respect of such Senior Debt
(including interest after the commencement of any such proceeding at the rate
specified in the applicable Senior Debt) before the Holders of New Senior
Subordinated Notes will be entitled to receive any payment with respect to the
New Senior Subordinated Notes, and until all Obligations with respect to
Senior Debt are paid in full in cash, any distribution to which the Holders of
New Senior Subordinated Notes would be entitled shall be made to the holders
of Senior Debt (except that Holders of New Senior Subordinated Notes may
receive Permitted Junior Securities and payments made from the trust described
under "--Defeasance").
The Company also may not make any payment upon or in respect of the New
Senior Subordinated Notes (except in Permitted Junior Securities or from the
trust described under "--Defeasance") if (i) a default in the payment of the
principal of, premium, if any, or interest on Designated Senior Debt occurs
and is continuing beyond any applicable period of grace or (ii) any other
default occurs and is continuing with respect to Designated Senior Debt that
permits holders of the Designated Senior Debt as to which such default relates
to accelerate its maturity and the New Senior Subordinated Note Trustee
receives a notice of such default (a "Payment Blockage Notice") from the
Company or the holders of any Designated Senior Debt. Payments on the New
Senior Subordinated Notes may and shall be resumed (a) in the case of a
payment default, upon the date on which such default is cured or waived and
(b) in case of a nonpayment default, the earlier of the date on which such
nonpayment default is cured or waived or 179 days after the date on which the
applicable Payment Blockage Notice is received, unless the maturity of any
Designated Senior Debt has been accelerated. No new period of payment blockage
may be commenced unless and until 360 days have elapsed since the
effectiveness of the immediately prior Payment Blockage Notice. No nonpayment
default that existed or was continuing on the date of delivery of any Payment
Blockage Notice to the Senior Subordinated Note Trustee shall be, or be made,
the basis for a subsequent Payment Blockage Notice unless such default shall
have been waived for a period of not less than 180 days.
The Senior Subordinated Note Indenture will further require that the Company
promptly notify holders of Senior Debt if payment of the New Senior
Subordinated Notes is accelerated because of an Event of Default.
As a result of the subordination provisions described above, in the event of
a liquidation or insolvency, Holders of New Senior Subordinated Notes may
recover less ratably than creditors of the Company who are Holders of Senior
Debt. See "Risk Factors--Subordinated and Unsecured Status of New Senior
Subordinated Notes."
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OPTIONAL REDEMPTION
NEW SENIOR NOTES
The New Senior Notes will be redeemable, at the Company's option, in whole
or in part, at any time on and after November 15, 2002, upon not less than 30
nor more than 60 days' notice mailed to each Holder of New Senior Notes to be
redeemed at such Holder's address appearing in the Company's Security
Register, in principal amounts of $1,000 or an integral multiple of $1,000, at
the following redemption prices (expressed as percentages of the principal
amount) if redeemed during the 12-month period commencing on November 15 of
each of the years set forth below, plus, in each case, accrued interest
thereon to, but excluding, the date of redemption:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2002.......................................... 104.187%
2003.......................................... 102.094%
2004 and thereafter........................... 100.000%
</TABLE>
In addition, the Company may, at its option, use the net cash proceeds of
one or more Equity Offerings to the extent the net cash proceeds thereof are
contributed to the equity capital of the Company to redeem for cash up to 35%
in aggregate principal amount of the New Senior Notes originally issued under
the Senior Note Indenture at any time prior to November 15, 2001, at a
redemption price equal to 108.375% of the aggregate principal amount so
redeemed, plus accrued interest; provided that at least 65% of the principal
amount of New Senior Notes originally issued remain outstanding immediately
after such redemption. Any such redemption will be required to occur on or
prior to 120 days after the receipt by the Company of the net cash proceeds of
such Equity Offering and upon not less than 30 nor more than 60 days' notice
mailed to each Holder of New Senior Notes to be redeemed at such holder's
address appearing in the Company's Security Register, in principal amounts of
$1,000 or an integral multiple of $1,000. The Company may not use the net cash
proceeds of any Equity Offerings which alone or combined with a related series
of transactions result in a Change of Control to redeem New Senior Notes
pursuant to this paragraph.
NEW SENIOR SUBORDINATED NOTES
The New Senior Subordinated Notes will be redeemable, at the Company's
option, in whole or in part, at any time on and after November 15, 2002, upon
not less than 30 nor more than 60 days' notice mailed to each Holder of New
Senior Subordinated Notes to be redeemed at such Holder's address appearing in
the Company's Security Register, in principal amounts of $1,000 or an integral
multiple of $1,000, at the following redemption prices (expressed as
percentages of the principal amount) if redeemed during the 12-month period
commencing on November 15 of each of the years set forth below, plus, in each
case, accrued interest thereon to, but excluding, the date of redemption:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2002.......................................... 104.437%
2003.......................................... 102.958%
2004.......................................... 101.479%
2005 and thereafter........................... 100.000%
</TABLE>
In addition, the Company may, at its option, use the net cash proceeds of
one or more Equity Offerings to the extent the net cash proceeds thereof are
contributed to the equity capital of the Company to redeem for cash up to 35%
in aggregate principal amount of the New Senior Subordinated Notes originally
issued under the Senior Subordinated Note Indenture at any time prior to
November 15, 2001, at a redemption price equal to 108.875% of the aggregate
principal amount so redeemed, plus accrued interest; provided that at least
50% of the principal amount of New Senior Subordinated
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Notes originally issued remain outstanding immediately after such redemption.
Any such redemption will be required to occur on or prior to 120 days after
the receipt by the Company of the net cash proceeds of such Equity Offering
and upon not less than 30 nor more than 60 days' notice mailed to each holder
of New Senior Subordinated Notes to be redeemed at such holder's address
appearing in the Company's Security Register, in principal amounts of $1,000
or an integral multiple of $1,000. The Company may not use the net cash
proceeds of any Equity Offerings which alone or combined with a related series
of transactions result in a Change of Control to redeem New Senior
Subordinated Notes pursuant to this paragraph.
If less than all of a series of New Notes are to be redeemed at any time,
the applicable Trustee shall select, in such manner as it shall deem fair and
appropriate, the particular New Notes to be redeemed or any portion thereof
that is an integral multiple of $1,000.
The indenture governing the 9 1/2% Notes (the "9 1/2% Note Indenture") and
the Credit Agreement restrict the Company's ability to optionally redeem the
New Notes. See "Description of Certain Debt Instruments."
CHANGE OF CONTROL
In the event that there shall occur a Change of Control resulting in a
Rating Decline, then the Company shall make an Offer (as described under "--
Procedures for Offers" below) to purchase all or any part (equal to $1,000 or
an integral multiple thereof) of each holder's New Notes at a purchase price
equal to 101% of the aggregate principal amount thereof, plus accrued and
unpaid interest, including Additional Interest, to the date of purchase. Such
right to require the repurchase of New Notes shall not continue after a
discharge of the Company from its obligations with respect to the New Notes
(see "Defeasance" ). The Company's board of directors may not waive this
provision.
The Change of Control purchase feature of the New Notes may, in certain
circumstances, make it more difficult or discourage a takeover of the Company
and, as a result, may make removal of incumbent management more difficult. The
Change of Control purchase feature, however, is not the result of the
Company's knowledge of any specific effort to accumulate the Company's stock
or to obtain control of the Company by means of a merger, tender offer,
solicitation or otherwise, or part of
a plan by management to adopt a series of anti-takeover provisions. Instead,
the Change of Control purchase feature is a result of negotiations between the
Company and the Initial Purchasers. The Company has no present intention to
engage in a transaction involving a Change of Control, although it is possible
that the Company could decide to do so in the future.
The Loan Agreement and the 9 1/2% Note Indenture contain "change of control"
provisions similar to the Change of Control provision in the Indentures. If a
Change of Control were to occur, it is likely that the Company would not have
sufficient assets to satisfy its obligation to purchase all of the New Notes
that might be delivered by holders seeking to exercise the purchase right and
any repurchase obligations pursuant to the Term Loan and the 9 1/2% Notes,
which will rank pari passu with the New Senior Notes and senior to the New
Senior Subordinated Notes. In addition, pursuant to the terms of the
Indentures, the Company is only required to offer to repurchase the New Notes
in the event that a Change of Control results in a Rating Decline. The Change
of Control provisions contained in the 9 1/2% Notes do not require that a
Rating Decline occur as a condition for the Company to offer to repurchase
such notes upon the occurrence of a Change of Control. Consequently, if a
Change of Control were to occur which does not result in a Rating Decline, the
Company would be required to offer to repurchase the 9 1/2% Notes, but would
not be required to offer to repurchase the New Notes offered hereby. A "change
of control" under the Credit Agreement is an event of default under the Credit
Agreement.
The provisions of the Indentures would not necessarily afford holders of the
New Notes protection in the event of a highly leveraged transaction,
reorganization, restructuring, merger or similar transaction involving the
Company that may adversely affect such Holders.
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PROVISION OF FINANCIAL INFORMATION
So long as any of the New Notes are outstanding, the Company will file with
the Commission the annual reports, quarterly reports and other documents that
the Company would have been required to file with the Commission pursuant to
Sections 13(a) and 15(d) of the Exchange Act if the Company were subject to
such Sections, and the Company will provide to all holders copies of such
reports and documents.
COVENANTS
Upon the occurrence of an Investment Grade Rating Event with respect to a
series of New Notes, the covenants imposed on the Company by the Indenture
governing such series of New Notes will change. See "--Certain Investment
Grade Covenants." An "Investment Grade Rating Event" shall occur on the first
day on which a series of New Notes is assigned an Investment Grade Rating. An
"Investment Grade Rating" means (i) a Moody's Rating of Baa3 or higher and an
S&P Rating of at least BB+ or (ii) an S&P Rating of BBB- or higher and a
Moody's Rating of at least Ba1 or, in each case, if Moody's or S&P shall
change their rating system, equivalent ratings.
CERTAIN NON-INVESTMENT GRADE COVENANTS
The Indentures contain, among others, the following covenants, each of which
shall apply to the Company from the Issue Date until the occurrence of an
Investment Grade Rating Event:
LIMITATION ON RESTRICTED PAYMENTS. The Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, make any
Restricted Payment, unless (i) at the time of and immediately after giving
effect to the proposed Restricted Payment, no Default or Event of Default
shall have occurred and be continuing, or would occur as a consequence
thereof, (ii) either the Company would (a) at the time of such Restricted
Payment and after giving pro forma effect thereto, have a Consolidated
Adjusted Net Worth exceeding $200.0 million or (b) be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Consolidated Operating
Cash Flow Ratio test set forth in the first paragraph of the covenant
described under "--Limitation on Indebtedness", and (iii) at the time of and
immediately after giving effect to the proposed Restricted Payment (the value
of any such payment if other than cash, as determined in good faith by the
board of directors of the Company and evidenced by a Board Resolution), the
aggregate amount of all Restricted Payments (including Restricted Payments
permitted by clauses (b), (j), (l) and (m) of the next succeeding paragraph
and excluding the other Restricted Payments permitted by such paragraph)
declared or made subsequent to the Issue Date shall not exceed the sum of (a)
50% of the aggregate Consolidated Net Operating Income (or, if such aggregate
Consolidated Net Operating Income is a deficit, minus 100% of such deficit) of
the Company for the period (taken as one accounting period) from the first day
of the fiscal quarter that begins after the Issue Date to the end of the
Company's most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment plus (b) 100%
of the aggregate net proceeds, including cash and the fair market value of
property other than cash (as determined in good faith by the board of
directors of the Company and evidenced by a Board Resolution), received by the
Company since the Issue Date, from any Person other than a Subsidiary of the
Company as a result of the issuance of Capital Stock (other than any
Disqualified Capital Stock) of the Company including such Capital Stock issued
upon conversion of Indebtedness or upon exercise of warrants and any
contributions to the capital of the Company (other than Excluded
Contributions) received by the Company from any such Person plus (c) to the
extent that any Restricted Investment that was made after the Issue Date, is
sold for cash or otherwise liquidated or repaid for cash, the cash return of
capital with respect to such Restricted Investment (less the cost of
disposition, if any). For purposes of any calculation pursuant to the
preceding sentence which is required to be made within 60 days after the
declaration of a dividend by the Company, such dividend shall be deemed to be
paid at the date of declaration.
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The foregoing provisions of this covenant will not be violated by reason of
(a) the payment of any dividends or distributions payable solely in shares of
the Company's Capital Stock (other than Disqualified Capital Stock) or in
options, warrants or other rights to acquire the Company's Capital Stock
(other than Disqualified Capital Stock), (b) the payment of any dividend
within 60 days after the date of declaration thereof if, at such date of
declaration, such payment complied with the provisions described above, (c)
the payment of cash dividends or the making of loans or advances to Clark USA
after October 1, 2002, in an amount sufficient to enable Clark USA to make
cash payments of interest or dividends required to be made in respect of the
New Exchangeable Preferred Stock or the Exchange Debentures in accordance with
the terms thereof in effect on the date of the Indenture, (d) the payment of
cash dividends or the making of loans or advances in an amount sufficient to
enable Clark USA to make payments required to be made in respect of the 10
7/8% Notes in accordance with the terms thereof in effect on the date of the
Indenture, (e) the retirement of any shares of the Company's Capital Stock in
exchange for, or out of the proceeds of, the substantially concurrent sale
(other than to a Subsidiary of the Company) of, other shares of its Capital
Stock (other than Disqualified Capital Stock) or options, warrants or other
rights to purchase the Company's Capital Stock (other than Disqualified
Capital Stock) and the declaration and payment of dividends on such new
Capital Stock in an aggregate amount no greater than the amount of dividends
declarable and payable on such retired Capital Stock immediately prior to such
retirement, (f) the Chevron Payment, (g) the AOC Payment, (h) the Gulf
Payments, (i) other Restricted Payments in an aggregate amount not to exceed
$50 million, (j) the making of any payment in redemption of Capital Stock of
the Company or Clark USA or options to purchase such Capital Stock granted to
officers or employees of the Company or Clark USA pursuant to any stock
option, stock purchase or other stock plan approved by the board of directors
of the Company or Clark USA in connection with the severance or termination of
officers or employees not to exceed $8.0 million per annum or the payment of
cash dividends or the making of loans or advances to Clark USA to permit it to
make such payments, (k) the declaration and payment of dividends to holders of
any class or series of preferred stock of the Company and its Restricted
Subsidiaries issued in accordance with the covenant "Limitation on
Indebtedness," (l) the payment of dividends on the Company's common stock,
following the first public offering of the Company's or Clark USA's common
stock after the Issue Date, of up to 6% per annum of the net proceeds received
by the Company in such public offering or the payment of funds to Clark USA in
amounts necessary to permit Clark USA to make such payments to the extent the
proceeds of such offering were contributed to the equity capital of the
Company, (m) so long as no Default or Event of Default shall have occurred and
be continuing (or would result therefrom), the payment to Clark USA (in the
form of dividends, loans, advances or otherwise) of 100% of the proceeds of
Indebtedness incurred pursuant to clause (xv) of the definition of "Permitted
Indebtedness" to redeem, repurchase, defease or otherwise acquire or retire
for value the 10 7/8% Notes; provided, however, that at the time of such
redemption, repurchase, defeasance or other acquisition or retirement for
value, the Consolidated Operating Cash Flow Ratio of the Company, after giving
effect to the incurrence of Indebtedness in connection therewith, would be
greater than 1.75 to 1.0, (n) the payment of dividends or the making of loans
or advances by the Company to Clark USA in an amount not to exceed $2.0
million in any fiscal year for costs and expenses incurred by Clark USA in its
capacity as a holding company or for services rendered to the Company, (o)
Restricted Investments not to exceed at any one time an aggregate of $75.0
million, and (p) Restricted Investments made with Excluded Contributions.
The board of directors of the Company may designate any Restricted
Subsidiary to be an Unrestricted Subsidiary if such designation would not
cause a Default or Event of Default; provided that, in no event shall the
business currently operated by the Company or Clark USA be transferred to or
held by an Unrestricted Subsidiary, unless after giving pro forma effect to
such transfer the Company could have incurred an additional $1.00 of
Indebtedness pursuant to the Consolidated Operating Cash Flow Ratio test set
forth in the first paragraph of the covenant described under "--Limitation on
Indebtedness." For purposes of making such determination, all outstanding
Investments by the Company and its Restricted Subsidiaries (except to the
extent repaid in cash) in
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the Subsidiary so designated shall be deemed to be Restricted Payments at the
time of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of this Limitation on Restricted Payments
covenant. All such outstanding Investments shall be deemed to constitute
Investments in an amount equal to the greatest of (x) the net book value of
such Investments at the time of such designation, (y) the fair market value of
such Investments at the time of such designation, and (z) the original fair
market value of such Investments at the time they were made. Such designation
will only be permitted if such Restricted Payment would be permitted at such
time and if such Restricted Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary.
LIMITATION ON INDEBTEDNESS. The Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, incur any Indebtedness (including
Acquired Debt) other than (i) the New Notes, and (ii) Permitted Indebtedness,
unless after giving effect to the incurrence of such Indebtedness and the
receipt and application of the proceeds therefrom, the Company's Consolidated
Operating Cash Flow Ratio is greater than 2 to 1. Notwithstanding the
foregoing, the Company's Unrestricted Subsidiaries may incur Non-Recourse
Debt; provided, however, that if any such Indebtedness ceases to be Non-
Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to
constitute an incurrence of Indebtedness by a Restricted Subsidiary of the
Company.
Other than the limitations on incurrence of indebtedness contained in this
covenant, there are no provisions in the Indenture that would protect the
holders of the New Notes in the event of a highly leveraged transaction.
LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES OF THE COMPANY. The Company will not, and will not permit any
Restricted Subsidiary of the Company (other than a Securitization Special
Purpose Entity) to, create or otherwise cause or suffer to exist or become
effective, any consensual encumbrance or restriction which, by its terms,
restricts the ability of any Restricted Subsidiary of the Company (other than
a Securitization Special Purpose Entity) to (i) pay dividends or make any
other distributions on any such Restricted Subsidiary's Capital Stock or pay
any Indebtedness owed to the Company or any Restricted Subsidiary of the
Company, (ii) make any loans or advances to the Company or any Restricted
Subsidiary of the Company, or (iii) transfer any of its property or assets to
the Company or any Restricted Subsidiary of the Company, except for, in the
case of clauses (i), (ii) and (iii) above, any restrictions (a) existing under
the Indenture and any restrictions existing on the Issue Date pursuant to any
agreement relating to Existing Indebtedness of the Company or any Restricted
Subsidiary, (b) pursuant to an agreement relating to Indebtedness incurred by
such Restricted Subsidiary prior to the date on which such Restricted
Subsidiary was acquired by the Company and outstanding on such date and not
incurred in anticipation of becoming a Restricted Subsidiary, (c) imposed by
virtue of applicable corporate law or regulation and relating solely to the
payment of dividends or distributions to stockholders, (d) with respect to
restrictions of the nature described in clause (iii) above, included in a
contract entered into in the ordinary course of business and consistent with
past practices that contains provisions restricting the assignment of such
contract, (e) pursuant to an agreement effecting a renewal, extension,
refinancing, refunding or replacement of Indebtedness referred to in (a) or
(b) above; provided, however, that the provisions contained in such renewal,
extension, refinancing, refunding or replacement agreement relating to such
encumbrance or restriction, taken as a whole, are not materially more
restrictive than the provisions contained in the agreement the subject
thereof, as determined in good faith by the board of directors, or (f) which
will not in the aggregate cause the Company not to have the funds necessary to
pay the principal of, premium, if any, or interest, including Additional
Interest, on the New Notes at their Stated Maturity.
LIMITATION ON TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES. The Company
will not, and will not permit any Restricted Subsidiary of the Company to,
directly or indirectly, conduct any business or enter into any transaction or
series of similar transactions (including, without limitation, the purchase,
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sale, transfer, lease or exchange of any property or the rendering of any
service) with (i) any direct or indirect holder of more than 5% of any class
of Capital Stock of the Company or of any Restricted Subsidiary of the Company
(other than transactions between or among the Company and/or its Restricted
Subsidiaries except for Restricted Subsidiaries owned in any part by the
Principal Shareholders) or (ii) any Affiliate of the Company (other than
transactions between or among the Company and/or its Restricted Subsidiaries
except for Restricted Subsidiaries owned in any part by the Principal
Shareholders) (each of the foregoing, a "Shareholder/Affiliate Transaction")
unless the terms of such business, transaction or series of transactions (a)
are set forth in writing and (b) are as favorable to the Company or such
Restricted Subsidiary in all material respects as terms that would be
obtainable at the time for a comparable transaction or series of similar
transactions in arm's-length dealings with a Person which is not such a
stockholder or Affiliate and, if such transaction or series of transactions
involves payment for services of such a stockholder or Affiliate, (x) for
amounts greater than $10.0 million and less than $25.0 million per annum, the
Company shall deliver an Officers' Certificate to the Trustee certifying that
such Shareholder/Affiliate Transaction complies with clause (b) above or (y)
for amounts equal to or greater than $25.0 million per annum, then (A) a
majority of the disinterested members of the board of directors shall in good
faith determine that such payments are fair consideration for the services
performed or to be performed (evidenced by a Board Resolution) or (B) the
Company must receive a favorable opinion from a nationally recognized
investment banking firm chosen by the Company or, if no such investment
banking firm is in a position to provide such opinion, a similar firm chosen
by the Company (having expertise in the specific area which is the subject of
the opinion), that such payments are fair consideration for the services
performed or to be performed (a copy of which shall be delivered to the
Trustee); provided that the foregoing requirements shall not apply to (i)
Shareholder/Affiliate Transactions involving the purchase or sale of crude oil
in the ordinary course of the Company's business, so long as such transactions
are priced in line with the market price of a crude benchmark and the pricing
of such transactions are equivalent to the pricing of comparable transactions
with unrelated third parties; and provided further that the Gulf Payments
shall not be deemed a Shareholder/Affiliate Transaction, (ii) Restricted
Payments permitted by the provisions of the Indentures described under
"Limitation on Restricted Payments", (iii) payments made in connection with
the Blackstone Transaction, including fees to Blackstone, (iv) payment of
annual management, consulting, monitoring and advisory fees and related
expenses to Blackstone and its Affiliates, (v) payment of reasonable and
customary fees paid to, and indemnity provided on behalf of, officers,
directors, employees or consultants of the Company or any Restricted
Subsidiary, (vi) payments by the Company or any of its Restricted Subsidiaries
to Blackstone and its Affiliates made for any financial advisory, financing,
underwriting or placement services or in respect of other investment banking
activities, including, without limitation, in connection with acquisitions or
divestitures which payments are approved by a majority of the board of
directors of the Company in good faith, (vii) payments or loans to employees
or consultants which are approved by a majority of the board of directors of
the Company in good faith, (viii) any agreement in effect on the Issue Date
and any amendment thereto (so long as any such amendment is not
disadvantageous to the holders of the Notes in any material respect) or any
transaction contemplated thereby, or (ix) any stockholder agreement or
registration rights agreement to which the Company is a party on the Issue
Date and any similar agreements which it may enter into thereafter; provided
that the performance by the Company or any of its Restricted Subsidiaries of
obligations under any future amendment or under such a similar agreement
entered into after the Issue Date shall only be permitted by this clause (ix)
to the extent that the terms of any such amendment or new agreement are not
disadvantageous to the holders of the New Notes in any material respect.
LIMITATION ON CERTAIN ASSET DISPOSITIONS. The Company will not, and will not
permit any Restricted Subsidiary of the Company to, make any Asset Disposition
unless (i) the Company or such Restricted Subsidiary receives consideration at
the time of such disposition (or in the case of a lease, over the term of such
lease) at least equal to the fair market value of the shares or assets
disposed of (which shall be as determined in good faith by the Company), and
(ii) at least 75% of the consideration
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for such disposition consists of cash or Cash Equivalents; provided that the
following will be deemed to be cash for purposes of this covenant: (1) the
amount of any liabilities (as shown on the Company's or such Restricted
Subsidiary's most recent balance sheet or in the notes thereto) of the Company
or such Restricted Subsidiary (other than liabilities that are by their terms
subordinated to the applicable series of Notes) that are assumed by the
transferee of any such assets and (2) any notes or other obligations received
by the Company or such Restricted Subsidiary from a transferee that are
converted by the Company or such Restricted Subsidiary into cash within 180
days after such Asset Disposition; provided, further, that the 75% limitation
referred to above in clause (ii) will not apply to (x) any disposition of
assets in which the cash portion of such consideration received therefor on an
after-tax basis, determined in accordance with the foregoing proviso, is equal
to or greater than what the after-tax net proceeds would have been had such
transaction complied with the aforementioned 75% limitation, (y) any
disposition of assets (other than the Port Arthur Refinery) in exchange for
assets of comparable fair market value related to the Principal Business of
the Company, provided that in any such exchange of assets of the Company or a
Restricted Subsidiary with a fair market value in excess of $20.0 million
occurring when Blackstone fails to hold, directly or indirectly, 30% or more
of the total voting power of all classes of stock of the Company, the Company
shall obtain an opinion or report from a nationally recognized investment
banking firm, valuation expert or accounting firm confirming that the assets
received by the Company and such Restricted Subsidiary in such exchange have a
fair market value at least equal to the assets so exchanged, or (z) any
disposition of Securitization Program Assets to any Securitization Special
Purpose Entity in exchange for Indebtedness of, procurement of letters of
credit and similar instruments by, or equity or other interests in, such
Securitization Special Purpose Entity.
Within 360 days of the later of (a) the receipt of the Net Available
Proceeds and (b) the date of such applicable Asset Disposition, the Company
may elect to (i) apply the Net Available Proceeds from such Asset Disposition
to permanently redeem or repay Indebtedness of the Company or any Restricted
Subsidiary, other than Indebtedness of the Company which is subordinated to
the applicable series of New Notes or (ii) apply the Net Available Proceeds
from such Asset Disposition to invest in assets related to the Principal
Business of the Company or Capital Stock of any Person primarily engaged in
the Principal Business if, as a result of such acquisition, such Person
becomes a Restricted Subsidiary. Pending the final application of any such Net
Available Proceeds, the Company may temporarily invest such Net Available
Proceeds in any manner permitted by the Indentures. Any Net Available Proceeds
from an Asset Disposition not applied or invested as provided in the first
sentence of this paragraph will be deemed to constitute "Excess Proceeds." The
Credit Agreement may prohibit the use of Excess Proceeds to prepay the New
Senior Subordinated Notes.
As soon as practical, but in no event later than ten (10) Business Days
after any date (an "Asset Disposition Trigger Date") that the aggregate amount
of Excess Proceeds exceeds $25.0 million, the Company will commence an Offer
(as described below under "Procedures for Offers") to purchase the maximum
principal amount of New Notes that may be purchased out of the Excess
Proceeds, at an Offer price in cash in an amount equal to 100% of the
principal amount thereof, plus accrued and unpaid interest, including
Additional Interest, to the date of purchase. To the extent that any Excess
Proceeds remain after completion of an Offer, the Company may use the
remaining amount for general corporate purposes. Upon completion of such
Offer, the amount of Excess Proceeds will be reset to zero.
LIMITATION ON LIENS. The Company will not, directly or indirectly, create,
incur, assume or suffer to exist any Lien (other than Permitted Liens) on any
asset now owned or hereafter acquired, or on any income or profits therefrom,
or assign or convey any right to receive income therefrom to secure any
Indebtedness which is pari passu with or subordinate in right of payment to
the applicable series of New Notes, unless such New Notes are secured equally
and ratably simultaneously with or prior to
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the creation, incurrence or assumption of such Lien for so long as such Lien
exists; provided, that in any case involving a Lien securing Indebtedness
which is subordinated in right of payment to such New Notes, such Lien is
subordinated to the Lien securing such New Notes to the same extent that such
subordinated debt is subordinated to such New Notes.
LIMITATION ON MERGER, CONSOLIDATION AND SALE OF ASSETS. The Company shall
not consolidate or merge with or into (whether or not the Company is the
Surviving Person), or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets in one or more
related transactions to another Person unless (i) the Surviving Person is a
corporation organized and existing under the laws of the United States, any
state thereof or the District of Columbia, (ii) the Surviving Person (if other
than the Company) assumes all of the obligations of the Company under the New
Notes and the applicable Indentures pursuant to supplemental indentures in a
form reasonably satisfactory to the Trustees, (iii) at the time of and
immediately after such transaction, no Default or Event of Default shall have
occurred and be continuing, and (iv) except with respect to a merger with or
into Clark USA that does not result in a Rating Decline, after giving pro
forma effect to the transaction, either (a) the Surviving Person would be
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Operating Cash Flow Ratio test set forth in the first paragraph
of the covenant described under "--Limitations on Indebtedness" or (b) the
Consolidated Operating Cash Flow Ratio of the Surviving Person would be no
less than such ratio for the Company immediately prior to such transaction.
LIMITATION ON ISSUANCE OF GUARANTEES OF INDEBTEDNESS. The Company will not
permit any Restricted Subsidiary, directly or indirectly, to guarantee or
secure the payment of any Indebtedness of the Company unless such Restricted
Subsidiary simultaneously executes and delivers supplemental indentures to the
Indentures providing for the guarantee or security of the payment of the New
Notes by such Restricted Subsidiary (other than the grant of security
interests in cash and cash equivalents, receivables and product inventories to
secure obligations under the Credit Agreement). If the Indebtedness to be
guaranteed is subordinated to a series of New Notes, the guarantee or security
of such Indebtedness shall be subordinated to the guarantee or security of
such New Notes to the same extent as the Indebtedness to be guaranteed is
subordinated to such New Notes under the applicable Indenture. Notwithstanding
the foregoing, any such guarantee or security by a Restricted Subsidiary of
the New Notes shall provide by its terms that it shall be automatically and
unconditionally released and discharged upon either (i) the release or
discharge of such guarantee or security of payment of such other Indebtedness,
except a discharge by or as a result of payment under such guarantee or
security or (ii) any sale, exchange or transfer, to any Person not an
Affiliate of the Company, of all of the Company's Capital Stock in, or all or
substantially all the assets of, such Restricted Subsidiary, which sale,
exchange or transfer is made in compliance with the applicable provision of
the applicable Indenture.
NO SENIOR SUBORDINATED INDEBTEDNESS
The Senior Subordinated Note Indenture also provides that the Company will
not incur, create, issue, assume, guarantee or otherwise become liable for any
Indebtedness that is subordinate or junior in right of payment to any Senior
Debt and senior in any respect in right of payment to the New Senior
Subordinated Notes.
CERTAIN INVESTMENT GRADE COVENANTS
Upon the occurrence of an Investment Grade Rating Event with respect to a
series of New Notes, each of the covenants (except for "--Limitation on
Issuance of Guarantees of Indebtedness" and clauses (i), (ii) and (iii) of "--
Limitation on Merger, Consolidation and Sale of Assets" and, with respect to
the New Senior Subordinated Notes, "--No Senior Subordinated Indebtedness")
described above under "--Certain Non-Investment Grade Covenants" shall be of
no further force and effect and shall cease to apply to the Company. In
addition, each of the Indentures contains, among other things, the following
covenants, each of which will apply to the Company upon and after the
occurrence of an Investment Grade Rating Event with respect to the New Notes
issued thereunder.
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RESTRICTIONS ON SECURED INDEBTEDNESS. If the Company shall incur, issue,
assume or guarantee any Indebtedness secured by a Lien on any Principal
Property of the Company or on any share of stock or Indebtedness of any
Restricted Subsidiary (other than a Securitization Special Purpose Entity),
the Company will secure the New Notes equally and ratably with (or, at the
Company's option, prior to) such secured Indebtedness so long as such
Indebtedness shall be so secured, unless the aggregate amount of all such
secured Indebtedness, together with all Attributable Indebtedness of the
Company with respect to any sale and leaseback transactions involving
Principal Properties (with the exception of such transactions which are
excluded as described in clauses (i) through (v) under "--Restrictions on
Sales and Leasebacks" below), would not exceed 10% of Consolidated Net
Tangible Assets. The above restriction does not apply to, and there will be
excluded from secured Indebtedness in any computation under such restriction,
Indebtedness secured by: (i) Liens on property of, or on any share of stock or
Indebtedness of, any corporation existing at the time such corporation becomes
a Restricted Subsidiary and Liens on any property acquired from a corporation
which is merged with or into the Company or a Subsidiary, (ii) Liens in favor
of the Company, (iii) Liens in favor of governmental bodies to secure
progress, advance or other payments, (iv) Liens upon any property acquired
after the date of the Indenture, securing the purchase price thereof or
created or incurred simultaneously with (or within 270 days after) such
acquisition to finance the acquisition of such property or existing on such
property at the time of such acquisition, or Liens on improvements after such
date, in each case subject to certain conditions and provided that the
principal amount of the obligation or indebtedness secured by such Lien shall
not exceed 100% of the cost or fair value (as determined in good faith by the
Company), whichever shall be lower, of the property at the time of the
acquisition, construction or improvement thereof, (v) Liens securing
industrial revenue or pollution control bonds, (vi) Liens arising out of any
final judgment for the payment of money aggregating not in excess of $25.0
million which remains unstayed, in effect and unpaid for a period of 60
consecutive days or Liens arising out of any judgments which are being
contested in good faith, (vii) Permitted Liens in existence on the date of the
Investment Grade Rating Event, (viii) Liens to secure obligations arising from
time to time under the Credit Agreement, or (ix) any extension, renewal, or
replacement of any Lien referred to in the foregoing clauses (i) through
(viii) inclusive.
RESTRICTIONS ON SALES AND LEASEBACKS. The Company may not enter into any
sale and leaseback transaction involving any Principal Property, unless the
aggregate amount of all Attributable Indebtedness of the Company with respect
to such transaction plus all secured Indebtedness (with the exception of
secured Indebtedness which is excluded as described in clauses (i) through
(ix) under "--Restrictions on Secured Indebtedness" above) would not exceed
10% of Consolidated Net Tangible Assets. This restriction does not apply to,
and there shall be excluded from Attributable Indebtedness in any computation
under such restriction, any sale and leaseback transaction if: (i) the lease
is for a period, including renewal rights, not in excess of three years; (ii)
the sale of the Principal Property is made within 270 days after its
acquisition, construction or improvements; (iii) the lease secures or relates
to industrial revenue or pollution control bonds; (iv) the transaction is
between the Company and a Restricted Subsidiary; or (v) the Company, within
270 days after the sale is completed, applies to the retirement of
Indebtedness of the Company or a Restricted Subsidiary, or to the purchase of
other property which will constitute a Principal Property, an amount not less
than the greater of (1) the net proceeds of the sale of the Principal Property
leased or (2) the fair market value (as determined by the Company in good
faith) of the Principal Property leased. The amount to be applied to the
retirement of Indebtedness shall be reduced by (x) the principal amount of any
debentures or notes (including the Notes) of the Company or a Restricted
Subsidiary surrendered within 270 days after such sale to the applicable
trustee for retirement and cancellation, (y) the principal amount of
Indebtedness, other than the items referred to in the preceding clause (x),
voluntarily retired by the Company or a Restricted Subsidiary within 270 days
after such sale and (z) associated transaction expenses.
Procedures for Offers
Within 30 days following a Change of Control resulting in a Rating Decline
and on any Asset Disposition Trigger Date, the Company will mail to each
holder of New Notes, at such Holder's
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registered address, a notice stating: (i) the Offer is being made as a result
of a Change of Control or one or more Asset Dispositions, the length of time
the Offer shall remain open, and the maximum aggregate principal amount of New
Notes that will be accepted for payment pursuant to such Offer, (ii) the
purchase price, the amount of accrued and unpaid interest (including
Additional Interest) as of the Purchase Date, and the Purchase Date, (iii) in
the case of a Change of Control, the circumstances and material facts
regarding such Change of Control, to the extent known to the Company
(including, but not limited to, information with respect to pro forma and
historical financial information after giving effect to such Change of
Control, and information regarding the Person or Persons acquiring control),
and (iv) such other information required by the Indenture and applicable laws
and regulations.
On the Purchase Date for any Offer, the Company will (1) in the case of an
Offer resulting from a Change of Control, accept for payment all New Notes
tendered pursuant to such Offer and, in the case of an Offer resulting from
one or more Asset Dispositions, accept for payment the maximum principal
amount of New Notes tendered pursuant to such Offer that can be purchased out
of Excess Proceeds from such Asset Dispositions, (2) deposit with the Paying
Agent the aggregate purchase price of all New Notes accepted for payment and
any accrued and unpaid interest, including Additional Interest, on such New
Notes as of the Purchase Date, and (3) deliver or cause to be delivered to the
Trustee all New Notes tendered pursuant to the Offer. If less than all New
Notes tendered pursuant to any Offer are accepted for payment by the Company
for any reason, selection of the New Notes to be purchased will be in
compliance with the requirements of the principal national securities
exchange, if any, on which the New Notes are listed or, if the New Notes are
not so listed, by lot or by such method as the Trustee shall deem fair and
appropriate; provided that New Notes accepted for payment in part shall only
be purchased in integral multiples of $1,000. The Paying Agent will promptly
mail to each holder of New Notes accepted for payment an amount equal to the
Purchase price for such New Notes plus any accrued and unpaid interest,
including Additional Interest thereon, the Trustee will promptly authenticate
and mail to such holder of New Notes accepted for payment in part new New
Notes equal in principal amount to any unpurchased portion of the New Notes,
and any New Notes not accepted for payment in whole or in part shall be
promptly returned to the holder thereof. On and after a Purchase Date,
interest will cease to accrue on the New Notes accepted for payment. The
Company will announce the results of the Offer to holders of the New Notes on
or as soon as practicable after the Purchase Date.
The Company will comply with all applicable requirements of Rule 14e-1 under
the Exchange Act and all other applicable securities laws and regulations
thereunder, to the extent applicable, in connection with any Offer.
Events of Default
The following will be Events of Default under each of the Indentures: (a)
failure to pay any interest on any New Note issued under such Indenture when
due, continued for 30 days; (b) failure to pay principal of (or premium, if
any, on) any New Note issued under such Indenture when due; (c) failure to
perform or comply with the provisions described under "--Certain Covenants--
Limitation on Merger, Consolidation and Sale of Assets;" (d) failure to
perform any other covenant or warranty of the Company in the Indenture,
continued for 30 days after written notice as provided in the Indenture; (e)
failure to pay, at final maturity, in excess of $25.0 million principal amount
of any indebtedness of the Company or any Subsidiary of the Company, or
acceleration of any indebtedness of the Company or any Subsidiary of the
Company in an aggregate principal amount in excess of $25.0 million; (f) the
rendering of a final judgment or judgments (not subject to appeal) against the
Company or any of its Subsidiaries in an aggregate principal amount in excess
of $50.0 million which remains unstayed, in effect and unpaid for a period of
60 consecutive days thereafter; and (g) certain events in bankruptcy,
insolvency or reorganization affecting the Company or any Subsidiary of the
Company.
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If an Event of Default shall occur and be continuing, either the Trustee or
the holders of at least 25% in aggregate principal amount of the outstanding
New Notes issued under an Indenture may accelerate the maturity of all New
Notes issued under such Indenture; provided, however, that after such
acceleration, but before a judgment or decree based on acceleration, the
holders of a majority in aggregate principal amount of outstanding New Notes
issued under such Indenture may, under certain circumstances, rescind and
annul such acceleration if all Events of Default, other than the nonpayment of
accelerated principal, have been cured or waived as provided in the Indenture.
For information as to waiver of defaults, see "--Modification and Waiver."
No holder of any New Note will have any right to institute any proceeding
with respect to an Indenture or for any remedy thereunder, unless such holder
shall have previously given to the Trustee written notice of a continuing
Event of Default and unless the holders of at least 25% in aggregate principal
amount of the outstanding New Notes issued under such Indenture shall have
made written request, and offered reasonable indemnity, to the Trustee to
institute such proceeding as Trustee, and the Trustee shall not have received
from the holders of a majority in aggregate principal amount of the
outstanding New Notes issued under such Indenture a direction inconsistent
with such request and shall have failed to institute such proceeding within 60
days. However, such limitations do not apply to a suit instituted by a Holder
of a New Note for enforcement of payment of the principal of (and premium, if
any) or interest on such New Note on or after the respective due dates
expressed in such New Note.
Subject to the provisions of the applicable Indenture relating to the duties
of the Trustee in case an Event of Default shall occur and be continuing, the
Trustee will be under no obligation to exercise any of its rights or powers
under such Indenture at the request or direction of any of the holders, unless
such holders shall have offered to the Trustee reasonable indemnity. Subject
to such provisions for the indemnification of the Trustee, the holders of a
majority in aggregate principal amount of the outstanding New Notes issued
under an Indenture will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee.
The Company will be required to furnish to each Trustee annually a statement
as to the performance by the Company of certain of its obligations under the
applicable Indentures and as to any default in such performance.
Defeasance
The Indentures provide that, at the option of the Company, (A) if
applicable, the Company will be discharged from any and all obligations in
respect of the outstanding New Notes issued under such Indenture or (B) if
applicable, the Company may omit to comply with certain restrictive covenants,
and that such omission shall not be deemed to be an Event of Default under the
applicable Indenture and the New Notes issued thereunder, and that such New
Notes shall no longer be subject to the subordination provisions in the case
of either (A) or (B) upon irrevocable deposit with the Trustee, in trust, of
money and/or U.S. government obligations which will provide money in an amount
sufficient in the opinion of a nationally recognized accounting firm to pay
the principal of and premium, if any, and each installment of interest, if
any, on the outstanding New Notes issued under such Indenture. With respect to
clause (B), the obligations under the applicable Indenture other than with
respect to such covenants and the Events of Default other than the Event of
Default relating to such covenants above shall remain in full force and
effect. Such trust may only be established if, among other things (i) with
respect to clause (A), the Company has received from, or there has been
published by, the Internal Revenue Service (the "Service") a ruling or there
has been a change in law, which in the Opinion of Counsel provides that
holders of the New Notes will not recognize gain or loss for federal income
tax purposes as a result of such deposit, defeasance and discharge and will be
subject to
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federal income tax on the same amount, in the same manner and at the same
times as would have been the case if such deposit, defeasance and discharge
had not occurred; or, with respect to clause (B), the Company has delivered to
the Trustee an Opinion of Counsel to the effect that the holders of the New
Notes will not recognize gain or loss for federal income tax purposes as a
result of such deposit and defeasance and will be subject to federal income
tax on the same amount, in the same manner and at the same times as would have
been the case if such deposit and defeasance had not occurred; (ii) no Event
of Default or event that, with the passing of time or the giving of notice, or
both, shall constitute an Event of Default shall have occurred or be
continuing; (iii) the Company has delivered to the Trustee an Opinion of
Counsel to the effect that such deposit shall not cause the Trustee or the
trust so created to be subject to the Investment Company Act of 1940; and (iv)
certain other customary conditions precedent.
Modification and Waiver
Modifications and amendments of any of the Indentures may be made by the
Company and the applicable Trustee with the consent of the holders of a
majority in aggregate principal amount of the outstanding New Notes in the
affected series; provided, however, that no such modification or amendment
may, without the consent of the holder of each outstanding New Note affected
thereby, (a) change the Stated Maturity of the principal of, or any
installment of interest on, any New Note, (b) reduce the principal amount of
(or the premium), or interest on, any New Notes, (c) change the place or
currency of payment of principal of (or premium), or interest on, any New
Notes, (d) impair the right to institute suit for the enforcement of any
payment on or with respect to any New Notes, (e) reduce the above-stated
percentage of outstanding New Notes necessary to modify or amend the
Indenture, (f) reduce the percentage of aggregate principal amount of
outstanding New Notes necessary for waiver of compliance with certain
provisions of the Indenture or for waiver of certain defaults, or (g) modify
any provisions of the Indenture relating to the modification and amendment of
the Indenture or the waiver of past defaults or covenants, except as otherwise
specified.
The holders of a majority in aggregate principal amount of the outstanding
New Notes of a series may waive compliance by the Company with certain
restrictive provisions of the applicable Indenture. The holders of a majority
in aggregate principal amount of the outstanding New Notes of a series may
waive any past default under the applicable Indenture.
The Trustee
Each Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set
forth in such Indenture. During the existence of an Event of Default, the
Trustee will exercise such rights and powers vested in it under such Indenture
and use the same degree of care and skill in its exercise as a prudent person
would exercise under the circumstances in the conduct of such person's own
affairs.
Each Indenture and the provisions of the TIA incorporated by reference
therein contain limitations on the rights of the Trustee, should it become a
creditor of the Company, to obtain payment of claims in certain cases or to
realize on certain property received by it in respect of any such claim as
security or otherwise. The Trustees are permitted to engage in other
transactions with the Company or any Affiliate; provided, however, that if it
acquires any conflicting interest (as defined in the Indenture or in the TIA),
it must eliminate such conflict or resign.
Certain Definitions
Set forth below is a summary of certain of the defined terms used in the
Indentures. Reference is made to the Indentures for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
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"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person,
including, without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"AOC Payment" means all payments made to AOC Limited Partnership, a limited
partnership organized under the laws of the State of Missouri, constituting
"Additional Redemption Consideration" required to be paid by Clark USA
pursuant to Section 2.4 of the Stock Purchase and Redemption Agreement.
"Asset Disposition" by any Person means any transfer, conveyance, sale,
lease or other disposition by such Person or any of its Restricted
Subsidiaries (including a consolidation or merger or other sale of any such
Restricted Subsidiaries with, into or to another Person in a transaction in
which such Restricted Subsidiary ceases to be a Restricted Subsidiary, but
excluding a disposition by a Restricted Subsidiary of such Person to such
Person or a Restricted Subsidiary of such Person or by such Person to a
Restricted Subsidiary of such Person) of (i) shares of Capital Stock (other
than directors' qualifying shares) or other ownership interests of a
Restricted Subsidiary of such Person, (ii) substantially all of the assets of
such Person or any of its Restricted Subsidiaries representing a division or
line of business, or (iii) other assets or rights of such Person or any of its
Restricted Subsidiaries outside of the ordinary course of business, which in
the case of either clause (i), (ii) or (iii), whether in a single transaction
or a series of related transactions, result in Net Available Proceeds in
excess of $10.0 million; provided that (x) any transfer, conveyance, sale,
lease or other disposition of assets securing the Credit Agreement in
connection with the enforcement of the security interests therein and (y) any
sale of crude oil pursuant to the contracts governing the Gulf Transaction
shall not be deemed an Asset Disposition hereunder.
"Attributable Indebtedness" means the total net amount of rent required to
be paid during the remaining primary term of any particular lease under which
any person is at the time liable, discounted at the rate per annum equal to
the weighted average interest rate borne by the New Notes.
"Blackstone" means Blackstone Capital Partners III Merchant Banking Fund
L.P. and its affiliates.
"Blackstone Transaction" means the acquisition of 13,500,000 shares of
common stock of Clark USA previously held by Trizec Hahn Corporation and
certain of its subsidiaries.
"Borrowing Base" means, as of any date, an amount equal to the sum of (i)
95% of the accounts receivable owned by the Company and its Restricted
Subsidiaries (excluding any accounts receivable from Restricted Subsidiaries
and any accounts receivable that are more than 90 days past due) as of such
date, plus (ii) 90% of the market value of inventory owned by the Company and
its Restricted Subsidiaries as of such date, plus (iii) 100% of the cash and
Cash Equivalents owned by the Company and its Restricted Subsidiaries as of
such date that are, as of such date, held in one or more separate accounts
under the direct control of the agent bank under the Credit Agreement and that
are as of such date pledged to secure working capital borrowings under the
Credit Agreement, minus (iv) the principal amount of borrowings outstanding as
of such date under the Credit Agreement to the extent that the amount of such
borrowings exceeds the sum of clauses (i) and (ii) above, all of the foregoing
calculated on a consolidated basis in accordance with GAAP.
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"Capital Lease" means, at the time any determination thereof is to be made,
any lease of property, real or personal or mixed, in respect of which the
present value of the minimum rental commitment would be capitalized on a
balance sheet of the lessee in accordance with GAAP.
"Capitalized Lease Obligation" of any Person means any lease of any property
(whether real, personal or mixed) by such Person as lessee which, in
conformity with GAAP, is required to be accounted for as a Capital Lease on
the balance sheet of that Person.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of any association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, and (iii) in the case of a partnership, partnership interests
(whether general or limited).
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof, (iii) certificates of deposit and
eurodollar time deposits with maturities of six months or less from the date
of acquisition, bankers' acceptances with maturities not exceeding six months
and overnight bank deposits, in each case with any domestic commercial bank
having capital and surplus in excess of $500 million and a Keefe Bank Watch
Rating of "B" or better, (iv) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clauses
(ii) and (iii) entered into with any financial institution meeting the
qualifications specified in clause (iii) above and (v) commercial paper having
the highest rating obtainable from Moody's or S&P and, in each case, maturing
within six months after the date of acquisition.
"Change of Control" means any transaction the result of which is that any
Person (an "Acquiring Person") other than Blackstone, or a Person, a majority
of whose voting equity is owned by Blackstone, becomes the Beneficial Owner,
directly or indirectly, of shares of stock of the Company or Clark USA
entitling such Acquiring Person to exercise 50% or more of the total voting
power of all classes of stock of the Company or Clark USA, as the case may be,
entitled to vote in elections of directors. The term "Beneficial Owner" shall
be determined in accordance with Rule 13d-3 under the Exchange Act.
"Chevron Payment" means that certain contingent payment obligation of Clark
USA to Chevron U.S.A. Inc. based on industry refining margins and the volume
of refined oil products produced at the Port Arthur Refinery over a five-year
period, pursuant to Section 3.1(d) of the Asset Purchase Agreement, dated as
of August 18, 1994, between Clark USA and Chevron U.S.A. Inc., as amended.
"Clark USA" means Clark USA, Inc., a Delaware corporation and the direct
parent of the Company.
"Consolidated Adjusted Net Worth" of any Person means the total amount of
consolidated stockholder's equity (par value plus additional paid-in capital
(including all Capital Stock except as excluded below) plus retained earnings
or minus accumulated deficit) of such Person as reflected on the consolidated
balance sheet of such Person and its Restricted Subsidiaries for the most
recent Quarter prior to the event requiring such determination to be made,
after excluding (to the extent otherwise included therein and without
duplication) the following (the amount of such stockholder's equity and
deductions therefrom to be computed, except as noted below, in accordance with
GAAP consistently applied): (i) any amount receivable but not paid from sales
of Capital Stock of such Person or its Restricted Subsidiaries determined on a
consolidated basis; (ii) any revaluation or other write-up in book value of
assets subsequent to the date hereof (other than write-ups of oil inventory
previously written down and other than reevaluations or write-ups upon the
acquisition of assets acquired in a transaction to be accounted for by
purchase accounting under GAAP); (iii) treasury stock; (iv) an amount equal to
the excess, if any, of the amount reflected on the books and records of such
Person
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or its Restricted Subsidiaries for the securities of any Person which is not a
Restricted Subsidiary of such Person over the lesser of cost or market value
(as determined in good faith by the board of directors of such Person or such
Restricted Subsidiary); (v) Disqualified Capital Stock; (vi) equity securities
of such Person or its Restricted Subsidiaries which are not Disqualified
Capital Stock but which are exchangeable for or convertible into debt
securities of such Person or such Restricted Subsidiary, as the case may be,
other than at the option of such Person or such Restricted Subsidiary except
to the extent that the exchange or conversion rights in such other equity
securities cannot, under any circumstances, be exercised prior to Maturity;
(vii) the cumulative foreign currency translation adjustment, if any; and
(viii) write-offs of non-cash items in an amount not to exceed $80.0 million.
"Consolidated Net Operating Income" means, when used with reference to any
Person, for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined
in accordance with GAAP, provided that (i) the Net Income of any Person which
is not a Subsidiary of such Person or is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid to such Person or its Restricted Subsidiaries, (ii) the Net
Income of any Unrestricted Subsidiary shall be excluded (except to the extent
distributed to the Company or one of its Subsidiaries), (iii) the Net Income
of any Person acquired in a pooling of interests transaction for any period
prior to the date of such acquisition shall be excluded, (iv) extraordinary
gains and losses and gains and losses from the sale of assets outside the
ordinary course of such Person's business shall be excluded, (v) the
cumulative effect of changes in accounting principles in the year of adoption
of such changes shall be excluded, and (vi) the tax effect of any of the items
described in clauses (i) through (v) above shall be excluded.
"Consolidated Net Tangible Assets" of a Person means the consolidated total
assets of such Person and its Restricted Subsidiaries determined in accordance
with GAAP, less the sum of (i) all current liabilities and current liability
items and (ii) all goodwill, trade names, trademarks, patents, organization
expense, unamortized debt discount and expense and other similar intangibles
properly classified as intangibles in accordance with GAAP.
"Consolidated Operating Cash Flow" means with respect to any Person,
Consolidated Net Operating Income of such Person and its Restricted
Subsidiaries without giving effect to gains and losses on securities
transactions (net of related taxes) for the period described below, increased
by the sum of (i) consolidated Fixed Charges of such Person and its Restricted
Subsidiaries which reduced Consolidated Net Operating Income for such period,
(ii) consolidated income tax expense (net of taxes relating to gains and
losses on securities transactions) of such Person and its Restricted
Subsidiaries which reduced Consolidated Net Operating Income for such period,
(iii) consolidated depreciation and amortization expense (including
amortization of purchase accounting adjustments) of such Person and its
Restricted Subsidiaries and other noncash items to the extent any of which
reduced Consolidated Net Operating Income for such period, (iv) expenses
incurred in connection with the Blackstone Transaction in an amount not to
exceed $9.0 million, and (v) any annual management monitoring, consulting and
advisory fees and related expenses paid to Blackstone and its affiliates in an
amount not to exceed $2.0 million, less noncash items which increased
Consolidated Net Operating Income for such period, all as determined for such
Person and its consolidated Restricted Subsidiaries in accordance with GAAP
for the four full Quarters for which financial information in respect thereof
is available immediately prior to the Transaction Date.
"Consolidated Operating Cash Flow Ratio" means, with respect to any Person,
the ratio of (i) Consolidated Operating Cash Flow of such Person and its
Restricted Subsidiaries for the four Quarters for which financial information
in respect thereof is available immediately prior to the Transaction Date to
(ii) the aggregate Fixed Charges of such Person and its Restricted
Subsidiaries
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for such four Quarters, such Fixed Charges and Preferred Stock Dividends to be
calculated on the basis of the amount of the Indebtedness, Capitalized Lease
Obligations and Preferred Stock of such Person and its Restricted Subsidiaries
outstanding on the Transaction Date and assuming the continuation of market
interest rate levels prevailing on the Transaction Date in any calculation of
interest rates in respect of floating interest rate obligations; provided,
however, that if such Person or any Restricted Subsidiary of such Person shall
have acquired, sold or otherwise disposed of any Material Asset or engaged in
an Equity Offering during the four full Quarters for which financial
information in respect thereof is available immediately prior to the
Transaction Date or during the period from the end of such fourth full Quarter
to and including the Transaction Date, the calculation required in clause (i)
above will be made giving effect to such acquisition, sale or disposition or
the other investment of the Net Available Proceeds of such Equity Offering on
a pro forma basis as if such acquisition, sale, disposition or investment had
occurred at the beginning of such four full Quarter period without giving
effect to clause (iii) of the definition of "Consolidated Net Operating
Income" (that is, including in such calculation the Net Income for the
relevant prior period of any Person acquired in a pooling of interests
transaction, notwithstanding the provisions of said clause (iii)); provided,
further, that Fixed Charges of such Person during the applicable period shall
not include the amount of consolidated interest expense which is directly
attributable to Indebtedness to the extent such Indebtedness is reduced by the
proceeds of the incurrence of such Indebtedness which gave rise to the need to
calculate the Consolidated Operating Cash Flow Ratio. Any such pro forma
calculation may include adjustments appropriate, in the reasonable
determination of the Company as set forth in an Officer's Certificate, to (i)
reflect operating expense reductions reasonably expected to result from the
acquisition by the Company of such Material Assets or (ii) eliminate the
effect of any extraordinary accounting event with respect to any acquired
Person on Consolidated Net Operating Income.
"Credit Agreement" means that certain Credit Agreement, dated as of
September 25, 1997, by and among the Company and the financial institutions
party thereto, including any related notes, recorded or otherwise perfected
under applicable law (including any conditional sale or other title
guarantees, collateral documents, instruments and agreements executed in
connection therewith), and in each case as amended, modified, extended,
renewed, refunded, replaced or refinanced from time to time.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Designated Senior Debt" means (i) any Indebtedness outstanding under the
Credit Agreement, (ii) the Senior Note Indenture, (iii) the Term Loan, and
(iv) any other Senior Debt permitted under the Senior Subordinated Note
Indenture, the principal amount of which is $20.0 million or more and that has
been designated by the Company as "Designated Senior Debt."
"Disposition" means, with respect to any Person, any merger, consolidation
or other business combination involving such Person (whether or not such
Person is the Surviving Person) or the sale, assignment, transfer, lease,
conveyance or other disposition of all or substantially all of such Person's
assets.
"Disqualified Capital Stock" means any Capital Stock of the Company that,
either by its terms or by the terms of any security into which it is
convertible or exchangeable, is, or upon the happening of any event or passage
of time would be, required to be redeemed or purchased (other than pursuant to
an offer to repurchase such Capital Stock following a change of control, which
offer may not be completed until 45 days after completion of the Offer
described under "--Change of Control"), including at the option of the holder,
in whole or in part, or has, or upon the happening of an event or passage of
time would have, a redemption, sinking fund or similar payment due, on or
prior to November 15, 2007.
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"Equity Offering" means any public or private sale of Capital Stock
(including options, warrants or rights with respect thereto) of the Company or
of Clark USA.
"Excluded Contribution" means the net cash proceeds received by the Company
after the Issue Date from (a) contributions to its common equity capital and
(b) the sale (other than to a Subsidiary or to any Company or Subsidiary
management equity plan or stock option plan or any other management or
employee benefit plan or agreement) of Capital Stock of the Company (other
than Disqualified Stock), in each case, designated as Excluded Contributions
pursuant to an Officers' Certificate.
"Existing Indebtedness" means any outstanding Indebtedness of the Company
and its Subsidiaries as of the Issue Date and in any event Indebtedness
evidenced by the Credit Agreement whether or not outstanding on the Issue
Date.
"Fixed Charges" of any Person means, for any period, the sum of (i)
consolidated Interest Expense of such Person and its Restricted Subsidiaries,
plus (ii) all but the principal component of rentals in respect of
consolidated Capitalized Lease Obligations of such Person and its Restricted
Subsidiaries paid, accrued or scheduled to be paid or accrued by such Person
and its Restricted Subsidiaries during such period, and determined in
accordance with GAAP, plus (iii) all cash dividend payments (excluding items
eliminated in consolidation) on any series of preferred stock of such Person.
For purposes of this definition, (a) interest on Indebtedness which accrues on
a fluctuating basis for periods succeeding the date of determination shall be
deemed to accrue at a rate equal to the average daily rate of interest in
effect during such immediately preceding Quarter and (b) interest on a
Capitalized Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined in good faith by the chief financial officer, treasurer
or controller of such Person to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP (including Statement of
Financial Accounting Standards No. 13 of the Financial Accounting Standards
Board).
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entities as have been approved by a significant segment of the
accounting profession, which are in effect on the Issue Date.
"Guaranty" means a guaranty (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Gulf Payments" means all payments (other than the initial purchase price of
$26.9 million under the Gulf Oil Purchase Contract) to Gulf Resources
Corporation, a Panamanian corporation, and/or any of its Affiliates, in each
case, pursuant to the Gulf Merger Agreement, the Gulf Oil Purchase Contract,
the Gulf Stockholders' Agreement and the Gulf Pledge Agreement, as each is in
effect on the date hereof.
"Indebtedness" with respect to any Person, means any indebtedness,
including, in the case of the Company, the indebtedness evidenced by the
Notes, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or representing the balance
deferred and unpaid of the purchase price of any property (including pursuant
to Capital Leases) (except any such balance that constitutes a trade payable
in the ordinary course of business that is not overdue by more than 90 days
from the invoice date or is being contested in good faith), if and to the
extent any of the foregoing indebtedness would appear as a liability upon a
balance sheet of such Person prepared on a consolidated basis in accordance
with GAAP, and shall also include, to the extent not otherwise
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included, the Guaranty of Indebtedness of other Persons not included in the
financial statements of the Company, the maximum fixed redemption or
repurchase price of Disqualified Capital Stock (or if not redeemable or
subject to repurchase, the issue price) and the maximum fixed redemption or
repurchase price (or if not redeemable or subject to repurchase, the issue
price) of Preferred Stock issued by any Restricted Subsidiary of the Company
to any Person other than to the Company or a Restricted Subsidiary.
"Interest Expense" of any Person means, for any period, the aggregate amount
of interest expense in respect of Indebtedness (excluding (a) the Chevron
Payment, (b) the AOC Payment, (c) the Gulf Payments and (d) the amortization
of debt issuance expense relating to the Securities, but including without
limitation or duplication (i) amortization of debt issuance expense with
respect to other Indebtedness, (ii) amortization of original issue discount on
any Indebtedness, and (iii) the interest portion of any deferred payment
obligation, all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financings and the net
cost associated with Interest Swap Obligations) paid, accrued or scheduled to
be paid or accrued by such Person during such period, determined in accordance
with GAAP.
"Interest Swap Obligations" means, when used with reference to any Person,
the obligations of such person under (i) interest rate swap agreements,
interest rate exchange agreements, interest rate cap agreements, and interest
rate collar agreements, (ii) currency swap agreements and currency exchange
agreements, and (iii) other similar agreements or arrangements, which are, in
each such case, designed solely to protect such Person against fluctuations in
interest rates or currency exchange rates.
"Investment" means, when used with reference to any Person, any direct or
indirect advances, loans or other extensions of credit or capital
contributions by such Person to (by means of transfers of property to others
or payments for property or services for the account or use of others, or
otherwise), or purchases or acquisitions by such Person of Capital Stock,
bonds, notes, debentures or other securities issued by, any other Person or
any Guaranty or assumption of any liability (contingent or otherwise) by such
Person of any Indebtedness or Obligations of any other Person and all other
items that are or would be classified as investments on a balance sheet
prepared in accordance with GAAP.
"Issue Date" means November 21, 1997.
"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind (except for taxes not yet owing)
in respect of such asset, whether or not filed, retention agreement, any lease
in the nature thereof, any option or other agreement to sell and, with respect
to which, any filing of or agreement to give any financing statement under the
Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Loan Agreement" means the term loan agreement, dated as of November 21,
1997, among the Company, certain lenders and Goldman Sachs Credit Partners
L.P., as agent, as amended from time to time.
"Maturity" means, with respect to any New Notes, the date on which the
principal of such New Notes becomes due and payable as provided in the
Indenture, whether at the Stated Maturity or by declaration of acceleration,
call for redemption or otherwise.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Available Proceeds" means cash or readily marketable cash equivalents
received (including by way of sale or discounting of a note, installment
receivable or other receivable, but excluding any other consideration received
in the form of assumption by the acquiree of Indebtedness or other obligations
relating to such properties or assets or received in any other noncash form)
net of (i) all legal and accounting expenses, commissions and other fees and
expenses incurred and all federal, state, provincial, foreign and local taxes
required to be accrued as a liability as a consequence of such issuance and
(ii) all payments made by such Person or its Subsidiaries on any Indebtedness
which must, in order to obtain a necessary consent to such issuance or by
applicable law, be repaid out of the proceeds from such issuance.
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"Net Income" of any Person for any period means the net income (loss) from
continuing operations of such Person for such period, determined in accordance
with GAAP.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the Company
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries to declare a default on such
other Indebtedness or cause the payment thereof to be accelerated or payable
prior to its stated maturity.
"Obligations" means any principal (and premium, if any), interest,
penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Permitted Indebtedness" means Indebtedness incurred by the Company or its
Restricted Subsidiaries (i) to renew, extend, refinance or refund Indebtedness
that is permitted to be incurred pursuant to the Consolidated Operating Cash
Flow Ratio test set forth in the covenant described under "--Limitation on
Indebtedness" and clauses (ii) through (iv) and (xi) below; provided, however,
that such Indebtedness does not exceed the principal amount of the
Indebtedness so renewed, extended, refinanced or refunded 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 or such Restricted Subsidiary as
necessary to accomplish such refinancing by means of a tender offer or
privately negotiated repurchase, plus the expenses of the Company or such
Restricted Subsidiary incurred in connection with such refinancing; and
provided, however, that Indebtedness the proceeds of which are used to
refinance or refund such Indebtedness shall only be permitted if (A) in the
case of any refinancing or refunding of Indebtedness that is pari passu with
the New Notes the refinancing or refunding Indebtedness is made pari passu
with the New Notes or subordinated to the New Notes, (B) in the case of any
refinancing or refunding of Indebtedness that is subordinated to the New Notes
the refinancing or refunding of Indebtedness is made subordinated to the New
Notes at least to the same extent as such Indebtedness being refinanced or
refunded was subordinated to the New Notes and (C) in the case of the
refinancing or refunding of Indebtedness that is subordinated to the New
Notes, the refinancing or refunding Indebtedness by its terms, or by the terms
of any agreement or instrument pursuant to which such Indebtedness is issued,
(x) does not provide for payments of principal of such Indebtedness at the
stated maturity thereof or by way of a sinking fund applicable thereto or by
way of any mandatory redemption, defeasance, retirement or repurchase thereof
by the Company or such Restricted Subsidiary (including any redemption,
retirement or repurchase which is contingent upon events or circumstances, but
excluding any retirement required by virtue of acceleration of such
Indebtedness upon an event of default thereunder), in each case prior to the
final stated maturity of the Indebtedness being refinanced or refunded and (y)
does not permit redemption or other retirement (including pursuant to an offer
to purchase made by the Company or such Restricted Subsidiary) of such
Indebtedness at the option of the holder thereof prior to the final stated
maturity of the Indebtedness being refinanced or refunded, other than a
redemption or other retirement at the option of the holder of such
Indebtedness (including pursuant to an offer to purchase made by the Company
or such Restricted Subsidiary), which is conditioned upon the change of
control of the Company or such Restricted Subsidiary; (ii) arising from time
to time under the Credit Agreement in an aggregate principal amount which,
together with any obligations under clause (xi) below, do not exceed the
greater of (a) $500.0 million at any one time outstanding less the aggregate
amount of all proceeds of all Asset Dispositions that have been applied since
the Issue Date to permanently reduce the outstanding amount of such
Indebtedness and (b) the amount of the Borrowing Base as of such date
(calculated on a pro forma basis after giving effect to such borrowing and the
application of the
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proceeds therefrom); (iii) outstanding on the Issue Date; (iv) evidenced by
trade letters of credit incurred in the ordinary course of business not to
exceed $20 million in the aggregate at any time; (v) between or among the
Company and/or its Restricted Subsidiaries other than Restricted Subsidiaries
owned in any part by the Principal Shareholders; (vi) which is Subordinated
Debt; (vii) arising out of Sale and Leaseback Transactions or Capitalized
Lease Obligations relating to computers and other office equipment and
elements, catalysts or other chemicals used in connection with the refining of
petroleum or petroleum by-products; (viii) the proceeds of which are used to
make the Chevron Payment, the AOC Payment and the Gulf Payments; (ix) arising
out of Interest Swap Obligations; (x) in connection with capital projects
qualifying under Section 142(a) (or any successor provision) of the Internal
Revenue Code of 1986, as amended, in an amount not to exceed $75.0 million in
the aggregate at any time; (xi) obligations of the Company or any Restricted
Subsidiary in connection with any Qualified Securitization Transaction in an
amount which, together with any amount under clause (ii) above, does not
exceed the greater of (a) $500.0 million at any one time outstanding less the
aggregate amount of all proceeds of all Asset Dispositions that have been
applied since the Issue Date to permanently reduce the outstanding amount of
such Indebtedness and (b) the amount of the Borrowing Base as of such date
(calculated on a pro forma basis after giving effect to such borrowing and the
application of the proceeds therefrom); (xii) any guarantee by the Company of
Indebtedness of any of its Restricted Subsidiaries so long as the incurrence
of such Indebtedness is permitted to be incurred under the covenant "--
Limitation on Indebtedness;" (xiii) Indebtedness or preferred stock of Persons
that are acquired by the Company or any of its Restricted Subsidiaries or
merged into the Company or a Restricted Subsidiary in accordance with the
terms of the applicable Indenture; provided that such Indebtedness or
preferred stock is not incurred in contemplation of such acquisition or
merger; and provided further that after giving effect to such acquisition or
merger either (A) the Company would be permitted to incur at least $1.00 of
additional Indebtedness under the Consolidated Operating Cash Flow Ratio test
set forth in the first paragraph of "--Limitation on Indebtedness" or (B) the
Company's Consolidated Operating Cash Flow Ratio is equal to or greater than
such ratio immediately prior to such acquisition or merger; (xiv) in an amount
not greater than twice the aggregate amount of cash contributions made to the
capital of the Company; (xv) in exchange for, or the proceeds of which are
used to refund or refinance the 10 7/8% Notes; provided, however, that after
giving effect to such exchange, refunding or refinancing, the Consolidating
Operating Cash Flow Ratio exceeds 1.75 to 1.0 and such Indebtedness shall be
subordinated to the New Senior Notes to at least the same extent as the New
Senior Subordinated Notes are subordinated to the New Senior Notes; and (xvi)
in addition to Indebtedness permitted by clauses (i) through (xv) above,
Indebtedness not to exceed on a consolidated basis for the Company and its
Restricted Subsidiaries at any time $75.0 million.
"Permitted Junior Securities" means Capital Stock (and all warrants, options
or other rights to acquire Capital Stock) in the Company or debt securities
that are subordinated to the New Senior Subordinated Notes (and any debt
securities issued in exchange for Senior Debt) to substantially the same
extent as, or to a greater extent than, the New Senior Subordinated Notes are
subordinated to Senior Debt pursuant to the Senior Subordinated Note
Indenture.
"Permitted Liens" means (i) Liens in favor of the Company; (ii) Liens on
property of a Person existing at the time such Person is merged into or
consolidated with the Company, provided that such Liens were in existence
prior to the contemplation of such merger or consolidation and do not extend
to any assets other than those of the Person merged into or consolidated with
the Company; (iii) Liens on property existing at the time of acquisition
thereof by the Company, provided that such Liens were in existence prior to
the contemplation of such acquisition; (iv) Liens to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business; (v)
Liens existing on the Issue Date; (vi) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently concluded, provided that any
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reserve or other appropriate provision as shall be required in conformity with
GAAP shall have been made therefor; (vii) Liens imposed by law, such as
mechanics', carriers', warehousemen's, materialmen's, and vendors' Liens,
incurred in good faith in the ordinary course of business with respect to
amounts not yet delinquent or being contested in good faith by appropriate
proceedings if a reserve or other appropriate provisions, if any, as shall be
required by GAAP shall have been made therefor; (viii) zoning restrictions,
easements, licenses, covenants, reservations, restrictions on the use of real
property or minor irregularities of title incident thereto that do not, in the
aggregate, materially detract from the value of the property or the assets of
the Company or impair the use of such property in the operation of the
Company's business; (ix) judgment Liens to the extent that such judgments do
not cause or constitute a Default or an Event of Default; (x) Liens to secure
the payment of all or a part of the purchase price of property or assets
acquired or the construction costs of property or assets constructed in the
ordinary course of business on or after the Issue Date, provided that (a) such
property or assets are used in the Principal Business of the Company, (b) at
the time of incurrence of any such Lien, the aggregate principal amount of the
obligations secured by such Lien shall not exceed the lesser of the cost or
fair market value of the assets or property (or portions thereof) so acquired
or constructed, (c) each such Lien shall encumber only the assets or property
(or portions thereof) so acquired or constructed and shall attach to such
assets or property within 180 days of the purchase or construction thereof and
(d) any Indebtedness secured by such Lien shall have been permitted to be
incurred under the covenant entitled "--Limitation on Indebtedness"; (xi)
Liens incurred in the ordinary course of business of the Company with respect
to obligations that do not exceed 5% of Consolidated Net Tangible Assets at
any one time outstanding; (xii) Liens incurred in connection with Interest
Swap Obligations; (xiii) Liens on any Securitization Program Assets in
connection with any Qualified Securitization Transaction; (xiv) Liens to
secure obligations owing from time to time under the Credit Agreement; and
(xv) with respect to the Senior Subordinated Notes, Liens to secure Senior
Debt.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, estate, unincorporated organization
or government or any agency or political subdivision thereof.
"Port Arthur Refinery" means the refinery in Port Arthur, Texas and certain
other assets acquired from Chevron U.S.A., Inc.
"Principal Business" means, with respect to the Company and its Restricted
Subsidiaries, (i) the business of the acquisition, processing, marketing,
refining, storage and/or transportation of hydrocarbons and/or royalty or
other interests in crude oil or associated products related thereto, (ii) the
acquisition, operation, improvement, leasing and other use of convenience
stores, retail service stations, truck stops and other public accommodations
in connection therewith, (iii) any business currently engaged in by the
Company or its Restricted Subsidiaries on the Issue Date, and (iv) any
activity or business that is a reasonable extension, development or expansion
of, or reasonably related to, any of the foregoing.
"Principal Property" means (i) any refinery and related pipelines,
terminalling and processing equipment or (ii) any other real property or
marketing assets or related group of such assets of the Company having a fair
market value in excess of $20.0 million.
"Principal Shareholders" means (i) Blackstone, (ii) Occidental Petroleum
Corporation, (iii) Gulf Resources Corporation, and (iv) Affiliates of the
Persons described in the foregoing clauses (i) through (iii), other than the
Company and its Subsidiaries.
"Qualified Securitization Transaction" means any transaction or series of
transactions that may be entered into by the Company or any Subsidiary
pursuant to which the Company or any Subsidiary may sell, convey, grant a
security interest in or otherwise transfer to a Securitization Special Purpose
Entity, and such Securitization Special Purpose Entity may sell, convey, grant
a security interest in, or otherwise transfer to any other Person, any
Securitization Program Assets (whether now existing or arising in the future).
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"Quarter" means a fiscal quarterly period of the Company.
"Rating Agencies" means (i) S&P and Moody's or (ii) if S&P or Moody's or
both of them are not making ratings of the New Notes publicly available, a
nationally recognized U.S. rating agency or agencies, as the case may be,
selected by the Company, which will be substituted for S&P or Moody's or both,
as the case may be.
"Rating Category" means (i) with respect to S&P, any of the following
categories (any of which may include a "+" or "-"); AAA, AA, A, BBB, BB, B,
CCC, CC, C and D (or equivalent successor categories); (ii) with respect to
Moody's, any of the following categories (any of which may include a "1," "2"
or "3"); Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C and D (or equivalent successor
categories), and (iii) the equivalent of any such categories of S&P or Moody's
used by another Rating Agency, if applicable.
"Rating Decline" means that at any time within 90 days (which period shall
be extended so long as the rating of the New Notes is under publicly announced
consideration for possible down grade by any Rating Agency) after the date of
public notice of a Change of Control, or of the intention of the Company or of
any Person to effect a Change of Control, the rating of the New Notes is
decreased by both Rating Agencies by one or more categories and the ratings on
the New Notes following such downgrade is below Investment Grade.
"Receivables" means all rights of the Company or any Subsidiary of the
Company to payments (whether constituting accounts, chattel paper,
instruments, general intangibles or otherwise, and including the right to
payment of any interest or finance charges), which rights are identified in
the accounting records of the Company or such Subsidiary as accounts
receivable.
"Redemption Date," when used with respect to any New Note to be redeemed,
means the date fixed for such redemption by or pursuant to the applicable
Indenture.
"Redemption Price," when used with respect to any New Note to be redeemed,
means the price at which it is to be redeemed pursuant to the applicable
Indenture.
"Restricted Debt Prepayment" means any purchase, redemption, defeasance
(including, but not limited to, in-substance or legal defeasance) or other
acquisition or retirement for value (collectively a "prepayment") other than
in connection with a concurrent issuance of pari passu or Subordinated
Indebtedness, directly or indirectly, by the Company or a Restricted
Subsidiary of the Company, prior to the scheduled maturity on or prior to any
scheduled repayment of principal (and premium, if any) or sinking fund payment
in respect of Indebtedness of the Company (other than the New Notes) which is
subordinate in right of payment to the applicable series of New Notes.
"Restricted Investment" means any direct or indirect Investment by the
Company or any Restricted Subsidiary of the Company in (i) any Affiliate of
the Company which is not a Restricted Subsidiary of the Company and (ii) any
Unrestricted Subsidiary of the Company, other than direct or indirect
investments in (a) Polymer Asphalt L.L.C., a Missouri limited liability
company, (b) Bagel Street Holdings, Inc., and (c) any pipeline company in
which the Company or any of its Restricted Subsidiaries now owns or hereafter
acquires any interest; provided that the aggregate amount of Investments made
by the Company or any of its Restricted Subsidiaries pursuant to clauses (a),
(b) and (c) above shall not exceed $25.0 million in the aggregate at any one
time outstanding provided, that no Investment in a Securitization Special
Purpose Entity in connection with a Qualified Securitization Transaction shall
be a Restricted Investment.
"Restricted Payment" means (i) any Stock Payment, (ii) any Restricted
Investment, or (iii) any Restricted Debt Prepayment. Notwithstanding the
foregoing, Restricted Payments shall not include (a) payments by the Company
to any Restricted Subsidiary of the Company, (b) payments by any Restricted
Subsidiary of the Company to the Company or any other Restricted Subsidiary of
the Company, (c) the Chevron Payment, (d) the AOC Payment, and (e) the Gulf
Payments.
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"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not (i) an Unrestricted Subsidiary or (ii) a direct or indirect
Subsidiary of an Unrestricted Subsidiary.
"S&P" means Standard & Poor's Rating Services and its successors.
"Sale and Leaseback Transaction" of any Person means an arrangement with any
lender or investor or to which such lender or investor is a party providing
for the leasing by such Person of any property or asset of such Person which
has been or is being sold or transferred by such Person more than 365 days
after the acquisition thereof or the completion of construction or
commencement of operation thereof to such lender or investor or to any Person
to whom funds have been or are to be advanced by such lender or investor on
the security of such property or asset. The stated maturity of such
arrangement shall be the date of the last payment of rent or any other amount
due under such arrangement prior to the first date on which such arrangement
may be terminated by the lessee without payment of a penalty.
"Securitization Program Assets" means (a) all Receivables and inventory
which are described as being transferred by the Company or any Subsidiary of
the Company pursuant to documents relating to any Qualified Securitization
Transaction, (b) all Securitization Related Assets, and (c) all collections
(including recoveries) and other proceeds of the assets described in the
foregoing clauses.
"Securitization Related Assets" means (i) any rights arising under the
documentation governing or relating to Receivables (including rights in
respect of Liens securing such Receivables and other credit support in respect
of such Receivables) or to inventory, (ii) any proceeds of such Receivables or
inventory and any lockboxes or accounts in which such proceeds are deposited,
(iii) spread accounts and other similar accounts (and any amounts on deposit
therein) established in connection with a Qualified Securitization
Transaction, (iv) any warranty, indemnity, dilution and other intercompany
claim arising out of the documents relating to such Qualified Securitization
Transaction, and (v) other assets which are customarily transferred or in
respect of which security interests are customarily granted in connection with
asset securitization transactions involving accounts receivable or inventory.
"Securitization Special Purpose Entity" means a Person (including, without
limitation, a Subsidiary of the Company) created in connection with the
transactions contemplated by a Qualified Securitization Transaction, which
Person engages in no activities other than those incidental to such Qualified
Securitization Transaction.
"Senior Debt" means (i) all Indebtedness outstanding under the Credit
Agreement and the Loan Agreement, (ii) Indebtedness represented by the New
Senior Notes, the 10 1/2% Notes and the 9 1/2% Notes, (iii) any other
Indebtedness permitted to be incurred by the Company under the terms of the
Senior Subordinated Note Indenture, unless the instrument under which such
Indebtedness is incurred expressly provides that it is on a parity with or
subordinated in right of payment to the New Senior Subordinated Notes, and
(iv) all Obligations with respect to the foregoing. Notwithstanding anything
to the contrary in the foregoing, Senior Debt will not include (v)
Indebtedness represented by preferred stock, (w) any liability for federal,
state, local or other taxes owed or owing by the Company, (x) any Indebtedness
of the Company to any of its Subsidiaries or other Affiliates, (y) any trade
payables, or (z) any Indebtedness that is incurred in violation of the Senior
Subordinated Note Indenture; provided, however, that any Indebtedness incurred
under the Credit Agreement, in respect of which the lenders or the agent
thereunder receive from the Company a representation that such Indebtedness is
Senior Debt for all purposes under the Senior Subordinated Note Indenture,
shall be Senior Debt for all purposes under the Senior Subordinated Note
Indenture notwithstanding this clause (z).
"Stated Maturity" means November 15, 2007.
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"Stock Payment" means, with respect to the Company, any dividend, either in
cash or in property (except dividends payable in Capital Stock of the Company
which is not convertible into Indebtedness), on, or the making by the Company
of any other distribution in respect of, its Capital Stock, now or hereafter
outstanding, or the redemption, repurchase, retirement, defeasance or any
acquisition for value by the Company, directly or indirectly, of its Capital
Stock or any warrants, rights or options to purchase or acquire shares of any
class of its Capital Stock, now or hereafter outstanding (other than in
exchange for the Company's Capital Stock (other than Disqualified Capital
Stock) or options, warrants or other rights to purchase the Company's Capital
Stock (other than Disqualified Capital Stock)).
"Stock Purchase and Redemption Agreement" means that certain Stock Purchase
and Redemption Agreement dated as of December 30, 1992, by and among AOC
Limited Partnership, P. Anthony Novelly, Samuel R. Goldstein, G&N Investments,
Inc., The Horsham Corporation, the Company and Clark USA.
"Subordinated Indebtedness" means, with respect to any series of New Notes,
any Indebtedness of the Company which is subordinated in right of payment to
such series of New Notes and with respect to which no payments of principal
(by way of sinking fund, mandatory redemption, maturity or otherwise)
including, without limitation, at the option of the holder thereof (other than
pursuant to an offer to repurchase such Subordinated Indebtedness following a
change of control, which offer may not be completed until 45 days after
completion of the Offer described under "--Change of Control") are required to
be made by the Company at any time prior to the Stated Maturity of such series
of New Notes.
"Subsidiary" of any Person means (i) a corporation more than 50% of the
total voting power of all classes of the outstanding voting stock of which is
owned, directly or indirectly, by such Person or by one or more other
Subsidiaries of such Person or by such Person and one or more Subsidiaries
thereof or (ii) any other Person (other than a corporation) in which such
Person, or one or more other Subsidiaries of such Person or such Person and
one or more other Subsidiaries thereof, directly or indirectly, has at least a
majority ownership and the power to direct the policies, management and
affairs thereof.
"Surviving Person" means, with respect to any Person involved in or that
makes any Disposition, the Person formed by or surviving such Disposition or
the Person to which such Disposition is made.
"Transaction Date" means the date on which the Indebtedness giving rise to
the need to calculate the Consolidated Operating Cash Flow Ratio was incurred
or the date on which, pursuant to the terms of this Indenture, the transaction
giving rise to the need to calculate the Consolidated Operating Cash Flow
Ratio occurred.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the Issue Date; provided, however, that in the event the Trust Indenture Act
of 1939 is amended after such date, "Trust Indenture Act" means, to the extent
required by any such amendment, the Trust Indenture Act of 1939 as so amended.
"Unrestricted Subsidiary" means any Subsidiary that is designated by the
board of directors of the Company as an Unrestricted Subsidiary pursuant to a
Board Resolution; but only to the extent that such Subsidiary: (a) has no
Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement,
contract, arrangement or understanding with the Company or any Restricted
Subsidiary of the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from
Persons who are not Affiliates of the Company; (c) is a Person with respect to
which neither the Company nor any of its Restricted Subsidiaries has any
direct or indirect obligation (x) to
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subscribe for additional Capital Stock (including options, warrants or other
rights to acquire Capital Stock) or (y) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any specified levels of
operating results; and (d) has not guaranteed or otherwise directly or
indirectly provided credit support for any Indebtedness of the Company or any
of its Restricted Subsidiaries. The board of directors of the Company may at
any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only
be permitted if (i) such Indebtedness is permitted under "--Certain
Covenants--Limitation on Indebtedness," and (ii) no Default or Event of
Default would be in existence following such designation.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall
at the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person or by such Person and one or more Wholly Owned
Restricted Subsidiaries of such Person.
"Wholly Owned U.S. Restricted Subsidiary" of any Person means a Wholly Owned
Restricted Subsidiary of such Person which is organized under the laws of any
state in the United States or of the District of Columbia.
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BOOK ENTRY; DELIVERY AND FORM
GENERAL
The New Notes are being offered to existing holders of the Old Notes. The
New Notes will be issued only in fully registered form, without interest
coupons. The New Notes will not be issued in bearer form.
Each series of New Notes will initially be represented by a single permanent
global certificate (each a "Global Note" and collectively the "Global Notes").
The Global Notes will be deposited with the Senior Note Trustee or the Senior
Subordinated Note Trustee, as applicable, as custodian for DTC in New York,
New York, and registered in the name of DTC or its nominee, in each case for
credit to an account of a direct or indirect participant in DTC as described
below.
Except as set forth below, the Global Notes may be transferred, in whole and
not in part, only to another nominee of DTC or to a successor of DTC or its
nominee.
In addition, transfer of beneficial interests in the Global Notes will be
subject to the applicable rules and procedures of DTC and its direct or
indirect participants (including, if applicable, these of Euroclear and
CEDEL), which may change from time to time. Beneficial interests in the Global
Notes may not be exchanged for New Notes in certified form except in the
limited circumstances described below. See "--Exchange of Interests in Global
Notes for Certificated Notes."
EXCHANGE OF INTERESTS IN GLOBAL NOTES FOR CERTIFICATED NOTES
As long as DTC, or its nominee, is the registered holder of the Global
Notes, DTC or such nominee, as the case may be, will be considered the sole
owner and holder of the New Notes represented by such Global Notes for all
purposes under the Indenture, and the New Notes. Unless DTC notifies the
Company that it is unwilling or unable to continue as depository for the
Global Notes, or ceases to be a "Clearing Agency" registered under the
Exchange Act, or announces an intention permanently to cease doing business or
does in fact do so, or an Event of Default has occurred and is continuing with
respect to either Global Note, owners of beneficial interests in a Global Note
will not be entitled to have any portions of such Global Note registered in
their names, will not receive or be entitled to receive a physical delivery of
such applicable New Note in definitive form and will not be considered the
owners or Holders of such Global Note (or any New Notes represented thereby)
under the applicable Indenture or series of New Notes. In addition, no
beneficial owner of an interest in a Global Note will be able to transfer that
interest except in accordance with DTC's applicable procedures (in addition to
those under the applicable Indenture referred to herein). In the event that
owners of beneficial interests in a Global Note become entitled to receive
such applicable New Notes in certificated form, such New Notes will be issued
only as New Notes in certificated form in denominations of $1,000 and integral
multiples thereof.
DEPOSITORY PROCEDURES WITH RESPECT TO GLOBAL NOTES
The following description of the operations and procedures of DTC, Euroclear
and CEDEL is provided solely as a matter of convenience. These operations and
procedures are solely within the control of the respective settlement systems
and are subject to changes by them from time to time. The Company takes no
responsibility for these operations and procedures and urges investors to
contact the system or their participants directly to discuss these matters.
Upon the issuance of the Global Notes, DTC will credit, on its internal
system, the respective principal amount of the individual beneficial interests
represented by such Global Notes to the accounts with DTC ("Participants") or
persons who hold interests through Participants. Ownership of beneficial
interests in the Global Notes will be shown on, and the transfer of that
ownership will be effected only through, records maintained by DTC or its
nominee (with respect to interests of Participants) and the records of
Participants (with respect to interest of persons other than Participants).
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AS LONG AS DTC, OR ITS NOMINEE, IS THE REGISTERED HOLDER OF THE GLOBAL
NOTES, DTC OR SUCH NOMINEE, AS THE CASE MAY BE, WILL BE CONSIDERED THE SOLE
OWNER AND HOLDER OF THE NEW NOTES REPRESENTED BY SUCH GLOBAL NOTES FOR ALL
PURPOSES UNDER THE INDENTURES AND THE NEW NOTES. Unless DTC notifies the
Company that it is unwilling or unable to continue as depository for the
Global Notes, or ceases to be a "Clearing Agency" registered under the
Exchange Act, or announces an intention permanently to cease business or does
in fact do so, or an Event of Default has occurred and is continuing with
respect to the Global Notes, owners of beneficial interests in a Global Note
will not be entitled to have any portions of such Global Note registered in
their names, will not receive or be entitled to receive physical delivery of
such applicable New Notes in definitive form and will not be considered the
owners or holders of such Global Notes (or any applicable New Notes presented
thereby) under the applicable Indenture or series of New Notes. In addition,
no beneficial owner of an interest in the Global Notes will be able to
transfer that interest except in accordance with DTC's applicable procedures
(in addition to those under the Indenture referred to herein and, if
applicable, those of Euroclear and CEDEL). In the event that owners of
beneficial interests in a Global Note become entitled to receive such
applicable New Notes in definitive form, such New Notes will be issued only in
registered form in denominations of $1,000 and integral multiples thereof.
Investors may hold their interests in the Global Notes through CEDEL or
Euroclear, if they are Participants in such systems, or indirectly through
organizations which are Participants in such systems. Investors may also hold
such interests through organizations other than CEDEL and Euroclear that are
Participants in the DTC system. CEDEL and Euroclear will hold interests in the
Global Notes on behalf of their participants through customers' securities
accounts in their respective names on the books of their respective
depositories, which, in turn, will hold such interests in the Global Notes in
customers' securities accounts in the depositories' names on the books of DTC.
Investors may hold their interests in the Global Notes directly through DTC,
if they are Participants in such system. All interests in the Global Notes,
including those held through Euroclear or CEDEL, may be subject to the
procedures and requirements of DTC. Those interests held through Euroclear and
CEDEL may also be subject to the procedures and requirements of such system.
Payments of the principal of, premium, if any, and interest on Global Notes
will be made to DTC or its nominee as the registered owner thereof. Neither
the Company, the Trustee nor any of their respective agents will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global Notes
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
All payments with respect to the New Notes will be made by the Company in
immediately available funds. Subject to the following considerations,
beneficial interests in the Global Notes will trade in DTC's Settlement System
unit maturity, and secondary market trading activity in such interests will
therefore settle in immediately available funds. The Company expects that DTC
or its nominee, upon receipt of any payment of principal or interest in
respect of a Global Notes representing any New Notes held by it or its
nominee, will immediately credit participants' accounts with payment in
amounts proportionate to their respective beneficial interests in the
principal amount of such Global Notes for such New Notes as shown on the
records of DTC or its nominee. The Company also expects the payments by
Participants to owners of beneficial interest in such Global Notes held
through such Participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts
of customers registered in "street name." Such payments will be the
responsibility of such Participants.
Transfers between Participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds. Transfers between
Participants in Euroclear and CEDEL will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Cross-market transfers between DTC Participants, on the one hand, and
Euroclear or CEDEL Participants, on the other hand, will be effected by DTC in
accordance with DTC's rules on behalf of
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Euroclear or CEDEL, as the case may be, by its respective depository; however,
such cross-market transactions will require delivery of instructions to
Euroclear or CEDEL, as the case may be, by the counterparty in such system in
accordance with the rules and procedures and within the established deadlines
(Brussels time) of such system. Euroclear or CEDEL, as the case may be, will,
if the transaction meets its settlement requirements, deliver instructions to
its respective depositary to take action to effect final settlement on its
behalf by delivering or receiving interests in the relevant Global Note in
DTC, and making or receiving payment in accordance with normal procedures or
same-day funds settlement applicable to DTC. Euroclear Participants and CEDEL
Participants may not deliver instructions directly to the depositaries for
Euroclear or CEDEL.
Because of time zone differences, the securities account of a Euroclear or
CEDEL Participant purchasing an interest in the Global Notes from a DTC
Participant will be credited, and any such crediting will be reported to the
relevant Euroclear or CEDEL participant, during the securities settlement
processing day (which must be a business day for Euroclear and CEDEL)
immediately following the DTC settlement date. Cash received on Euroclear or
CEDEL as a result of sales of interests in a Global Note by or through a
Euroclear or CEDEL Participant to a DTC Participant will be received with
value on the DTC settlement date but will be available in the relevant
Euroclear or CEDEL cash account only as of the business day for Euroclear or
CEDEL following the DTC settlement date.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of New Notes (including the presentation of New Notes for
exchange as described below) only at the direction of one or more Participants
to whose account with DTC interests in the Global Notes are credited and only
in respect of such portion of the aggregate principal amount of the New Notes
as to which such Participant or Participants has or have given such direction.
However, if there is an Event of Default (as defined below) under the New
Notes, DTC reserves the right to exchange the Global Notes for legended New
Notes in certificated form, and to distribute such New Notes to its
Participants.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code, as amended, and a "Clearing Agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC was created
to hold securities for its Participants and facilitate the clearance and
settlement of securities transactions between Participants through electronic
book-entry changes in accounts of its Participants, thereby eliminating the
need for physical transfer and delivery of certificates. Direct Participants
of the Depository ("Direct Participants") include securities brokers and
dealers, banks, trust companies and clearing corporations and may include
certain other organizations. The Depository is owned by a number of its Direct
Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc., and the National Association of Securities Dealers, Inc.
Indirect access to the DTC system is available to other entities such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly
("Indirect Participants"). The rules applicable to the Depository and its
Participants are on file with the Commission.
Although DTC, Euroclear and CEDEL have agreed to the foregoing procedures in
order to facilitate transfers of beneficial ownership interests in the Global
Notes among Participants of DTC, Euroclear and CEDEL, they are under no
obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. None of the Company, the Trustees
nor any of their respective agents will have any responsibility for the
performance by DTC, Euroclear and CEDEL, their Participants or Indirect
Participants of their respective obligations under the rules and procedures
governing their operations, including maintaining, supervising or reviewing
the records relating to, or payments made on account of, beneficial ownership
interests in Global Notes.
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CERTIFICATED NOTES
If DTC is at any time unwilling or unable to continue as a depositary for
the reasons set forth above under "--Depository Procedures with Respect to
Registered Global Notes", or in the case of a Registered Global Note held for
an account of Euroclear or CEDEL, Euroclear or CEDEL (as the case may be) is
closed for business for 14 continuous days or announces an intention to cease
or permanently ceases business, the Company will issue certificates for the
New Notes in definitive, fully registered, non-global form without interest
coupons in exchange for the Global Notes.
The holder of a New Note in non-global form may transfer by surrendering it
at the office or agency maintained by the Company for such purpose in the
Borough of Manhattan, The City of New York, which initially will be the office
of the applicable Trustee.
Notwithstanding any statement herein, the Company and the applicable Trustee
reserve the right to impose such transfer, certification, exchange or other
requirements, and to require such restrictive legends on certificates
evidencing New Notes, as they may determine are necessary to ensure compliance
with the Securities Laws of the United States and any other applicable laws,
or as DTC, Euroclear or CEDEL may require.
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of certain United States federal tax
considerations relevant to the purchase, ownership and disposition of the New
Notes by the Holders thereof. The discussion is limited to Holders of New
Notes exchanged for Old Notes of which such Holders were the original
purchasers and does not address the tax consequences to other, e.g.
subsequent, holders of the New Notes. This summary does not purport to be a
complete analysis of all the potential federal income tax effects relating to
the purchase, ownership and disposition of the New Notes. There can be no
assurance that the IRS will take a similar view of such consequences. Further
the discussion does not address all aspects of taxation that may be relevant
to particular purchasers in light of their individual circumstances (including
the effect of any foreign, state or local tax laws) or to certain types of
purchasers (including dealers in securities, insurance companies, financial
institutions and tax-exempt entities) subject to special treatment under
United States federal income tax laws. The discussion below assumes that the
New Notes are held as capital assets.
The discussion of the United States federal income tax consequences set
forth below is based upon provisions of the Code, judicial decisions, and
administrative interpretation all in effect as of the date hereof, all of
which are subject to change at any time, and any such change may be applied
retroactively. Because individual circumstances may differ, each prospective
Holder of the New Notes is strongly urged to consult its own tax advisor with
respect to its particular tax situation and the particular tax effects of any
state, local, non-United States, or other tax laws and possible changes in the
tax laws.
As used herein, the term "United States Holder" means a beneficial owner of
a New Note who or which is for United States federal income tax purposes
either (i) a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in the United States or under
the laws of the United States or of any State thereof, (iii) an estate, the
income of which is subject to United States federal income taxation regardless
of its source, or (iv) a "United States Trust." A United States Trust is (a)
for taxable years beginning after December 31, 1996, or if the trustee of a
trust elects to apply the following definition to an earlier taxable year
ending after August 20, 1996, any trust if, and only if, (i) a court within
the United States is able to exercise primary supervision over the
administration of the trust and (ii) one or more U.S. persons have the
authority to control all substantial decisions of the trust, and (b) for all
other taxable years, any trust whose income is includible in gross income for
United States federal income tax purposes regardless of its source. The term
"United
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States Holder" also includes certain former citizens of the United States
whose income and gain on the New Notes will be subject to United States
taxation. As used herein, the term Foreign Holder means a beneficial owner of
a New Note that is not a United States Holder.
CONSEQUENCES OF THE EXCHANGE OFFER TO EXCHANGING AND NONEXCHANGING HOLDERS
The exchange of an Old Note for a New Note pursuant to the Exchange Offer
will not be taxable to an exchanging Holder for federal income tax purposes.
As a result (i) an exchanging Holder will not recognize any gain or loss on
the exchange; (ii) the holding period for the New Note will include the
holding period for the Old Note; (iii) the basis of the New Note will be the
same as the basis for the Old Note; and (iv) the original issue discount
("OID") on the New Note will be the same as on the Old Note.
The Exchange Offer will result in no federal income tax consequences to a
nonexchanging holder of Old Notes.
The treatment of interest described below with respect to the New Notes is
based in part upon the Company's determination that, as of the date of
issuance of the Old Notes, the possibility that additional interest would be
paid to holders of such Notes pursuant to a Registration Default was remote,
in which case the possibility of such payment would not, as of the issue date,
have caused the Old Notes to be treated as having been issued with OID under
Treasury Regulations with respect to OID and contingent payments, which ignore
"remote" or "incidental" contingencies. The IRS may take a different position,
which could affect the timing and character of interest income reported by
Holders of the New Notes. The Company's determination that such payments are a
remote contingency for these purposes is binding on a Holder, unless such
Holder discloses in the proper manner to the IRS that it is taking a different
position.
PAYMENTS OF INTEREST
Interest paid on a New Note will generally be taxable to a United States
Holder as ordinary interest income at the time it accrues or is received in
accordance with the United States Holder's method of accounting for federal
income tax purposes.
DE MINIMIS ORIGINAL ISSUE DISCOUNT
The Old Notes were issued with "de minimis" OID, because the Old Notes'
"stated redemption price at maturity" exceeded their issue price but by less
than a "de minimis amount" (as defined below). Generally, the issue price of
an Old Note was the first price at which a substantial amount of Old Notes
included in the issue of which the Old Note was a part was sold to other than
bond houses, brokers, or similar persons or organizations acting in the
capacity of underwriters, placement agents, or wholesalers. The stated
redemption price at maturity of an Old Note was the total of all payments
provided by the Old Note that were not payments of "qualified stated
interest." A qualified stated interest payment is generally any one of a
series of stated interest payments on an obligation that are unconditionally
payable at least annually at a single fixed rate (with certain exceptions for
lower rates paid during some periods) applied to the outstanding principal
amount of the obligation.
In general, because the excess of an Old Note's stated redemption price at
maturity over its issue price was less than 1/4 of 1 percent of the Old Note's
stated redemption price at maturity multiplied by the number of complete years
to its maturity (the "de minimis amount"), such excess constitutes "de minimis
original issue discount" and is not subject to inclusion in a United States
Holder's gross income calculated on a constant yield method before the receipt
of cash attributable to such income (absent the election referred to below).
The New Notes are a continuation of the Old Notes for which they are exchanged
for federal income tax purposes, including with respect to de minimis OID on
such
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Old Notes. Accordingly, unless a United States Holder makes an election to
treat all interest including stated interest and de minimis OID on a New Note
as OID which is subject to inclusion in gross income on a constant yield
basis, a United States Holder of a New Note with de minimis original issue
discount will include such de minimis original issue discount in gross income
as stated principal payments on the New Note are made. The includible amount
(which will be treated as a gain on retirement of a New Note, as described
below) with respect to each such payment will equal the product of the total
amount of the New Note's de minimis original issue discount and a fraction,
the numerator of which is the amount of the principal payment made and the
denominator of which is the stated principal amount of the New Note.
SALE, EXCHANGE OR RETIREMENT OF NEW NOTES
Upon the sale, exchange or retirement of a New Note, a United States Holder
will recognize taxable gain or loss equal to the difference between the amount
realized on the sale, exchange or retirement (not including any amount
attributable to accrued but unpaid interest) and such Holder's adjusted tax
basis in the New Note. A United States Holder's adjusted tax basis in a New
Note exchanged for an Old Note will equal the cost of the Old Note to such
Holder, reduced by any principal payments received by such Holder and
increased by any gain (e.g. de minimis OID) recognized on the receipt of any
such principal payments.
Gain or loss realized on the sale, exchange or retirement of a New Note
(including gain attributable to de minimis OID) by a United States Holder will
be capital gain or loss, and will be long-term capital gain or loss if at the
time of the sale, exchange or retirement the New Note has been held for more
than one year. The holding period of a New Note for this purpose would include
the Holder's holding period for the Old Note he exchanged for the New Note.
The excess of net long-term capital gains over net short-term capital losses
is taxed at a lower rate (not in excess of 28%) than ordinary income for
certain non-corporate taxpayers, but not for corporate taxpayers. Also, under
the Taxpayer Relief Act of 1997, even lower rates (generally not in excess of
20%) apply to the sale or exchange of capital assets by certain noncorporate
taxpayers who have held such assets for more than 18 months. The distinction
between capital gain or loss and ordinary income or loss is also relevant for
purposes of, among other things, limitations on the deductibility of capital
losses.
TAX CONSEQUENCES TO FOREIGN HOLDERS
Under present United States federal income and estate tax law, and subject
to the discussion below concerning backup withholding:
(a) payments of principal of and interest on the New Notes by the Company
or any paying agent to a beneficial owner of a New Note that is a Foreign
Holder, as defined above, will not be subject to United States federal
withholding tax, provided that, in the case of interest, (i) such Holder
does not own, actually or constructively, 10 percent or more of the total
combined voting power of all classes of stock of the Company entitled to
vote, (ii) such Holder is not, for United States federal income tax
purposes, a controlled foreign corporation related, directly or indirectly,
to the Company through stock ownership, (iii) such Holder is not a bank
receiving interest described in Section 881(c)(3)(A) of the Code, and (iv)
the certification requirements under Section 871(h) or Section 881(c) of
the Code and Treasury regulations thereunder (summarized below) are met;
(b) a Foreign Holder of a New Note will not be subject to United States
federal income tax on gain realized on the sale, exchange or other
disposition of such New Note, unless (i) such Holder is an individual who
is present in the United States for 183 days or more in the taxable year of
sale, exchange or other disposition, and certain conditions are met or (ii)
such gain is effectively connected with the conduct by such Holder of a
trade business in the United States; and
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(c) a New Note held by an individual who is not a citizen or resident of
the United States at the time of his death will not be subject to United
States federal estate tax as a result of such individual's death, provided
that, at the time of such individual's death, the individual does not own,
actually or constructively, 10 percent or more of the total combined voting
power of all classes of stock of the Company entitled to vote and payments
with respect to such New Note, if received at the time of the individual's
death, would not have been effectively connected to the conduct by such
individual of a trade or business in the United States.
Sections 871(h) and 881(c) of the Code and Treasury Regulations thereunder
require that, in order to obtain the exemption from withholding tax described
in paragraph (a) above, either (i) the beneficial owner of a New Note must
certify, under penalties of perjury, to the Company or paying agent, as the
case may be, that such owner is a Foreign Holder and must provide such owner's
name and address, and United States taxpayer identification number, if any, or
(ii) a securities clearing organization, bank or other financial institution
that holds customers securities in the ordinary course of its trade or
business (a "Financial Institution") and holds the New Note on behalf of the
beneficial owner thereof must certify, under penalties of perjury, to the
Company or paying agent, as the case may be, that such certificate has been
received from the beneficial owner by it or by a Financial Institution between
it and the beneficial owner and must furnish the payor with a copy thereof. A
certificate described in this paragraph is effective only with respect to
payments of interest made to the certifying Foreign Holder after delivery of
the certificate in the calendar year of its delivery and the two immediately
succeeding calendar years. Such requirement will be fulfilled if the
beneficial owner of a New Note certifies on IRS Form W-8, under penalties of
perjury, that it is a Foreign Holder and provides its name and address, and
any Financial Institution holding the New Note on behalf of the beneficial
owner files a statement with the withholding agent to the effect that it has
received such a statement from the beneficial owner (and furnishes the
withholding agent with a copy thereof).
The United States Treasury Department recently adopted new Treasury
Regulations (the "New Regulations") with respect to withholding and backup
withholding generally effective for payments after December 31, 1998. The New
Regulations similarly require a certification on Form W-8 in a manner similar
to that described above as the basis for a withholding tax exception, but also
provide that the certification requirement may be satisfied with other
documentary evidence for interest paid after December 31, 1998 with respect to
an offshore account or through certain foreign intermediaries.
If a Foreign Holder of a New Note is engaged in a trade or business in the
United States, and if interest on the New Note, or gain realized on the sale,
exchange or other disposition of the New Note, is effectively connected with
the conduct of such trade or business, the Foreign Holder, although exempt
from United States withholding tax, will generally be subject to regular
United States income tax on such interest or gain in the same manner as if it
were a United States Holder. In lieu of the certificate described in the
preceding paragraph, such a holder will be required to provide to the Company
a properly executed IRS Form 4224 in order to claim an exemption from
withholding tax. The New Regulations, though, will require a Form W-8 in place
of the Form 4224. In addition, if such Foreign Holder is a foreign
corporation, it may be subject to a branch profits tax equal to 30% (or such
lower rate provided by an applicable treaty) of its effectively connected
earnings and profits for the taxable year, subject to certain adjustments. For
purposes of the branch profits tax, interest on and any gain recognized on the
sale, exchange or other disposition of a New Note will be included in the
earnings and profits of such Foreign Holder if such interest or gain is
effectively connected with the conduct by the Foreign Holder of a trade or
business in the United States.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Under current United States federal income tax law, a 31% backup withholding
tax requirement applies to certain payments of interest on, and the proceeds
of a sale, exchange or redemption of, the New Notes. In addition, certain
persons making such payments are required to submit information returns (i.e.
IRS Forms 1099) to the IRS with regard to those payments.
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Backup withholding and information reporting will generally not apply with
respect to payments made to certain exempt recipients such as corporations or
certain exempt entities. In the case of a non-corporate United States Holder,
backup withholding generally will apply only if such holder (i) fails to
furnish its Taxpayer Identification Number ("TIN") which, for an individual,
would be his Social Security number, (ii) furnishes an incorrect TIN, (iii) is
notified by the IRS that it has failed to properly report payments of interest
and dividends, or (iv) under certain circumstances, fails to certify, under
penalties of perjury, that it has furnished a correct TIN and has not been
notified by the IRS that it is subject to backup withholding for failure to
report interest and dividend payments.
In the case of a Foreign Holder, information reporting on IRS Form 1099
(including IRS Form 1099B) and backup withholding will not apply to payments
made by the Company or any paying agent thereof on a New Note if such Holder
has provided the required certification on Form W-8 (as described above under
"Tax Consequences to Foreign Holders") under penalties of perjury that it is
not a United States Holder or has otherwise established an exemption, provided
in each case that the Company or such paying agent, as the case may be, does
not have actual knowledge that the payee is a United States Holder. The New
Regulations have similar rules. However, interest on a New Note beneficially
owned by a Foreign Holder will be required to be reported annually on IRS Form
1042S.
If payments on a New Note are made to or through a foreign office of a
custodian, nominee, broker or other agent acting on behalf of a beneficial
owner of a New Note, such custodian, nominee or other agent will not be
required to apply backup withholding or information reporting to such payments
made to such beneficial owner. If, however, such nominee, custodian, agent or
broker is, for United States federal income tax purposes, a United States
person, a controlled foreign corporation or a foreign person 50% or more of
whose gross income is effectively connected with the conduct of a United
States trade or business for a specified three-year period, such payments will
not be subject to backup withholding but will be subject to information
reporting, unless (1) such custodian, nominee, agent or broker has documentary
evidence in its records that the beneficial owner is not a United States
person and certain other conditions are met or (2) the beneficial owner
otherwise establishes an exemption. Under the New Regulations, backup
withholding will not apply to such payments absent actual knowledge that the
payee is a United States person.
Payments on the sale, exchange or other disposition of a New Note made to or
through a foreign office of a broker generally will not be subject to backup
withholding. Such payments, however, will be subject to information reporting
if the broker is a United States person, a controlled foreign corporation for
United States federal income tax purposes or a foreign person 50% or more of
whose gross income is effectively connected with the conduct of a United
States trade or business for a specified three year period, unless the broker
has in its records documentary evidence that the beneficial owner is not a
United States person and certain other conditions are met, or the beneficial
owner otherwise establishes an exemption. Under the New Regulations, backup
withholding will apply if such broker has actual knowledge that the payee is a
United States Holder. Payments to or through the United States office of a
broker will be subject to backup withholding and information reporting unless
the Holder certifies, under penalties of perjury, that it is not a United
States Holder and the payor does not have actual knowledge to the contrary, or
otherwise establishes an exemption.
Holders of New Notes should consult their tax advisors regarding the
application of backup withholding in their particular situations, the
availability of an exemption therefrom, and the procedure for obtaining such
an exemption, if available. Any amounts withheld from payment under the backup
withholding rules will be allowed as a credit against a Holder's United States
federal income tax liability and may entitle such holder to a refund, provided
that the required information is furnished to the IRS.
THE FOREGOING DISCUSSION IS FOR GENERAL INFORMATION AND IS NOT TAX ADVICE.
ACCORDINGLY, EACH PROSPECTIVE HOLDER OF NEW NOTES SHOULD CONSULT
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ITS OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO THE PROSPECTIVE
HOLDER OF THE NEW NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE,
LOCAL, OR NON-U.S. INCOME TAX LAWS AND ANY RECENT OR PROSPECTIVE CHANGES IN
APPLICABLE TAX LAWS.
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DESCRIPTION OF CERTAIN DEBT INSTRUMENTS
Set forth below is a summary of certain debt instruments to which the
Company is a party. The summary does not purport to be complete, and where
reference is made to particular provisions of a debt instrument, such
provisions, including the definition of certain terms, are incorporated by
reference as a part of such summaries or terms, which are qualified in their
entirety by such reference. Copies of such agreements are available from the
Company.
CREDIT AGREEMENT
The Company's Credit Agreement provides for revolving loan borrowings and
letter of credit issuances of up to the lesser of $400.0 million or the amount
of a borrowing base calculated with respect to the Company's cash and cash
equivalents, eligible investments, eligible receivables and certain eligible
petroleum inventories, provided that revolving loans are limited to the
principal amount of $50 million. The proceeds of revolving loans may be used
for working capital and other general corporate purposes.
Borrowings under the Credit Agreement are secured by a lien on substantially
all of the Company's cash and cash equivalents, receivables, crude oil and
refined product inventories of the Company located at its refineries and
terminals and in transit via pipelines and trademarks.
Outstanding principal balances under the Credit Agreement bear interest at
annual floating rates equal to the LIBOR Rate plus marginal rates between
0.625% and 2.25% or the agent bank's prime rate plus marginal rates between 0%
and 1.250%. The marginal rates are subject to adjustment under the Credit
Agreement, based upon changes in the Company's ratio of cash, cash equivalents
and eligible investments to the face amount of outstanding letters of credit
and the Company's ratio of indebtedness to twelve month trailing EBITDA. The
Credit Agreement terminates, and all amounts outstanding thereunder are due
and payable, on December 31, 1999. The Credit Agreement contains
representations and warranties, funding and yield protection provisions,
borrowing conditions precedent, financial and other covenants and
restrictions, events of default and other provisions customary for bank credit
agreements of this type.
Covenants and provisions contained in the Credit Agreement restrict (with
certain exceptions), among other things, the Company's and its subsidiaries'
ability: (i) to create or incur liens, (ii) to engage in certain asset sales,
(iii) to engage in mergers, consolidations, and sales of substantially all
assets, (iv) to make loans and investments, (v) to incur additional
indebtedness, (vi) to engage in certain transactions with affiliates, (vii) to
use loan proceeds to acquire or carry margin stock, or to acquire securities
in violation of certain sections of the Exchange Act, (viii) to create or
become or remain liable with respect to certain contingent liabilities, (ix)
to enter into certain joint ventures, (x) to enter into certain lease
obligations, (xi) to make certain dividend and other restricted payments,
(xii) to change the nature of its principal business, (xiii) to make any
significant change in its accounting practices, (xiv) to incur certain
liabilities or engage in certain prohibited transactions under ERISA, (xv) to
maintain deposit accounts not under the control of the banks, or to take
certain other action with respect to its bank accounts, (xvi) to engage in
speculative trading, and (xvii) to amend, modify or terminate certain material
agreements. The Company is also required to comply with certain financial
covenants. The financial covenants are: (i) maintenance of working capital (as
defined) of at least $150.0 million at all times; (ii) maintenance of a
tangible net worth (as defined) of at least $300.0 million; and
(iii) maintenance of minimum levels of balance sheet cash (as defined) of
$50.0 million at all times. The covenants also provide for a cumulative cash
flow test, as defined in the Credit Agreement, that, from March 31, 1997,
shall not be less than or equal to zero at all times. The Credit Agreement
also limits the amount of future additional indebtedness outside of the
cumulative cash flow covenant that may be incurred by the Company in an amount
equal to $25.0 million.
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Events of default under the Credit Agreement include, among other things:
(i) any failure of the Company to pay principal thereunder when due, or to pay
interest or any other amount due within three days after the date due; (ii)
material inaccuracy of any representation or warranty given by the Company
therein; (iii) breach by the Company of certain covenants contained therein;
(iv) the continuance of a default by the Company in the performance of or the
compliance with other covenants and agreements for 20 days after the
occurrence thereof; (v) breach of or default under any indebtedness in excess
of $5.0 million and continuance beyond any applicable grace period; (vi)
certain acts of bankruptcy or insolvency; (vii) the occurrence of certain
events under ERISA; (viii) certain judgments, writs or warrants of attachment
of similar process remaining undischarged, unvacated, unbonded, or unstayed
for a period of 10 days; (ix) the occurrence of a change of control; (x) the
loss of material licenses of permits; (xi) the failure of the liens of the
banks to be first priority perfected liens, subject to certain permitted
liens; or (xii) Clark USA incurs any indebtedness in the aggregate in excess
of $25 million.
LOAN AGREEMENT
On November 21, 1997 the Company entered into a Loan Agreement with certain
lenders and Goldman Sachs Credit Partners L.P., as Agent, pursuant to which
the Company borrowed $125 million. The proceeds of the term loan were used,
together with the net proceeds from the Debt Offering to redeem the Company's
outstanding 10 1/2% Notes. The remaining net proceeds were used to replenish
the Company's cash reserves.
Borrowings under the Loan Agreement are senior unsecured obligations of the
Company. One quarter of the borrowings under the Loan Agreement mature on
November 15, 2003, and the remaining three quarters plus all other amounts
outstanding thereunder mature on November 15, 2004. The Company is able to
prepay the borrowings in whole or in part in an amount equal to 102.50% of the
aggregate principal amount so prepaid prior to November 15, 1998, 101.25% of
the aggregate principal amount so prepaid after November 15, 1998, and prior
to November 15, 1999, and 100% of the aggregate principal amount so prepaid
after November 15, 1999 plus, in each case, accrued interest thereon through
but excluding the date of such prepayment.
In the event that there shall occur a Change of Control resulting in a
Rating Decline, the Company shall make an offer to prepay the outstanding
balance under the Loan Agreement in an amount equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest to the date of
prepayment.
Outstanding principal balances under the Loan Agreement bear interest at the
LIBOR Rate (as defined in the Loan Agreement) plus a margin of 275 basis
points.
The Loan Agreement contains customary representations and warranties.
Covenants and events of default under the Loan Agreement are substantially
similar to those of the New Notes, as described under "Description of the New
Notes--Certain Covenants" and "--Events of Default."
Lenders under the Loan Agreement have customary voting, participation,
indemnification and assignment rights.
10 1/2% NOTES
The 10 1/2% Notes are governed by an indenture, dated as of December 1, 1991
(as amended and supplemented, the "10 1/2% Note Indenture").
Interest on the 10 1/2% Notes is payable in cash semi-annually on June 1 and
December 1 of each year. The 10 1/2% Notes do not have the benefit of any
sinking fund obligations, and are not convertible or exchangeable into any
other security.
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The 10 1/2% Notes are senior obligations of the Company, ranking pari passu
in right of payment with all other senior debt of the Company.
The 10 1/2% Notes are currently redeemable at the option of the Company, in
whole or in part from time to time, at 105.250% of principal amount thereof,
plus accrued interest, reducing to 102.625% of principal amount thereof, plus
accrued interest on December 1, 1997, and to 100% of the principal amount
thereof, plus accrued interest, on or after December 1, 1998.
The Company is required to offer to purchase all outstanding 10 1/2% Notes
at 101% of their principal amount, plus accrued interest, in the event of a
Change of Control (as defined in the 10 1/2% Note Indenture, which definition
is substantially similar to that contained in the Indentures, except that the
change of control need not be accompanied by a rating decline).
The Company is required to make an offer to purchase up to 10% of the
principal amount of the 10 1/2% Notes originally issued at 100% of their
principal amount, plus accrued interest, if the Company's Consolidated
Adjusted Net Worth (as defined) as of the end of any two consecutive fiscal
quarters is less than $100.0 million.
The Company is required to make an offer to purchase all outstanding 10 1/2%
Notes at the applicable redemption price if the Company or a subsidiary makes
an Asset Disposition (as defined in the 10 1/2% Note Indenture) and the sale
proceeds are not reinvested. The offer to purchase is limited to the net
proceeds from such Asset Disposition.
The 10 1/2% Note Indenture contains certain covenants that, among other
things, limit the ability of the Company and its subsidiaries to pay cash
dividends on or repurchase capital stock, enter into agreements restricting
the ability of a subsidiary to pay money or transfer assets to the Company,
enter into certain transactions with their affiliates, engage in speculative
trading, incur additional indebtedness, create liens, engage in sale and
leaseback transactions, dispose of certain assets and engage in mergers and
consolidations.
Events of default under the 10 1/2% Note Indenture include: (i) failure to
pay any interest on any 10 1/2% Notes when due, continued for 30 days; (ii)
failure to pay principal of or premium, if any, on the 10 1/2% Notes when due
at maturity (upon acceleration, redemption or otherwise), (iii) failure to
comply with the covenant regarding mergers and consolidations; (iv) failure to
perform any other covenant or agreement of the Company in the 10 1/2% Note
Indenture, continued for 30 days after written notice as provided in the 10
1/2% Note Indenture; (v) failure to pay at final maturity in excess of $5.0
million principal amount of any indebtedness of the Company or any subsidiary
of the Company, or acceleration of any indebtedness of the Company or any
subsidiary of the Company in an aggregate principal amount in excess of $5.0
million; (vi) the entry of a final judgment or judgments against the Company
or any subsidiary in an amount in excess of $5.0 million, that are not paid,
discharged or stayed within 60 days; and (vii) certain events of bankruptcy,
insolvency or reorganization of the Company or any significant subsidiary.
On November 24, 1997, Clark issued a notice to the holders of its 10 1/2%
Notes that it intends to redeem on December 24, 1997, all $225.0 million of
the 10 1/2% Notes outstanding at a price of $1,032.96 for each $1,000
principal amount of the Notes outstanding, representing the redemption premium
and accrued interest.
9 1/2% NOTES
The 9 1/2% Notes are governed by the 9 1/2% Note Indenture.
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Interest on the 9 1/2% Notes is payable in cash semi-annually on March 15
and September 15 of each year. The 9 1/2% Notes are not convertible or
exchangeable into any other security.
A sinking fund payment with respect to the 9 1/2% Notes, in the amount of
$87.5 million, is required to be made prior to September 15, 2003.
The 9 1/2% Notes are senior obligations of the Company, ranking pari passu
in right of payment with all other senior debt of the Company.
The 9 1/2% Notes are redeemable at the option of the Company at any time on
or after September 15, 1997, in whole or in part from time to time, at
104.750% of principal amount thereof, plus accrued interest, reducing to
102.375% of principal amount thereof, plus accrued interest on September 15,
1998, and to 100% of the principal amount thereof, plus accrued interest, on
or after September 15, 1999.
The Company is required to offer to purchase all outstanding 9 1/2% Notes at
101% of their principal amount, plus accrued interest, in the event of a
Change of Control (as defined in the 9 1/2% Note Indenture, which definition
is substantially similar to that contained in the Indentures, except that the
change of control need not be accompanied by a rating decline).
The Company is required to make an offer to purchase up to 10% of the
principal amount of the 9 1/2% Notes originally issued at 100% of their
principal amount, plus accrued interest, if the Company's Consolidated
Adjusted Net Worth (as defined) as of the end of any two consecutive fiscal
quarters is less than $100 million.
The Company is required to make an offer to purchase all outstanding 9 1/2%
Notes at the applicable redemption price if the Company or a subsidiary makes
an Asset Disposition (as defined in the 9 1/2% Note Indenture) and the sale
proceeds are not reinvested. The offer to purchase is limited to the net
proceeds from such Asset Disposition.
The 9 1/2% Note Indenture contains certain covenants that, among other
things, limit the ability of the Company and its subsidiaries to pay cash
dividends on or repurchase capital stock, enter into agreements restricting
the ability of a subsidiary to pay money or transfer assets to the Company,
enter into certain transactions with their affiliates, engage in speculative
trading, incur additional indebtedness, create liens, engage in sale and
leaseback transactions, dispose of certain assets and engage in mergers and
consolidations.
Events of default under the 9 1/2% Note Indenture include: (i) failure to
pay any interest on any 9 1/2% Notes when due, continued for 30 days; (ii)
failure to pay principal of or premium, if any, on the 9 1/2% Notes when due
at maturity (upon acceleration, redemption or otherwise); (iii) failure to
comply with the covenant regarding mergers and consolidations; (iv) failure to
perform any other covenant or agreement of the Company in the 9 1/2% Note
Indenture, continued for 30 days after written notice as provided in the 9
1/2% Note Indenture; (v) failure to pay at final maturity in excess of $5.0
million principal amount of any indebtedness of the Company or any subsidiary
of the Company, or acceleration of any indebtedness of the Company or any
subsidiary of the Company in an aggregate principal amount in excess of $5.0
million; (vi) the entry of a final judgment or judgments against the Company
or any subsidiary in an amount in excess of $5.0 million, that are not paid,
discharged or stayed within 60 days; and (vii) certain events of bankruptcy,
insolvency or reorganization of the Company or any significant subsidiary.
As a result of the Blackstone Transaction, the 9 1/2% Notes will be subject
to a repurchase offer.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities and not acquired directly from the Company. The Company has
agreed that for a period of 180 days after the Expiration Date, it will make
this Prospectus, as amended or supplemented, available to any broker-dealer
for use in connection with any such resale.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from
any such broker-dealer and/or purchasers of any such New Notes. Any broker-
dealer that resells New Notes that were received by it for its own account
pursuant to the Exchange Offer and any broker or dealer that participates in a
distribution of such New Notes may be deemed to be an "underwriter" within the
meaning of the Securities Act, and any profit on any such resale of New Notes
and any commissions or concessions received by any such persons may be deemed
to be underwriting compensation under the Securities Act. The Letter of
Transmittal states that by acknowledging that it will deliver and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such
documents in the Letter of Transmittal. The Company has agreed to pay the
expenses incident to the Exchange Offer and will indemnify the Holders of the
Old Notes against certain liabilities, including liabilities under the
Securities Act, in connection with the Exchange Offer.
LEGAL MATTERS
The validity of and other matters related to the New Notes will be passed
upon for the Company by Mayer, Brown & Platt, and for the Initial Purchasers
by Latham & Watkins.
EXPERTS
The Company's consolidated balance sheets as of December 31, 1995 and 1996,
and the consolidated statements of earnings, stockholder's equity, and cash
flows for each of the three years in the period ended December 31, 1996,
included in this Prospectus have been included herein in reliance on the
report of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.
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INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Clark Refining & Marketing, Inc. and Subsidiary:
Annual Financial Statements
Report of Independent Accountants .................................... F-2
Consolidated Balance Sheets as of December 31, 1995 and 1996 ......... F-3
Consolidated Statements of Earnings for the years ended December 31,
1994, 1995 and 1996.................................................. F-4
Consolidated Statements of Cash Flows for the years ended December 31,
1994, 1995 and 1996.................................................. F-5
Consolidated Statements of Stockholder's Equity for the years ended
December 31, 1994, 1995 and 1996..................................... F-6
Notes to Consolidated Financial Statements............................ F-7
Interim Financial Statements
Consolidated Balance Sheet as of September 30, 1997................... F-18
Consolidated Statements of Earnings for the nine months ended
September 30, 1996 and 1997.......................................... F-19
Consolidated Statements of Cash Flows for the nine months ended
September 30, 1996 and 1997.......................................... F-20
Notes to Consolidated Financial Statements............................ F-21
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Clark Refining & Marketing, Inc.:
We have audited the accompanying consolidated balance sheets of Clark
Refining & Marketing, Inc. and Subsidiary (a Delaware corporation), as of
December 31, 1995 and 1996 and the related consolidated statements of
earnings, stockholder's equity and cash flows for each of the three years in
the period ended December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Clark
Refining & Marketing, Inc. and Subsidiary as of December 31, 1995 and 1996 and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
St. Louis, Missouri
February 4, 1997
F-2
<PAGE>
CLARK REFINING & MARKETING, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
REFERENCE DECEMBER 31, DECEMBER 31,
NOTE 1995 1996
--------- ------------ ------------
<S> <C> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents................ 2 $ 60,477 $ 319,378
Short-term investments................... 2,3 46,116 14,881
Accounts receivable...................... 2 179,200 171,733
Inventories.............................. 2,4 290,444 277,095
Prepaid expenses and other............... 18,875 15,411
---------- ----------
Total current assets................... 595,112 798,498
PROPERTY, PLANT AND EQUIPMENT.............. 2,5 549,292 555,691
OTHER ASSETS............................... 2,6 43,930 39,131
---------- ----------
$1,188,334 $1,393,320
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Accounts payable......................... 7 $ 315,236 $ 303,141
Accrued expenses and other............... 8,9 41,501 49,384
Accrued taxes other than income.......... 45,240 46,484
---------- ----------
Total current liabilities.............. 401,977 399,009
LONG-TERM DEBT............................. 8,9 420,441 417,606
DEFERRED INCOME TAXES...................... 2,12 22,861 802
OTHER LONG-TERM LIABILITIES................ 11 38,937 41,774
CONTINGENCIES.............................. 15 -- --
STOCKHOLDER'S EQUITY:
Common stock, $.01 par value per share;
1,000 shares authorized and 100 shares
issued and outstanding.................. -- --
Paid-in capital.......................... 10,13 195,610 464,210
Retained earnings........................ 3,7 108,508 69,919
---------- ----------
Total stockholder's equity............. 304,118 534,129
---------- ----------
$1,188,334 $1,393,320
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE>
CLARK REFINING & MARKETING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
REFERENCE -------------------------------------
NOTE 1994 1995 1996
--------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES AND OPERATING
REVENUES..................... $ 2,440,028 $ 4,486,083 $ 5,072,718
EXPENSES:
Cost of sales............... (2,092,516) (4,018,274) (4,559,982)
Operating expenses.......... (219,883) (373,377) (418,903)
General and administrative
expenses................... (51,439) (52,280) (59,169)
Depreciation................ 2 (26,540) (31,435) (37,290)
Amortization................ 2,6 (10,797) (12,001) (11,127)
Recovery of inventory market
value write-down........... 4 26,500 -- --
----------- ----------- -----------
(2,374,675) (4,487,367) (5,086,471)
----------- ----------- -----------
OPERATING INCOME (LOSS)....... 65,353 (1,284) (13,753)
Interest and finance costs,
net........................ 8 (37,547) (39,916) (38,688)
----------- ----------- -----------
EARNINGS (LOSS) BEFORE
INCOME TAXES................. 27,806 (41,200) (52,441)
Income tax (provision)
benefit.................... 2,12 (9,732) 15,656 13,914
----------- ----------- -----------
NET EARNINGS (LOSS)........... $ 18,074 $ (25,544) $ (38,527)
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
CLARK REFINING & MARKETING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------
1994 1995 1996
---------- ---------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss)........................ $ 18,074 $ (25,544) $ (38,527)
Adjustments:
Depreciation............................. 26,540 31,435 37,290
Amortization............................. 11,973 17,370 17,842
Realized loss on sales of investments.... 5,396 -- --
Share of earnings of affiliates, net of
dividends............................... (468) (1,413) (136)
Deferred income taxes.................... 9,732 (15,656) (22,059)
Recovery of inventory market value write-
down.................................... (26,500) -- --
Other.................................... 1,271 1,385 1,062
Cash provided by (reinvested in) working cap-
ital--
Accounts receivable, prepaid expenses and
other..................................... (21,135) (110,966) 12,758
Inventories................................ 22,995 (138,978) 13,266
Accounts payable, accrued expenses, taxes
other than income and other............... 5,859 156,814 (4,640)
---------- ---------- ---------
Net cash provided by (used in)
operating activities.................. 53,737 (85,553) 16,856
---------- ---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments........ (89,987) (41,500) --
Sales of short-term investments............ 187,785 25,942 31,135
Expenditures for property, plant and
equipment................................. (100,276) (42,093) (44,996)
Expenditures for turnaround................ (11,191) (6,525) (13,862)
Refinery acquisition expenditures.......... (13,514) (71,776) --
Proceeds from disposals of property, plant
and equipment............................. 5,941 1,866 4,359
Advance crude oil purchase receivable...... -- -- 235,400
---------- ---------- ---------
Net cash provided by (used in)
investing activities.................. (21,242) (134,086) 212,036
---------- ---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term debt payments.................... (585) (1,620) (2,835)
Proceeds from capital lease transactions... -- 24,301 --
Capital contribution....................... -- 165,610 33,600
Deferred financing costs................... (4,804) (13,625) (756)
---------- ---------- ---------
Net cash provided by (used in)
financing activities.................. (5,389) 174,666 30,009
---------- ---------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS................................. 27,106 (44,973) 258,901
CASH AND CASH EQUIVALENTS, beginning of
period...................................... 78,344 105,450 60,477
---------- ---------- ---------
CASH AND CASH EQUIVALENTS, end of period..... $ 105,450 $ 60,477 $ 319,378
========== ========== =========
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE>
CLARK REFINING & MARKETING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
------ -------- -------- --------
<S> <C> <C> <C> <C>
Balance--January 1, 1994................... $ -- $ 30,000 $115,978 $145,978
Change in unrealized short-term
investment gains and losses, net of
taxes................................... -- -- (1,200) (1,200)
Net earnings............................. -- -- 18,074 18,074
----- -------- -------- --------
Balance--December 31, 1994................. -- 30,000 132,852 162,852
----- -------- -------- --------
Change in unrealized short-term
investment gains and losses, net of
taxes................................... -- -- 1,200 1,200
Capital contributions.................... -- 165,610 -- 165,610
Net loss................................. -- -- (25,544) (25,544)
----- -------- -------- --------
Balance--December 31, 1995................. -- 195,610 108,508 304,118
----- -------- -------- --------
Change in unrealized short-term
investment gains and losses, net of
taxes................................... -- -- (62) (62)
Capital contributions.................... -- 268,600 -- 268,600
Net loss................................. -- -- (38,527) (38,527)
----- -------- -------- --------
Balance--December 31, 1996................. $ -- $464,210 $ 69,919 $534,129
===== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
F-6
<PAGE>
CLARK REFINING & MARKETING, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
(TABULAR DOLLAR AMOUNTS IN THOUSANDS)
1. GENERAL
Clark Refining & Marketing, Inc., a Delaware corporation ("Clark" or "the
Company"), is wholly owned by Clark USA, Inc., a Delaware corporation ("Clark
USA"). Clark's principal operations include crude oil refining, wholesale and
retail marketing of refined petroleum products and retail marketing of
convenience store items in the Central United States.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
The Company's earnings and cash flow from operations are primarily dependent
upon processing crude oil and selling quantities of refined petroleum products
at margins sufficient to cover operating expenses. Crude oil and refined
petroleum products are commodities, and factors largely out of the Company's
control can cause prices to vary, in a wide range, over a short period of
time. This potential margin volatility can have a material effect on financial
position, current period earnings and cash flow.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents; Short-term Investments
Clark considers all highly liquid investments, such as time deposits, money
market instruments, commercial paper and United States and foreign government
securities, purchased with an original maturity of three months or less, to be
cash equivalents. Short-term investments consist of similar investments, as
well as United States government security funds, maturing more than three
months from date of purchase and are carried at fair value (see Note 3 "Short-
term Investments"). Clark invests only in AA rated or better fixed income
marketable securities or the short-term rated equivalent.
The Company classifies checks issued which have not yet cleared the bank
account as accounts payable. Such balances included in "Accounts payable" were
$12.1 million and $12.9 million at December 31, 1995 and 1996, respectively.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentration
of credit risk consist primarily of trade receivables. Credit risk on trade
receivables is minimized as a result of the credit quality of the Company's
customer base and industry collateralization practices. As of December 31,
1996, the Company had $36.4 million (1995--$17.0 million) due from Chevron USA
Products Co. ("Chevron"). Sales to Chevron in 1996 totaled $455.8 million
(1995--$448.8 million).
Inventories
Inventories are stated at the lower of cost, predominantly using the last-
in, first-out "LIFO" method, or market on an aggregate basis. During the year
ended December 31, 1996, total petroleum inventory quantities were reduced,
resulting in a LIFO liquidation, the effect of which increased pretax earnings
by $2.4 million. There was no such effect in the year ended December 31, 1995.
F-7
<PAGE>
CLARK REFINING & MARKETING, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
To limit risk related to price fluctuations, Clark employs risk strategies
using crude oil and refined products futures and options contracts to manage
potentially volatile market movements on aggregate physical and contracted
inventory positions. At December 31, 1996, Clark's open contracts represented
0.7 million barrels of crude oil and refined products, and had terms extending
into February, 1997. At December 31, 1995, Clark's open contracts represented
1.7 million barrels of crude oil and refined products, and had terms extending
into December, 1996.
The Company considers all futures and options contracts to be part of its
risk management strategy. Unrealized gains and losses on open contracts are
recognized as a product cost component unless the contract can be identified
as a price risk hedge of specific inventory positions or open commitments, in
which case the unrealized gain or loss is deferred and recognized as an
adjustment to the carrying amount of petroleum inventories or accounts payable
if related to open commitments. Deferred gains and losses on these contracts
are recognized as an adjustment to product cost when such inventories are sold
or consumed. At December 31, 1996, the Company had net unrealized gains on
open futures and options contracts of $1.2 million (1995--unrealized loss of
$0.4 million) all of which have been recognized in operations.
Property, Plant and Equipment
Property, plant and equipment additions are recorded at cost. Depreciation
of property, plant and equipment is computed using the straight-line method
over the estimated useful lives of the assets or group of assets. The cost of
buildings and marketing facilities on leased land and leasehold improvements
are amortized on a straight-line basis over the shorter of the estimated
useful life or the lease term. The Company capitalizes the interest cost
associated with major construction projects based on the effective interest
rate on aggregate borrowings.
Expenditures for maintenance and repairs are expensed. Major replacements
and additions are capitalized. Gains and losses on assets depreciated on an
individual basis are included in current income. Upon disposal of assets
depreciated on a group basis, unless unusual in nature or amount, residual
cost less salvage is charged against accumulated depreciation.
The Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards ("SFAS") No. 121 concerning "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of."
The standard requires that long-lived assets and certain identifiable
intangibles be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable with future cash flows. The Company adopted this standard
beginning January 1, 1996 which did not have any effect on the financial
statements. The Company believes that if a project initiated to produce low
sulfur diesel fuel at the Hartford refinery ("DHDS Project"), which was
delayed in 1992 due to an expectation of narrow differentials between low and
high sulfur diesel fuel, does not proceed due to continued relatively narrow
price differentials between low and high sulfur diesel fuel, future cash flows
from the asset would not likely support the carrying value which is
approximately $24.1 million as of December 31, 1996. Effective January 1,
1996, the Company began to depreciate the DHDS Project over 30 years.
Environmental Costs
Environmental expenditures are expensed or capitalized depending upon their
future economic benefit. Costs which improve a property as compared with the
condition of the property when originally constructed or acquired and costs
which prevent future environmental contamination are capitalized. Costs which
return a property to its condition at the time of acquisition or original
construction are expensed.
F-8
<PAGE>
CLARK REFINING & MARKETING, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Deferred Turnaround and Financing Costs
A turnaround is a periodically required standard procedure for maintenance
of a refinery that involves the shutdown and inspection of major processing
units and generally occurs approximately every three years. Turnaround costs,
which are included in "Other assets", are amortized over the period to the
next scheduled turnaround, beginning the month following completion.
Financing costs related to obtaining or refinancing of debt are deferred and
amortized over the expected life of the debt.
Income Taxes
Clark files a consolidated U.S. federal income tax return with Clark USA but
computes its provision on a separate company basis. The Company provides for
deferred taxes under the asset and liability method in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS 109") (see Note 12 "Income Taxes"). Deferred taxes are
classified as current, included in prepaid or accrued expenses, or noncurrent
depending on the classification of the assets and liabilities to which the
temporary differences relate. Deferred taxes arising from temporary
differences that are not related to a specific asset or liability are
classified as current or noncurrent depending on the periods in which the
temporary differences are expected to reverse. In accordance with the
provisions of SFAS 109, the Company records a valuation allowance when
necessary to reduce the net deferred tax asset to an amount expected to be
realized.
Employee Benefit Plans
The Clark Refining & Marketing, Inc. Savings Plan and separate Trust (the
"Plan"), a defined contribution plan, covers substantially all employees of
Clark. Under terms of the Plan, Clark matches the amount of employee
contributions, subject to specified limits. Contributions to the Plan during
1996 were $6.4 million (1995--$5.5 million; 1994--$3.4 million).
Clark provides certain benefits for most retirees once they have reached a
specified age and specified years of service. These benefits include health
insurance in excess of social security and an employee paid deductible amount,
and life insurance equal to the employee's annual salary.
3. SHORT-TERM INVESTMENTS
The Company's short-term investments are all considered Available-for-Sale
and are carried at fair value with the resulting unrealized gain or loss (net
of applicable taxes) shown as a component of retained earnings.
Short-term investments consisted of the following:
<TABLE>
<CAPTION>
1995 1996
-------------------------------- --------------------------------
AMORTIZED UNREALIZED AGGREGATE AMORTIZED UNREALIZED AGGREGATE
MAJOR SECURITY TYPE COST GAIN/(LOSS) FAIR VALUE COST GAIN/(LOSS) FAIR VALUE
------------------- --------- ----------- ---------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
U.S. Debt Securities.... $46,116 $ -- $46,116 $14,981 $(100) $14,881
</TABLE>
The net unrealized position at December 31, 1996 included gains of $0.0
million and losses of $0.1 million (1995--gains of $0.1 million and losses of
$0.1 million).
F-9
<PAGE>
CLARK REFINING & MARKETING, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The contractual maturities of the short-term investments at December 31,
1996 were:
<TABLE>
<CAPTION>
AMORTIZED AGGREGATE
COST FAIR VALUE
--------- ----------
<S> <C> <C>
Due in one year or less................................. $ 3,019 $ 3,002
Due after one year through five years................... 11,962 11,879
------- -------
$14,981 $14,881
======= =======
</TABLE>
Although some of the contractual maturities of these short-term investments
are over one year, management's intent is to use the funds for current
operations and not hold the investments to maturity.
For the year ended December 31, 1996, the proceeds from sales of short-term
investments were $31.1 million with no realized gains or losses recorded for
the period. For the same period in 1995 and 1994, the proceeds from the sale
of short-term investments were $25.9 million and $187.8 million, respectively,
with no realized gains or losses in 1995 and $5.4 million realized losses in
1994. Realized gains and losses are presented in "Interest and financing
costs, net" and are computed using the specific identification method.
The change in the net unrealized holding gains or losses on Available-for-
Sale securities for the year ended December 31, 1996, was a loss of $0.1
million ($0.1 million after taxes). For the same period in 1995, there was a
net unrealized holding gain of $1.9 million ($1.2 million after taxes), and in
1994, there was a net unrealized holding loss of $1.9 million ($1.2 million
after taxes).
Cash and cash equivalents include $20.0 million of debt securities whose
cost approximated market value at December 31, 1996 (1995--$45.0 million), and
for which there were no realized gains or losses recorded in the period.
4. INVENTORIES
The carrying value of inventories consisted of the following:
<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Crude oil................................................. $ 90,635 $105,786
Refined products and blendstocks.......................... 163,915 136,747
Convenience products...................................... 20,532 17,643
Warehouse stock and other................................. 15,362 16,919
-------- --------
$290,444 $277,095
======== ========
</TABLE>
The market value of the crude and refined product inventories at December
31, 1996 was approximately $81.7 million above the carrying value (1995--$5.4
million above the carrying value). In the first half of 1994, crude oil and
related refined product prices rose substantially, allowing the reversal of
the inventory write-down to market which was recorded in 1993 due to falling
crude oil and product prices.
F-10
<PAGE>
CLARK REFINING & MARKETING, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:
<TABLE>
<CAPTION>
1995 1996
--------- ---------
<S> <C> <C>
Land................................................... $ 20,006 $ 19,650
Refineries............................................. 418,675 434,623
Retail stores.......................................... 187,921 210,033
Product terminals and pipelines........................ 59,151 62,580
Other.................................................. 11,346 12,051
--------- ---------
697,099 738,937
Accumulated depreciation and amortization.............. (147,807) (183,246)
--------- ---------
$ 549,292 $ 555,691
========= =========
</TABLE>
At December 31, 1996 property, plant and equipment included $43.8 million
(1995--$52.2 million) of construction in progress. Capital lease assets, at
cost, of $25.3 million (1995--$25.3 million) are included in property, plant
and equipment at December 31, 1996.
6. OTHER ASSETS
Other assets consisted of the following:
<TABLE>
<CAPTION>
1995 1996
------- -------
<S> <C> <C>
Deferred financing costs.................................... $20,255 $14,439
Deferred turnaround costs................................... 14,243 16,978
Investment in non-consolidated affiliate.................... 6,291 6,427
Other....................................................... 3,141 1,287
------- -------
$43,930 $39,131
======= =======
</TABLE>
Amortization of deferred financing costs for the year ended December 31,
1996, was $6.5 million (1995--$5.2 million; 1994--$1.2 million). Amortization
of turnaround costs for the year ended December 31, 1996 was $11.1 million
(1995--$12.0 million; 1994--$10.8 million).
7. WORKING CAPITAL FACILITY
At all times during 1996, Clark had in place a working capital facility
which provided a revolving line of credit principally for the issuance of
letters of credit which are used primarily for securing purchases of crude
oil, other feedstocks and refined products, and for limited cash borrowings.
This facility is collateralized by substantially all of Clark's current assets
and certain intangibles. The amount of the facility is the lesser of $400
million or the amount available under a defined borrowing base, representing
specified percentages of cash, investments, accounts receivable, inventory and
other working capital items ($489.5 million at December 31, 1996). Clark is
required to comply with certain financial covenants including maintaining
defined levels of working capital, cash, tangible net worth, maximum
indebtedness to tangible net worth and a minimum ratio of adjusted cash flow
to debt service. At December 31, 1996, $298.5 million (1995--$221.0 million)
of the line of credit was utilized for letters of credit, of which $78.4
million (1995--$91.4 million) supported commitments for future deliveries of
petroleum products. There were no direct cash borrowings under the facility at
December 31, 1996 and 1995.
F-11
<PAGE>
CLARK REFINING & MARKETING, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
8. LONG-TERM DEBT
<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
10 1/2% Senior Notes due December 1, 2001 ("10
1/2% Notes").......................................... $225,000 $225,000
9 1/2% Senior Notes due September 15, 2004 ("9
1/2% Notes").......................................... 175,000 175,000
Obligations under capital leases and other notes........ 23,498 20,673
-------- --------
423,498 420,673
Less current portion.................................. 3,057 3,067
-------- --------
$420,441 $417,606
======== ========
</TABLE>
The estimated fair value of long-term debt at December 31, 1996 was $431.8
million, (1995--$442.0 million), determined using quoted market prices for
these issues. The capital leases and other notes have a market value which
approximates cost.
The 9 1/2% Notes and 10 1/2% Notes were issued by Clark in September 1992
and December 1991, respectively, and are unsecured. The 9 1/2% Notes and 10
1/2% Notes are redeemable at the Company's option beginning September 1997 and
December 1996, respectively, at a redemption price which starts at 105.25% and
decreases to 100% of principal two years later.
The Clark note indentures contain certain restrictive covenants including
limitations on the payment of dividends, limitations on the payment of amounts
to related parties, limitations on the level of debt, provisions related to
change of control and incurrence of liens. Under these covenants, Clark must
maintain a minimum net worth of $100 million.
During 1995, Clark entered into two sale/leaseback lease transactions for a
total of $24.3 million. Each capital lease has a term of five years. One lease
has a fixed rate of 8.36% and the other lease rate floats at a spread of 2.25%
over the London Interbank Offer Rate (LIBOR).
The scheduled maturities of long-term debt during the next five years are
(in thousands): 1997--$3,067 (included in "Accrued expenses and other");
1998--$3,828; 1999--$3,737; 2000--$6,775; 2001--$225,012; 2002 and
thereafter--$175,057.
Interest and financing costs
Interest and financing costs, net, included in the statements of earnings,
consisted of the following:
<TABLE>
<CAPTION>
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Interest expense.................................. $40,979 $42,150 $42,929
Financing costs................................... 1,178 5,244 6,526
Interest and finance income....................... (2,201) (6,074) (9,734)
------- ------- -------
39,956 41,320 39,721
Capitalized interest.............................. (2,409) (1,404) (1,033)
------- ------- -------
Interest and financing costs, net................. $37,547 $39,916 $38,688
======= ======= =======
</TABLE>
Cash paid for interest expense in 1996 was $42.9 million (1995--$42.2
million; 1994--$40.3 million). Accrued interest payable at December 31, 1996
of $6.8 million (December 31, 1995--$6.8 million) is included in "Accrued
expenses and other."
F-12
<PAGE>
CLARK REFINING & MARKETING, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
9. LEASE COMMITMENTS
The Company leases premises and equipment under lease arrangements, many of
which are non-cancelable. The Company leases store property and equipment with
lease terms extending to 2015, some of which have escalation clauses based on
a set amount of increases in the Consumer Price Index. The Company also has
operating lease agreements for certain equipment at the refineries, retail
stores, and the general office. These lease terms range from 1 to 8 years with
the option to purchase some of the equipment at the end of the lease term at
fair market value. The leases generally provide that the Company pay taxes,
insurance, and maintenance expenses related to the leased assets. As of
December 31, 1996, future minimum lease payments under capital leases and non-
cancelable operating leases were as follows (in millions): 1997--$17.2; 1998--
$16.8; 1999--$15.8; 2000--$17.8; 2001--$9.8; and $122.0 in the aggregate
thereafter. Rental expense during 1996 was $16.5 million (1995--$9.1 million;
1994--$7.6 million).
10. RELATED PARTY TRANSACTIONS
Transactions of significance with related parties not disclosed elsewhere in
the footnotes are detailed below:
Clark USA, Inc.
Clark USA contributed $268.6 million of capital to its subsidiary, Clark,
during 1996. Clark USA contributed $33.6 million from the proceeds of debt
issued in the Occidental/Gulf transactions in January of 1996. In addition,
$235.0 million was contributed to Clark from the contribution and subsequent
sale of the Occidental advance crude oil purchase receivable and the
associated hedge contracts in October of 1996. During 1995, Clark USA
contributed $165.6 million to Clark. Upon the issuance of stock in the first
quarter of 1995, Clark USA contributed $150.0 million for the purchase of the
Port Arthur Refinery (see Note 13 "Acquisition of Port Arthur Refinery") and
also contributed $9.2 million for operating purposes. In addition, from the
proceeds of debt issued in the Occidental/Gulf transactions, Clark USA
contributed $6.4 million in December 1995 to Clark.
HSM Insurance Inc.
Clark USA paid premiums of $2.0 million in 1994 to HSM Insurance, Inc., an
affiliate of TrizecHahn Corporation (formerly the Horsham Corporation)
("TrizecHahn"), the Clark USA's 46% shareholder, for providing environmental
impairment liability insurance. No loss claims have been made under the
policy. The policy was terminated on December 31, 1994.
Management Services and Trade Credit Guarantees
TrizecHahn and Clark have agreements to provide certain management services
to each other from time to time. Clark established trade credit with various
suppliers of its petroleum requirements, occasionally requiring the guarantee
of TrizecHahn. Fees related to trade credit guarantees totaled $0.1 million,
$0.2 million and $0.2 million in 1994, 1995 and 1996, respectively. The last
trade credit guarantee was terminated in August 1996.
F-13
<PAGE>
CLARK REFINING & MARKETING, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
11. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The following table sets forth the unfunded status for the post retirement
health and life insurance plans:
<TABLE>
<CAPTION>
1995 1996
------- -------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees................................................. $12,045 $11,889
Fully eligible plan participants......................... 1,288 873
Other plan participants.................................. 20,025 16,687
------- -------
Total.................................................. 33,358 29,449
Accrued postretirement benefit cost........................ -- --
Plan assets at fair value.................................. -- --
Unrecognized net (gain)/loss............................... (1,921) (216)
Unrecognized prior service cost............................ -- 635
------- -------
Accrued postretirement benefit liability................... $31,437 $29,868
======= =======
</TABLE>
The components of net periodic postretirement benefit costs are as follows:
<TABLE>
<CAPTION>
1994 1995 1996
------ ------ ------
<S> <C> <C> <C>
Service Costs.......................................... $ 415 $ 999 $1,074
Interest Costs......................................... 1,271 2,174 2,095
------ ------ ------
Net periodic postretirement benefit cost............... $1,686 $3,173 $3,169
====== ====== ======
</TABLE>
A discount rate of 7.50% (1995--7.25%) was assumed as well as a 4.25%
(1995--4.25%) rate of increase in the compensation level. For measuring the
expected postretirement benefit obligation, the health care cost trend rate
ranged from 7.25% to 10.25% in 1996, grading down to an ultimate rate in 2003
of 5.25%. The effect of increasing the average health care cost trend rates by
one percentage point would increase the accumulated postretirement benefit
obligation, as of December 31, 1996, by $4.3 million and increase the annual
aggregate service and interest costs by $0.6 million.
12. INCOME TAXES
The Company provides for deferred taxes under the asset and liability
approach which requires the recognition of deferred tax assets and liabilities
for the expected future tax consequences of temporary differences between the
carrying amounts and the tax bases of assets and liabilities.
The income tax provision (benefit) is summarized as follows:
<TABLE>
<CAPTION>
1994 1995 1996
------- -------- --------
<S> <C> <C> <C>
Earnings (loss) before provision for income
taxes........................................ $27,806 $(41,200) $(52,441)
======= ======== ========
Current provision (benefit)--Federal.......... $ -- $ -- $ 3,353
--State....................................... -- -- 4,754
------- -------- --------
-- -- 8,107
------- -------- --------
Deferred provision (benefit)--Federal......... 7,755 (15,656) (15,235)
--State....................................... 1,977 -- (6,786)
------- -------- --------
9,732 (15,656) (22,021)
------- -------- --------
Income tax provision (benefit)................ $ 9,732 $(15,656) $(13,914)
======= ======== ========
</TABLE>
F-14
<PAGE>
CLARK REFINING & MARKETING, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
A reconciliation between the income tax provision computed on pretax income
at the statutory federal rate and the actual provision for income taxes is as
follows:
<TABLE>
<CAPTION>
1994 1995 1996
------- -------- --------
<S> <C> <C> <C>
Federal taxes computed at 35%.................. $ 9,732 $(14,420) $(18,354)
State taxes, net of federal effect............. 1,285 (1,649) (1,320)
Nontaxable dividend income..................... (1,453) (2,172) (2,416)
Valuation allowance............................ -- -- 6,099
Other items, net............................... 168 2,585 2,077
------- -------- --------
Income tax provision (benefit)................. $ 9,732 $(15,656) $(13,914)
======= ======== ========
</TABLE>
The following represents the approximate tax effect of each significant
temporary difference giving rise to deferred tax liabilities and assets as of
December 31, 1995 and 1996.
<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Deferred tax liabilities:
Property, plant and equipment........................... $ 79,191 $ 85,421
Turnaround costs........................................ 5,559 4,939
Inventory............................................... 19,204 18,008
Other................................................... 4,297 28
-------- --------
108,251 108,396
-------- --------
Deferred tax assets:
Alternative minimum tax credit.......................... 19,376 15,403
Trademarks.............................................. 4,491 4,376
Environmental and other future costs.................... 22,958 18,992
Tax loss carryforwards.................................. 36,438 68,980
Other................................................... 2,127 5,942
-------- --------
85,390 113,693
-------- --------
Valuation allowance....................................... -- (6,099)
-------- --------
Net deferred tax liability................................ $ 22,861 $ 802
======== ========
</TABLE>
As of December 31, 1996, the Company has made payments of $15.4 million
under the Federal alternative minimum tax system which are available to reduce
future regular income tax payments. As of December 31, 1996, the Company had a
Federal net operating loss carryforward of $183.1 million and Federal tax
credit carryforwards in the amount of $1.5 million. Such operating loss and
tax credit carryforwards have carryover periods of 15 years and are available
to reduce future tax liabilities through the years ending December 31, 2011
and 2010, respectively.
The Company recorded a valuation allowance of $6.1 million at December 31,
1996 (1995--None). In calculating the increase in the valuation allowance, the
Company assumed as future taxable income only future reversals of existing
taxable temporary differences.
During 1996, the Company made a Federal tax payment of $2.7 million in
settlement of an Internal Revenue Service examination for tax years ended
December 31, 1991 and December 31, 1992 and made net cash state tax payments
of $0.6 million. (1995--net cash tax payments of $0.7 million; 1994--net cash
tax refunds of $2.9 million).
F-15
<PAGE>
CLARK REFINING & MARKETING, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Section 382 of the Internal Revenue Code restricts the utilization of net
operating losses upon the occurrence of an ownership change, as defined. An
ownership change that restricts future operating loss utilization occurred
during 1995, but based upon and to the extent of future taxable income from
reversals of existing taxable temporary differences management believes such
limitations will not restrict the Company's ability to significantly utilize
the net operating losses over the 15 year carryforward period.
13. ACQUISITION OF PORT ARTHUR REFINERY
On February 27, 1995, the Company purchased Chevron U.S.A. Inc.'s
("Chevron") Port Arthur, Texas refinery, acquiring the refinery assets and
certain related terminals, pipelines, and other assets for a purchase price of
approximately $70 million (excluding acquired hydrocarbon and non-hydrocarbon
inventories of $121.7 million and assumed liabilities of $19.4 million) plus
related acquisition costs of $14.9 million and accrued liabilities of $5.7
million. The total assumed and accrued liabilities of $25.1 million were
considered non-cash activity for purposes of the Statement of Cash Flows. The
total cost of the acquisition was accounted for using the purchase method of
accounting with $110.0 million allocated to the refinery long-term assets and
$121.7 million charged to current assets for hydrocarbon and non-hydrocarbon
inventories.
The purchase agreement also provides for contingent payments to Chevron of
up to $125 million over a five year period from the closing date of the
acquisition in the event refining industry margin indicators exceed certain
escalating levels. These contingent payments are calculated annually and the
appropriate liability, if any, will be recorded at that time. At December 31,
1996 and 1995, the Company had no obligation to Chevron relating to the
contingent payment agreement. While Chevron retained primary responsibility
for required remediation of most pre-closing environmental contamination, the
Company assumed responsibility for environmental contamination beneath and
within 25 to 100 feet of the facility's active processing units. The Company
accrued $7.5 million as part of the acquisition for the expected cost of
remediating pipe trenches and the recovery of free phase hydrocarbons in its
responsibility area of the Port Arthur refinery.
On February 27, 1995, Clark USA obtained a portion of the funds necessary to
finance the Port Arthur acquisition from a subsidiary of its major
shareholder, TrizecHahn. Clark USA sold 9,000,000 shares of Class A Common
Stock, 562,500 shares of Class B Common Stock and 562,500 shares of Class C
Common stock for an aggregate consideration of $135 million. Subsequently, the
TrizecHahn subsidiary sold 8,000,000 shares of Class A Common Stock and
500,000 shares of Class C Common Stock to Tiger Management Corporation for
$120 million. Clark USA subsequently contributed $150 million to Clark for the
purchase of the Port Arthur refinery.
14. STOCK OPTION PLANS
The Company has adopted a compensatory Long-Term Performance Plan (the
"Performance Plan"). Under the Performance Plan, designated employees,
including executive officers, of Clark USA and its subsidiaries and other
related entities are eligible to receive awards in the form of stock options,
stock appreciation rights and stock grants. An aggregate of 1,250,000 shares
of Clark USA Common Stock may be awarded under the Performance Plan, either
from authorized, unissued shares which have been reserved for such purpose or
from shares purchased on the open market, subject to adjustment in the event
of a stock split, stock dividend, recapitalization or similar change in the
outstanding Common Stock of Clark USA. The options normally extend for 10
years and become exercisable within 3 years of the
F-16
<PAGE>
CLARK REFINING & MARKETING, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
grant date. Additionally, under this plan the stock options granted may not be
sold or otherwise transferred, and are not exercisable until after a public
offering of stock is completed by the Company or change of control (as defined
in the Plan). Stock granted under this plan is priced at the fair market value
at the date of grant.
During 1996 no additional shares were granted under this Plan. In 1995,
549,000 shares were granted under this Plan and priced at the fair market
value at the date of grant. As of December 31, 1996, 549,000 stock options
were outstanding (1995--549,000) at an exercise price of $15 per share.
15. CONTINGENCIES
Clark USA and the Company are subject to various legal proceedings related
to governmental regulations and other actions arising out of the normal course
of business, including legal proceedings related to environmental matters.
Among those actions and proceedings are the following:
The Equal Employment Opportunity Commission ("EEOC") has alleged that Clark
had engaged in age discrimination in violation of the Age Discrimination in
Employment Act. The action involves 38 former managers it believes have been
affected by an alleged pattern and practice. The relief sought by the EEOC
includes reinstatement or reassignment of the individuals allegedly affected,
payment of back wages and benefits, an injunction prohibiting employment
practices which discriminate on the basis of age, and institution of practices
to eradicate the effects of any past discriminatory practices.
A Petition entitled Anderson, et al vs. Chevron and Clark, was filed in
Jefferson County, Texas by forty individual plaintiffs who were Chevron
employees who did not receive offers of employment by Clark at the time of
purchase of the Port Arthur Refinery. Chevron and the outplacement service
retained by Chevron are also named as defendants. Subsequent to the filing of
the lawsuit, the plaintiffs have each filed individual charges with the EEOC
and the Texas Commission of Human Rights.
The Company is the subject of a purported class action lawsuit related to an
on-site electrical malfunction at Clark's Blue Island refinery on October 7,
1994, which resulted in the release to the atmosphere of used catalyst
containing low levels of heavy metals, including antimony, nickel and
vanadium. This release resulted in the temporary evacuation of certain areas
near the refinery, including a high school, and approximately fifty people
were taken to area hospitals. Clark offered to reimburse the medical expenses
incurred by persons receiving treatment. The purported class action lawsuit
was filed on behalf of various named individuals and purported plaintiff
classes, including residents of Blue Island, Illinois and Eisenhower High
School students, alleging claims based on common law nuisance, negligence,
willful and wanton negligence and the Illinois Family Expense Act as a result
of this incident. Plaintiffs seek to recover damages in an unspecified amount
for alleged medical expenses, diminished property values, pain and suffering
and other damages. Plaintiffs also seek punitive damages in an unspecified
amount.
While it is not possible at this time to establish the ultimate amount of
liability with respect to the Company's contingent liabilities, Clark USA and
the Company are of the opinion that the aggregate amount of any such
liabilities, for which provision has not been made, will not have a material
adverse effect on their financial position; however, an adverse outcome of any
one or more of these matters could have a material effect on quarterly or
annual operating results or cash flows when resolved in a future period.
F-17
<PAGE>
CLARK REFINING & MARKETING, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(UNAUDITED, DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
REFERENCE SEPTEMBER 30,
NOTE 1997
--------- -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents............................ $ 271,112
Short-term investments............................... 14,818
Accounts receivable.................................. 109,462
Inventories.......................................... 2 335,216
Prepaid expenses and other........................... 17,830
----------
Total current assets............................... 748,438
PROPERTY, PLANT AND EQUIPMENT.......................... 572,765
OTHER ASSETS........................................... 3 54,729
----------
$1,375,932
==========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable..................................... 5 $ 230,605
Accrued expenses and other........................... 4,5 51,011
Accrued taxes other than income...................... 45,030
----------
Total current liabilities.......................... 326,646
LONG-TERM DEBT......................................... 415,296
DEFERRED INCOME TAXES.................................. 128
OTHER LONG-TERM LIABILITIES............................ 43,362
CONTINGENCIES.......................................... 6 --
STOCKHOLDER'S EQUITY:
Common stock $.01 par value per share; 1,000 shares
authorized and 100 shares issued and outstanding.... --
Paid-in capital...................................... 464,210
Retained earnings.................................... 126,290
----------
Total stockholder's equity......................... 590,500
----------
$1,375,932
==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-18
<PAGE>
CLARK REFINING & MARKETING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED, DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
REFERENCE ------------------------
NOTE 1996 1997
--------- ----------- -----------
<S> <C> <C> <C>
NET SALES AND OPERATING REVENUES............ $ 3,724,393 $ 3,296,367
EXPENSES:
Cost of sales............................. (3,346,318) (2,791,363)
Operating expenses........................ (304,559) (319,001)
General and administrative expenses....... (43,954) (47,393)
Depreciation.............................. (28,134) (30,249)
Amortization.............................. 3 (8,835) (14,095)
----------- -----------
(3,731,800) (3,202,101)
----------- -----------
OPERATING INCOME (LOSS)..................... (7,407) 94,266
Interest and financing costs, net......... 3,4 (31,177) (26,240)
----------- -----------
EARNINGS (LOSS) BEFORE INCOME TAXES......... (38,584) 68,026
Income tax benefit (provision)............ 14,662 (11,697)
----------- -----------
NET EARNINGS (LOSS)......................... $ (23,922) $ 56,329
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-19
<PAGE>
CLARK REFINING & MARKETING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
--------------------
1996 1997
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss).................................... $ (23,922) $ 56,329
Adjustments:
Depreciation......................................... 28,134 30,249
Amortization......................................... 13,898 19,442
Share of earnings of affiliates, net of dividends.... (139) (103)
Deferred income taxes ............................... (14,965) (700)
Other, net........................................... (617) 655
Cash provided by (reinvested in) working capital--
Accounts receivable, prepaid expenses and other...... 10,467 70,425
Inventories.......................................... 5,252 (57,847)
Accounts payable, accrued expenses, taxes other than
income and other.................................... (48,450) (79,234)
--------- ---------
Net cash provided by (used in) operating
activities........................................ (30,342) 39,216
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments.................... 85 131
Sales of short-term investments........................ 19,000 --
Expenditures for property, plant and equipment......... (23,327) (53,999)
Expenditures for turnaround............................ (7,174) (31,230)
Proceeds from disposals of property, plant and
equipment............................................. 3,890 3,691
--------- ---------
Net cash used in investing activities.............. (7,526) (81,407)
--------- ---------
CASH FLOW FROM FINANCING ACTIVITIES:
Long-term debt payments................................ (3,253) (2,310)
Capital contribution................................... 33,600 --
Deferred financing costs............................... (317) (3,765)
--------- ---------
Net cash provided by (used in) financing
activities........................................ 30,030 (6,075)
--------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS................ (7,838) (48,266)
CASH AND CASH EQUIVALENTS, beginning of period........... 60,477 319,378
--------- ---------
CASH AND CASH EQUIVALENTS, end of period................. $ 52,639 $ 271,112
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
F-20
<PAGE>
CLARK REFINING & MARKETING, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED, TABULAR DOLLAR AMOUNTS IN THOUSANDS OF U.S. DOLLARS)
1. BASIS OF PREPARATION
The unaudited consolidated balance sheet of Clark Refining & Marketing, Inc.
and Subsidiary (the "Company") as of September 30, 1997, and the related
consolidated statements of earnings and cash flows for the nine-month periods
ended September 30, 1996 and 1997, have been reviewed by independent
accountants. Clark Port Arthur Pipeline Company is included in the
consolidated results of the Company. In the opinion of the management of the
Company, all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the financial statements have been
included therein. The results of this interim period are not necessarily
indicative of results for the entire year.
Certain reclassification have been made to the operating and general and
administrative expenses in the 1996 financial statements to conform to current
year presentation.
Certain information and disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These unaudited financial
statements should be read in conjunction with the audited financial statements
and notes thereto for the year ended December 31, 1996.
The Company's earnings and cash flow from operations are primarily dependent
upon processing crude oil and selling quantities of refined petroleum products
at margins sufficient to cover operating expenses. Crude oil and refined
petroleum products are commodities, and factors largely out of the Company's
control can cause prices to vary, in a wide range, over a short period of
time. This potential margin volatility can have a material effect on financial
position, current period earnings and cash flow.
2. INVENTORIES
The carrying value of inventories consisted of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30,
1997
-------------
<S> <C>
Crude oil...................................................... $108,574
Refined and blendstocks........................................ 186,275
Convenience products........................................... 22,899
Warehouse stock and other...................................... 17,468
--------
$335,216
========
</TABLE>
The market value of the crude oil and refined product inventories at
September 30, 1997, was approximately $35.0 million above the carrying value.
3. OTHER ASSETS
Amortization of deferred financing costs for the nine month period ended
September 30, 1997 was $5.3 million (1996--$4.9 million) and was included in
"Interest and financing costs, net".
Amortization of refinery maintenance turnaround costs for the nine month
period ended September 30, 1997 was $14.1 million (1996--$8.8 million).
F-21
<PAGE>
CLARK REFINING & MARKETING, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)--(CONTINUED)
4. INTEREST AND FINANCING COSTS, NET
Interest and financing costs, net, consisted of the following:
<TABLE>
<CAPTION>
FOR THE NINE
MONTHS ENDED
SEPTEMBER 30,
-----------------
1996 1997
------- --------
<S> <C> <C>
Interest expense.......................................... $32,207 $ 32,281
Financing costs........................................... 4,922 5,285
Interest income........................................... (5,198) (10,354)
------- --------
31,931 27,212
Capitalized interest...................................... (754) (972)
------- --------
$31,177 $ 26,240
======= ========
</TABLE>
Accrued interest payable at September 30, 1997, of $8.6 million was included
in "Accrued expenses and other".
5. INCOME TAXES
The income tax provision of $11.7 million for the nine-month period ended
September 30, 1997, was primarily related to the resolution of an Internal
Revenue Service examination for the years 1993 and 1994 as determined under
the Company's tax sharing agreement with Clark USA, Inc. ("Clark USA"). The
resolution had the effect of accelerating the recognition of certain net
taxable temporary differences and, as a result, required an increase in the
valuation allowance related to the Company's net deferred tax asset. The
provision includes $2.0 million of associated interest.
6. CONTINGENCIES
The Company is subject to various legal proceedings related to governmental
regulations and other actions arising out of the normal course of business,
including legal proceedings related to environmental matters. While it is not
possible at this time to establish the ultimate amount of liability with
respect to such contingent liabilities, the Company is of the opinion that the
aggregate amount of any such liabilities, for which provision has not been
made, will not have a material adverse effect on their financial position,
however, an adverse outcome of any one or more of these matters could have a
material effect on quarterly or annual operating results or cash flows when
resolved in a future period.
7. WORKING CAPITAL FACILITY
On September 25, 1997, the Company entered into a new $400 million revolving
credit facility. The credit facility, which expires on December 31, 1999,
provides for borrowings and the issuance of letters of credit of up to the
lesser of $400 million or the amount available under a defined borrowing base
calculated with respect to the Company's cash and cash equivalents, eligible
investments, eligible receivables and eligible petroleum inventories. Direct
borrowings under the credit facility are limited to $50 million. The Company
will use the facility primarily for the issuance of letters of credit to
secure purchases of crude oil. The Company is required to comply with certain
financial covenants including maintaining defined levels of working capital,
cash, cash equivalents and qualifying investments tangible net worth, and
cumulative cash flow, as defined.
8. SUBSEQUENT EVENT
On October 1, 1997, Clark USA, the Company's parent, reclassified all shares
of Class A Common Stock held by Tiger Management to a new Class E Common
Stock. Subsequently,
F-22
<PAGE>
CLARK REFINING & MARKETING, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)--(CONTINUED)
TrizecHahn Corporation purchased all of the Class E Common Stock for $7.00 per
share in cash totaling $63 million. The new Class E Common Stock was then
converted into 63,000 shares ($1,000 liquidation preference per share) of 11
1/2% Senior Cumulative Exchangeable Preferred Stock, par value $0.01 per
share, which was sold on October 1, 1997 for face value to qualified
institutional buyers in reliance on Rule 144A under the Securities Act of
1933.
In connection with the above transactions all remaining shares of Class A
Common Stock were converted to Common Stock. In addition, Common Stock held by
affiliates of Occidental Petroleum ("Oxy") was converted to a new Class F
Common Stock which has voting rights limited to 19.9% of the total voting
power of all classes of Clark USA's voting stock, but is convertible into
Common Stock by any holder other than affiliates of Occidental Petroleum. Oxy
was also issued an additional 545,455 shares of Class F Common Stock in full
satisfaction of certain terms in the Oxy Stockholders' Agreement.
On November 3, 1997, an affiliate of Blackstone Capital Partners III
Merchant Banking Fund L.P. ("Blackstone") acquired the 13,500,000 shares of
Common Stock of Clark USA previously held by Trizec Hahn Corporation and
certain of its subsidiaries, as a result of which Blackstone obtained a 65%
controlling interest in Clark USA. This transaction triggered the Change of
Control covenant in Clark USA's Senior Secured Zero Coupon Notes, due 2000
("Zero Coupon Notes") and the Company's 9 1/2% Senior Notes, due 2004 and 10
1/2% Senior Notes, due 2001 ("10 1/2% Notes") and may trigger the Change of
Control covenant in Clark USA's 10 7/8% Senior Notes, 2005 if it results in a
Rating Decline (as defined). Under such covenants, noteholders would have the
right to require the Company and Clark USA to repurchase their notes at 101%
of face value or, in the case of the Zero Coupon Notes, accreted value.
However, market quotations for these notes were higher than 101% on November
4, 1997 and as a result, the Company does not believe this Change of Control
will have a material adverse effect on the Company. The Company's credit
facility was amended to permit the acquisition by Blackstone of Clark USA's
Common Stock.
In addition, the Blackstone transaction caused an "ownership change" of the
Clark USA consolidated tax return group (the "Group") under Section 382 of the
Internal Revenue Code of 1986, as amended. The result of the ownership change
is that utilization of the Group's tax attribute carryovers will be limited in
tax periods subsequent to the ownership change. While the Group has not
finally determined the effect of the limitation, the Company does not expect
that the book value of the Group's tax attribute carryovers would be
incrementally reduced. The Company expects to make a final determination by
the end of the year.
On November 21, 1997, the Company issued in a private placement to
institutional investors $100 million (issued at 99.266%) of 8 3/8% Senior
Notes Due 2007 and $175 million (issued at 99.281%) of 8 7/8% Senior
Subordinated Notes Due 2007 (the "Notes"). The Notes are not callable in the
first five years, but up to 35% of the aggregate principal amount may be
repurchased at a redemption price of 108.375% of the principal amount with the
proceeds from certain equity offerings.
The Company also borrowed $125 million under a floating rate term loan
agreement expiring 2004. Twenty-five percent of the principal outstanding must
be paid in 2003. The floating rate term loan is a senior unsecured obligation
of the Company and bears interest at the LIBOR Rate (as defined in the Loan
Agreement) plus a margin of 275 basis points. The loan may be repaid in whole
or in part at any time at a redemption price of 102.50% of the principal
amount in the first year, 101.25% of the principal amount in the second year
and at 100% of the principal amount thereafter.
F-23
<PAGE>
Proceeds from the above financings will be used for general corporate
purposes and to redeem on December 24, 1997 all $225 million of the Company's
outstanding 10 1/2% Senior Notes Due 2001. The redemption price will be 102
5/8% plus accrued interest, or $1,032.96 for each $1,000 principal amount of
the notes outstanding.
Separately, on November 21, 1997 Clark USA repurchased for $206.6 million,
$259.2 million (value at maturity) of notes tendered under a recent tender
offer for its $263.7 million (value at maturity) outstanding Senior Secured
Zero Coupon Notes Due 2000. To facilitate the repurchase, the Company returned
capital of $215 million to Clark USA.
As a result of the aforementioned transactions, the Company expects to
record an extraordinary charge to earnings for redemption premiums and
unamortized deferred financing costs of approximately $9.7 million on a pre-
tax basis and pay fees and expenses of $9.0 million associated with the
Blackstone transaction.
In the early 1990s the Company invested $25.0 million in a project initiated
to produce low-sulfur diesel fuel at the Hartford refinery (the "DHDS
Project") which was delayed in 1992 based on internal and third-party analyses
that indicated an oversupply of low-sulfur diesel fuel capacity in the
Company's markets. Based on these analyses, the Company projected relatively
narrow price differentials between low- and high-sulfur diesel products. This
projection has thus far been borne out. High sulfur diesel fuel is utilized by
the railroad, marine and farm industries. In December 1997, the Company
determined that equipment purchased for the DHDS Project could be better
utilized for other projects at its Hartford and Port Arthur refineries, rather
than remaining idle until low- and high-sulfur diesel fuel differentials
widened sufficiently to justify completing the DHDS Project. As a result, in
the fourth quarter of 1997 the Company expects to record a charge to earnings
of approximately $15.0 million principally for engineering costs specific to
the DHDS Project.
F-24
<PAGE>
EXHIBIT INDEX
<TABLE>
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EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
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3.1 Restated Certificate of Incorporation of Clark Refining &
Marketing, Inc. (Incorporated by reference to Exhibit
3.1 filed with Clark Oil & Refining Corporation
Registration Statement on Form S-1 (Registration No. 33-
28146))
3.2 Certificate of Amendment to Certificate of Incorporation
of Clark Refining & Marketing, Inc. (Incorporated by
reference to Exhibit 3.2 filed with Clark Oil & Refining
Corporation Annual Report on Form 10-K (Registration No.
1-11392))
3.3 By-laws of Clark Refining & Marketing, Inc. (Incorporated
by reference to Exhibit 3.2 filed with Clark Oil &
Refining Corporation Registration Statement on Form S-1
(Registration No. 33-28146))
4.1 Indenture between Clark Refining & Marketing, Inc.
(formerly Clark Oil & Refining Corporation) and
NationsBank of Virginia, N.A. (formerly Sovran Bank,
N.A.), including the form of 10 1/2% Senior Notes due
2001 (Incorporated by reference to Exhibit 4.1 filed
with Clark Oil & Refining Corporation Registration
Statement on Form S-1 (File No. 33-43358))
4.2 Supplemental Indenture between Clark Refining &
Marketing, Inc. and NationsBank of Virginia, N.A., dated
February 17, 1995 (Incorporated by reference to Exhibit
4.4 filed with Clark USA, Inc. Annual Report on Form
10-K for the year ended December 31, 1994) (File No. 33-
59144))
4.3 Indenture between Clark Refining & Marketing, Inc.
(formerly Clark Oil & Refining Corporation) and
NationsBank of Virginia, N.A. including the form of 9
1/2% Senior Notes due 2004 (Incorporated by reference to
Exhibit 4.1 filed with Clark Oil & Refining Corporation
Registration Statement on Form S-1 (File No.
33-50748))
4.4 Supplemental Indenture between Clark Refining &
Marketing, Inc. and NationsBank of Virginia, N.A., dated
February 17, 1995 (Incorporated by reference to Exhibit
4.6 filed with Clark USA, Inc. Annual Report on Form 10-
K for the year ended December 31, 1994 (File No. 33-
59144))
4.5 Indenture between Clark Refining & Marketing, Inc. and
Bankers Trust Company, dated as of November 21, 1997,
including the form of 8 3/8% Senior Notes due 2007
4.6 Indenture between Clark Refining & Marketing, Inc. and
Marine Midland Bank, dated as of November 21, 1997,
including the form of 8 7/8% Senior Subordinated Notes
due 2007
4.61 Supplemental Indenture between Clark Refining &
Marketing, Inc. and Marine Midland Bank, dated as of
November 21, 1997
4.7 Exchange and Registration Rights Agreement, dated
November 21, 1997, between Clark Refining & Marketing,
Inc., Goldman, Sachs & Co., BT Alex. Brown Incorporated,
Bear, Stearns & Co. Inc., Donaldson, Lufkin & Jenrette
Securities Corporation and Lehman Brothers Inc.
5.1 Opinion of Mayer, Brown & Platt as to the legality of the
notes
8.1 Opinion of Mayer, Brown & Platt as to certain matters
10.10 Credit Agreement, dated as of September 25, 1997, among
Clark Refining & Marketing, Inc., Bankers Trust Company,
as Administrative Agent, The Toronto-Dominion Bank, as
Syndication Agent, BankBoston, N.A., as Documentation
Agent, and the other financial institutions party
thereto. (Incorporated by reference to Exhibit 10.1
filed with Clark Refining & Marketing, Inc. Current
Report on Form 8-K, dated October 1, 1997 (File No. 1-
11392))
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
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10.11 Amendment No. 1 to Credit Agreement, dated as of October
29, 1997, among Clark Refining & Marketing, Inc.,
Bankers Trust Company, as Administrative Agent and
Collateral Agent, The Toronto-Dominion Bank, as
Syndication Agent, and BankBoston, N.A., as
Documentation Agent, and the other financial
institutions party thereto.
10.12 Amendment No. 2 to Credit Agreement, dated as of November
7, 1997, among Clark Refining & Marketing, Inc., Bankers
Trust Company, as Administrative Agent and Collateral
Agent, The Toronto-Dominion Bank, as Syndication Agent,
and BankBoston, N.A., as Documentation Agent, and the
other financial institutions party thereto.
10.13 Credit Agreement, dated as of November 21, 1997, among
Clark Refining & Marketing, Inc., Goldman, Sachs Credit
Partners L.P., as Arranger and Syndication Agent, and
State Street Bank and Trust Company of Missouri, N.A.,
as Payment Agent, the financial institutions listed on
the signature pages thereof, and Goldman Sachs Credit
Partners, as Administrative Agent.
10.20 Clark Refining & Marketing, Inc. Stock Option Plan
(Incorporated by reference to Exhibit 10.5 filed with
Clark Registration Statement on Form S-1 (Registration
No. 33-43358))
10.21 Clark Refining & Marketing, Inc. Savings Plan, as amended
and restated effective as of October 1, 1989
(Incorporated by reference to Exhibit 10.6 filed with
Clark Oil & Refining Corporation Annual Report on Form
10-K for the year ended December 31, 1989 (Commission
File No. 1-11392))
10.22 Employment Agreement of Paul D. Melnuk (Incorporated by
reference to Exhibit 10.2 filed with Clark Refining &
Marketing, Inc. Current Report on Form 8-K, dated
October 1, 1997 (File No. 1-11392))
10.23 Memorandum of Agreement, dated as of July 8, 1997,
between Clark Refining & Marketing, Inc. and Bradley D.
Aldrich.
10.24 Memorandum of Agreement, dated as of July 8, 1997,
between Clark Refining & Marketing, Inc. and Brandon K.
Barnholt.
10.25 Memorandum of Agreement, dated as of July 8, 1997,
between Clark Refining & Marketing, Inc. and Maura J.
Clark.
10.26 Memorandum of Agreement, dated as of July 8, 1997,
between Clark Refining & Marketing, Inc. and Edward J.
Stiften.
10.30 Amended and Restated Asset Sale Agreement, dated as of
August 16, 1994 between Chevron U.S.A. Inc. and Clark
Refining & Marketing, Inc., (Incorporated by reference
to Exhibit 10.3 filed with Clark USA, Inc. Current
Report on Form 8-K, dated February 27, 1995
(Registration No. 33-59144))
10.31 Chemical Facility Lease with Option to Purchase, dated as
of August 17, 1994 between Chevron U.S.A. Inc. and Clark
Refining & Marketing, Inc., (Incorporated by reference
to Exhibit 10.9.2 filed with Clark USA, Inc.
Registration Statement on Form S-1 (Registration No. 33-
84192))
10.32 Sublease of Chemical Facility Lease, dated as of August
16, 1994, between Chevron U.S.A. Inc. and Clark Refining
& Marketing, Inc., (Incorporated by reference to Exhibit
10.9.3 filed with Clark USA, Inc. Registration Statement
on Form S-1 (Registration No. 33-84192))
</TABLE>
<PAGE>
<TABLE>
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EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
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10.33 PADC Facility Lease with Option to Purchase, dated as of
August 16, 1994, between Chevron U.S.A. Inc. and Clark
Refining & Marketing, Inc., (Incorporated by reference
to Exhibit 10.9.4 filed with Clark USA, Inc.
Registration Statement on Form S-1 (Registration No. 33-
84192))
10.34 Supply Agreement for the Chemical Facility, dated as of
August 16, 1994, between Chevron U.S.A. Inc. and Clark
Refining & Marketing, Inc., (Incorporated by reference
to Exhibit 10.9.5 filed with Clark USA, Inc.
Registration Statement on Form S-1 (Registration No. 33-
84192))
10.35 Services Agreement for the Chemical Facility, dated as of
August 16, 1994, between Chevron U.S.A. Inc. and Clark
Refining & Marketing, Inc., (Incorporated by reference
to Exhibit 10.9.6 filed with Clark USA, Inc.
Registration Statement on Form S-1 (Registration No. 33-
84192))
10.36 Supply Agreement for the PADC Facility, dated as of
August 16, 1994, between Chevron U.S.A. Inc. and Clark
Refining & Marketing, Inc., (Incorporated by reference
to Exhibit 10.9.7 filed with Clark USA, Inc.
Registration Statement on Form S-1 (Registration No. 33-
84192))
10.37 Services Agreement for the PADC Facility, dated as of
August 16, 1994, between Chevron U.S.A. Inc. and Clark
Refining & Marketing, Inc. (Incorporated by reference to
Exhibit 10.9.8 filed with Clark USA, Inc. Registration
Statement on Form S-1 (Registration No. 33-84192))
10.60 Clark Refining & Marketing, Inc. Stock Option Plan
(Incorporated by reference to Exhibit 10.5 filed with
Clark Registration Statement on Form S-1 (Registration
No. 33-43358))
10.61 Clark Refining & Marketing, Inc. Savings Plan, as amended
and restated effective as of October 1, 1989
(Incorporated by reference to Exhibit 10.6 filed with
Clark Oil & Refining Corporation Annual Report on Form
10-K for the year ended December 31, 1989 (Commission
File No. 1-11392))
10.78 Stock Purchase and Redemption Agreement, dated as of
December 30, 1992, among AOC Limited Partnership, P.
Anthony Novelly, Samuel R. Goldstein, G & N Investments,
Inc., TrizecHahn Corporation, AOC Holdings, Inc. and
Clark Oil & Refining Corporation (Incorporated by
reference to Exhibit 10.11 filed with Clark R & M
Holdings, Inc. Registration Statement on Form S-4 (File
No. 33-59144))
12.1 Computation of Ratio of Earnings to Fixed Charges
21.1 Subsidiary of the Company
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Mayer, Brown & Platt (included in Exhibit 5.1)
24.1 Power of Attorney (included on signature page)
25.1 Statement of Eligibility and Qualification on Form T-1 of
Bankers Trust Company
25.2 Statement of Eligibility and Qualification on Form T-1 of
Marine Midland Bank
99.1 Form of Letter of Transmittal from Clark Refining &
Marketing, Inc. to its shareholder relating to the
exchange offer
99.2 Form of Notice of Guaranteed Delivery
</TABLE>
<PAGE>
EXHIBIT 4.5
8 3/8% SENIOR NOTES DUE 2007
INDENTURE, dated as of November 21, 1997 between Clark Refining &
Marketing, Inc., a corporation duly organized and existing under the laws of the
State of Delaware (herein called the "Company"), having its principal office at
8182 Maryland Avenue, St. Louis, Missouri, 63105, and Bankers Trust Company, a
New York banking corporation, as Trustee (herein called the "Trustee").
RECITALS
The Company has duly authorized the creation of an issue of its 8
3/8% Senior Notes due 2007 (the "Initial Notes") which, subject to certain
conditions, are exchangeable for the Company's 8 3/8% Senior Notes due 2007
which are registrable under the Securities Act (the "Exchange Notes" and,
together with the Initial Notes, the "Notes" or the "Securities") of
substantially the tenor and amount hereinafter set forth, and to provide
therefor the Company has duly authorized the execution and delivery of this
Indenture.
The Company has duly authorized the creation of an issue of its 8 7/8%
Senior Subordinated Notes due 2007 (the "Senior Subordinated Notes") to be
issued pursuant to an indenture to be entered into between the Company and a
trustee (the "Senior Subordinated Note Indenture").
All things necessary 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, and to make this Indenture a
valid agreement of the Company, in accordance with their and its terms, have
been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities or of series thereof, as
follows:
ARTICLE 1.
----------
DEFINITIONS AND OTHER PROVISIONS
--------------------------------
OF GENERAL APPLICATION
----------------------
Section 1.01. Definitions
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
<PAGE>
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as
are generally accepted and consistently applied in the United States which
are in effect on the date of this Indenture; and
(4) 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.
"9 1/2% Notes" means the Company's 9 1/2% Senior Notes due 2004.
"10 1/2% Notes" means the Company's 10 1/2% Senior Notes due 2001.
"10 7/8 % Notes" means the 10 7/8 % Senior Notes due 2005 of Clark USA.
"144A Global Note" means a 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 Depository 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.
"Acquired Debt" means, with respect to any specified Person, (i) Indebtedness
of any other Person existing at the time such other Person is merged with or
into or became a Subsidiary of such specified Person, including, without
limitation, Indebtedness incurred in connection with, or in contemplation of,
such other Person merging with or into or becoming a Subsidiary of such
specified Person, and (ii) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.
"Act", when used with respect to any Holder, has the meaning specified in
Section 1.04.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"AOC Payment" means all payments made to AOC Limited Partnership, a limited
partnership organized under the laws of the State of Missouri, constituting
"Additional Redemption Consideration" required to be paid by Clark USA pursuant
to Section 2.4 of the Stock Purchase and Redemption Agreement.
2
<PAGE>
"Applicable Procedures" means, with respect to any transfer or exchange of or
for beneficial interests in any Global Security, the rules and procedures of the
Depository, Euroclear and Cedel that apply to such transfer or exchange.
"Asset Disposition" by any Person means any transfer, conveyance, sale, lease
or other disposition by such Person or any of its Restricted Subsidiaries
(including a consolidation or merger or other sale of any such Restricted
Subsidiaries with, into or to another Person in a transaction in which such
Restricted Subsidiary ceases to be a Restricted Subsidiary, but excluding a
disposition by a Restricted Subsidiary of such Person to such Person or a
Restricted Subsidiary of such Person or by such Person to a Restricted
Subsidiary of such Person) of (i) shares of Capital Stock (other than directors'
qualifying shares) or other ownership interests of a Restricted Subsidiary of
such Person, (ii) substantially all of the assets of such Person or any of its
Restricted Subsidiaries representing a division or line of business or (iii)
other assets or rights of such Person or any of its Restricted Subsidiaries
outside of the ordinary course of business, which in the case of either clause
(i), (ii) or (iii), whether in a single transaction or a series of related
transactions, result in Net Available Proceeds in excess of $10 million;
provided that (x) any transfer, conveyance, sale, lease or other disposition of
assets securing the Credit Agreement in connection with the enforcement of the
security interests therein and (y) any sale of crude oil pursuant to the
contracts governing the transactions contemplated by the Gulf Merger Agreement
and the Gulf Oil Purchase Contract shall not be deemed an Asset Disposition
hereunder.
"Asset Disposition Trigger Date" has the meaning as specified in Section 9.16.
"Attributable Indebtedness" means the total net amount of rent required to be
paid during the remaining primary term of any particular lease under which any
person is at the time liable, discounted at the rate per annum equal to the
weighted average interest rate borne by the Notes.
"Authenticating Agent" means any Person authorized by the Trustee pursuant to
Section 5.15 to act on behalf of the Trustee to authenticate Securities of one
or more series.
"Blackstone" means Blackstone Capital Partners III Merchant Banking Fund L.P.
and its affiliates.
"Blackstone Transaction" means the acquisition of 13,500,000 shares of common
stock of Clark USA previously held by Trizec Hahn Corporation and certain of its
subsidiaries.
"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 the Board of
Directors and to be in full force and effect on the date of such certification,
and set forth in an Officers' Certificate delivered to the Trustee.
"Borrowing Base" means, as of any date, an amount equal to the sum of (i) 95%
of the accounts receivable owned by the Company and its Restricted Subsidiaries
(excluding any accounts receivable from Restricted Subsidiaries and any accounts
receivable that are more than
3
<PAGE>
90 days past due) as of such date, plus (ii) 90% of the market value of
inventory owned by the Company and its Restricted Subsidiaries as of such date,
plus (iii) 100% of the cash and Cash Equivalents owned by the Company and its
Restricted Subsidiaries as of such date that are, as of such date, held in one
or more separate accounts under the direct control of the agent bank under the
Credit Agreement and that are as of such date pledged to secure working capital
borrowings under the Credit Agreement, minus (iv) the principal amount of
borrowings outstanding as of such date under the Credit Agreement to the extent
that the amount of such borrowings exceeds the sum of clauses (i) and (ii)
above, all of the foregoing calculated on a consolidated basis in accordance
with GAAP.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in the Borough of Manhattan,
City of New York, are authorized or obligated by law, regulation or executive
order to close.
"Capital Lease" means, at the time any determination thereof is to be made,
any lease of property, real or personal or mixed, in respect of which the
present value of the minimum rental commitment would be capitalized on a balance
sheet of the lessee in accordance with GAAP.
"Capitalized Lease Obligation" of any Person means any lease of any property
(whether real, personal or mixed) by such Person as lessee which, in conformity
with GAAP, is required to be accounted for as a Capital Lease on the balance
sheet of that Person.
"Capital Stock" means (i) in the case of a corporation, corporate stock, (ii)
in the case of any association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock and (iii) in the case of a partnership, partnership interests
(whether general or limited).
"Cash Equivalents" means (i) United States dollars, (ii) securities issued or
directly and fully guaranteed or insured by the United States government or any
agency or instrumentality thereof, (iii) certificates of deposit and eurodollar
time deposits with maturities of six months or less from the date of
acquisition, bankers' acceptances with maturities not exceeding six months and
overnight bank deposits, in each case with any domestic commercial bank having
capital and surplus in excess of $500 million and a Keefe Bank Watch Rating of
"B" or better, (iv) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clauses (ii) and (iii)
entered into with any financial institution meeting the qualifications specified
in clause (iii) above and (v) commercial paper having the highest rating
obtainable from Moody's or S&P and, in each case, maturing within six months
after the date of acquisition.
"Cedel Bank" means Cedel Bank, SA.
"Change of Control" means any transaction the result of which is that any
Person (an "Acquiring Person") other than Blackstone, or a Person a majority of
whose voting equity is owned by Blackstone, becomes the Beneficial Owner,
directly or indirectly, of shares of stock of the Company or Clark USA entitling
such Acquiring Person to exercise 50% or more of the total voting power of all
classes of stock of the Company or Clark USA, as the case may be, entitled to
4
<PAGE>
vote in elections of directors. The term "Beneficial Owner" shall be determined
in accordance with Rule 13d-3 under the Exchange Act.
"Change of Control Triggering Event" means the occurrence of a Change of
Control resulting in a Rating Decline.
"Chevron Payment" means that certain contingent payment obligation of Clark
USA to Chevron U.S.A. Inc. based on industry refining margins and the volume of
refined oil products produced at the Port Arthur Refinery over a five-year
period, pursuant to Section 3.1(d) of the Asset Purchase Agreement, dated as of
August 18, 1994, between Clark USA and Chevron U.S.A. Inc., as amended.
"Clark USA" means Clark USA, Inc., a Delaware corporation and the direct
parent of the Company.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or, if at
any time after the execution of this instrument 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.
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company Request" or "Company Order" means a written request or order signed
in the name of the Company by its Chairman of the Board, its Vice Chairman of
the Board, its President or a Vice President, and by its Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary, and delivered to the
Trustee.
"Consolidated Adjusted Net Worth" of any Person means the total amount of
consolidated stockholder's equity (par value plus additional paid-in capital
(including all Capital Stock except as excluded below) plus retained earnings or
minus accumulated deficit) of such Person as reflected on the consolidated
balance sheet of such Person and its Restricted Subsidiaries for the most recent
Quarter prior to the event requiring such determination to be made, after
excluding (to the extent otherwise included therein and without duplication) the
following (the amount of such stockholder's equity and deductions therefrom to
be computed, except as noted below, in accordance with GAAP consistently
applied): (i) any amount receivable but not paid from sales of Capital Stock of
such Person or its Restricted Subsidiaries determined on a consolidated basis;
(ii) any revaluation or other write-up in book value of assets subsequent to the
date hereof (other than write-ups of oil inventory previously written down and
other than reevaluations or write-ups upon the acquisition of assets acquired in
a transaction to be accounted for by purchase accounting under GAAP); (iii)
treasury stock; (iv) an amount equal to the excess, if any, of the amount
reflected on the books and records of such Person or its Restricted Subsidiaries
for the securities of any Person which is not a Restricted Subsidiary of such
Person over the lesser of cost or market value (as determined in good faith by
the board of directors of such Person or such
5
<PAGE>
Restricted Subsidiary); (v) Disqualified Capital Stock; (vi) equity securities
of such Person or its Restricted Subsidiaries which are not Disqualified Capital
Stock but which are exchangeable for or convertible into debt securities of such
Person or such Restricted Subsidiary, as the case may be, other than at the
option of such Person or such Restricted Subsidiary except to the extent that
the exchange or conversion rights in such other equity securities cannot, under
any circumstances, be exercised prior to Maturity; (vii) the cumulative foreign
currency translation adjustment, if any; and (viii) write-offs of non-cash items
in an amount not to exceed $80 million.
"Consolidated Net Operating Income" means, when used with reference to any
Person, for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP, provided that (i) the Net Income of any Person which is
not a Subsidiary of such Person or is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid to such Person or its Restricted Subsidiaries, (ii) the Net
Income of any Unrestricted Subsidiary shall be excluded (except to the extent
distributed to the Company or one of its Subsidiaries), (iii) the Net Income of
any Person acquired in a pooling of interests transaction for any period prior
to the date of such acquisition shall be excluded, (iv) extraordinary gains and
losses and gains and losses from the sale of assets outside the ordinary course
of such Person's business shall be excluded, (v) the cumulative effect of
changes in accounting principles in the year of adoption of such changes shall
be excluded and (vi) the tax effect of any of the items described in clauses (i)
through (v) above shall be excluded.
"Consolidated Net Tangible Assets" of a Person means the consolidated total
assets of such Person and its Restricted Subsidiaries determined in accordance
with GAAP, less the sum of (i) all current liabilities and current liability
items, and (ii) all goodwill, trade names, trademarks, patents, organization
expense, unamortized debt discount and expense and other similar intangibles
properly classified as intangibles in accordance with GAAP.
"Consolidated Operating Cash Flow" means with respect to any Person,
Consolidated Net Operating Income of such Person and its Restricted Subsidiaries
without giving effect to gains and losses on securities transactions (net of
related taxes) for the period described below, increased by the sum of (i)
consolidated Fixed Charges of such Person and its Restricted Subsidiaries which
reduced Consolidated Net Operating Income for such period, (ii) consolidated
income tax expense (net of taxes relating to gains and losses on securities
transactions) of such Person and its Restricted Subsidiaries which reduced
Consolidated Net Operating Income for such period, (iii) consolidated
depreciation and amortization expense (including amortization of purchase
accounting adjustments) of such Person and its Restricted Subsidiaries and other
noncash items to the extent any of which reduced Consolidated Net Operating
Income for such period, (iv) expenses incurred in connection with the Blackstone
Transaction in an amount not to exceed $9 million, and (v) any annual management
monitoring, consulting and advisory fees and related expenses paid to Blackstone
and its affiliates in an amount not to exceed $2 million, less noncash items
which increased Consolidated Net Operating Income for such period, all as
determined for such Person and its consolidated Restricted Subsidiaries in
accordance with GAAP for the four full Quarters for which financial information
in respect thereof is available immediately prior to the Transaction Date.
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"Consolidated Operating Cash Flow Ratio" means, with respect to any Person,
the ratio of (i) Consolidated Operating Cash Flow of such Person and its
Restricted Subsidiaries for the four Quarters for which financial information in
respect thereof is available immediately prior to the Transaction Date to (ii)
the aggregate Fixed Charges of such Person and its Restricted Subsidiaries for
such four Quarters, such Fixed Charges to be calculated on the basis of the
amount of the Indebtedness and Capitalized Lease Obligations of such Person and
its Restricted Subsidiaries outstanding on the Transaction Date and assuming the
continuation of market interest rate levels prevailing on the Transaction Date
in any calculation of interest rates in respect of floating interest rate
obligations; provided, however, that if such Person or any Restricted Subsidiary
of such Person shall have acquired, sold or otherwise disposed of any Material
Asset or engaged in an Equity Offering during the four full Quarters for which
financial information in respect thereof is available immediately prior to the
Transaction Date or during the period from the end of such fourth full Quarter
to and including the Transaction Date, the calculation required in clause (i)
above will be made giving effect to such acquisition, sale or disposition or the
other investment of the Net Available Proceeds of such Equity Offering on a pro
forma basis as if such acquisition, sale, disposition or investment had occurred
at the beginning of such four full Quarter period without giving effect to
clause (iii) of the definition of "Consolidated Net Operating Income" (that is,
including in such calculation the Net Income for the relevant prior period of
any Person acquired in a pooling of interests transaction, notwithstanding the
provisions of said clause (iii)); provided, further, that Fixed Charges of such
Person during the applicable period shall not include the amount of consolidated
interest expense which is directly attributable to Indebtedness to the extent
such Indebtedness is reduced by the proceeds of the incurrence of such
Indebtedness which gave rise to the need to calculate the Consolidated Operating
Cash Flow Ratio. Any such pro forma calculation may include adjustments
appropriate, in the reasonable determination of the Company as set forth in an
Officer's Certificate, to (i) reflect operating expense reductions reasonably
expected to result from the acquisition by the Company of such Material Asset or
(ii) eliminate the effect of any extraordinary accounting event with respect to
any acquired Person on Consolidated Net Operating Income.
"Corporate Trust Office" means the principal office of the Trustee at which at
any particular time its corporate trust business shall be administered, which
office at the date of the execution of this Indenture is located at Four Albany
Street, New York, New York 10006, Attention: Corporate Trust and Agency Services
or at any other time at such other address as the Trustee may designate from
time to time by notice to the Noteholders.
"Credit Agreement" means that certain Credit Agreement, dated as of September
25, 1997, by and among the Company and the financial institutions party thereto,
including any related notes, recorded or otherwise perfected under applicable
law (including any conditional sale or other title guarantees, collateral
documents, instruments and agreements executed in connection therewith), and in
each case as amended, modified, extended, renewed, refunded, replaced or
refinanced from time to time.
"Default" means any event which is, or after notice or passage of time or both
would be, an Event of Default.
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"Defaulted Interest" has the meaning specified in Section 2.12.
"Definitive Securities" means certificated Securities that are in the form of
the Securities set forth in Article Two hereof, that do not include the
information called for by Section 2.06(g)(ii).
"Depository" means, with respect to Securities issuable or issued in whole or
in part in global form, the Person specified in Section 2.03 hereof as the
Depository with respect to the Securities, until a successor shall have been
appointed and become such Depository pursuant to the applicable provisions of
this Indenture, and, thereafter, "Depository" shall mean or include such
successor.
"Disposition" means, with respect to any Person, any merger, consolidation or
other business combination involving such Person (whether or not such Person is
the Surviving Person) or the sale, assignment, transfer, lease, conveyance or
other disposition of all or substantially all of such Person's assets.
"Disqualified Capital Stock" means any Capital Stock of the Company that,
either by its terms or by the terms of any security into which it is convertible
or exchangeable, is, or upon the happening of any event or passage of time would
be, required to be redeemed or purchased (other than pursuant to an offer to
repurchase such Capital Stock following a change of control, which offer may not
be completed until 45 days after completion of the Offer described in Section
12.01), including at the option of the holder, in whole or in part, or has, or
upon the happening of an event or passage of time would have, a redemption,
sinking fund or similar payment due, on or prior to November 15, 2007.
"Equity Offering" means any public or private sale of Capital Stock (including
options, warrants or rights with respect thereto) of the Company or of Clark
USA.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels office,
as operator of the Euroclear system.
"Event of Default" has the meaning as specified in Section 4.01.
"Excess Proceeds" has the meaning as specified in Section 9.16.
"Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time.
"Exchange Debentures" means the 11 1/2% Subordinated Exchange Debentures due
2009 which may be exchanged for the Exchangeable Preferred Stock of Clark USA,
at the option of Clark USA.
"Exchange Offer" means the offer that may be made by the Company pursuant to
the Registration Rights Agreement to exchange Initial Notes for Exchange Notes.
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"Exchangeable Preferred Stock" means the 11 1/2% Senior Cumulative
Exchangeable Preferred Stock of Clark USA.
"Excluded Contribution" means the net cash proceeds received by the Company
after the Issue Date from (a) contributions to its common equity capital and (b)
the sale (other than to a Subsidiary or to any Company or Subsidiary management
equity plan or stock option plan or any other management or employee benefit
plan or agreement) of Capital Stock of the Company (other than Disqualified
Capital Stock), in each case, designated as Excluded Contributions pursuant to
an Officers' Certificate.
"Existing Indebtedness" means any Indebtedness of the Company and its
Subsidiaries incurred on or outstanding as of the Issue Date and in any event
Indebtedness evidenced by the Credit Agreement whether or not outstanding on the
Issue Date.
"Fixed Charges" of any Person means, for any period, the sum of (i)
consolidated Interest Expense of such Person and its Restricted Subsidiaries,
plus (ii) all but the principal component of rentals in respect of consolidated
Capitalized Lease Obligations of such Person and its Restricted Subsidiaries
paid, accrued or scheduled to be paid or accrued by such Person and its
Restricted Subsidiaries during such period, and determined in accordance with
GAAP plus (iii) all cash dividend payments (excluding items eliminated in
consolidation) on any series of preferred stock of such Person. For purposes of
this definition, (a) interest on Indebtedness which accrues on a fluctuating
basis for periods succeeding the date of determination shall be deemed to accrue
at a rate equal to the average daily rate of interest in effect during such
immediately preceding Quarter, and (b) interest on a Capitalized Lease
Obligation shall be deemed to accrue at an interest rate reasonably determined
in good faith by the chief financial officer, treasurer or controller of such
Person to be the rate of interest implicit in such Capitalized Lease Obligation
in accordance with GAAP (including Statement of Financial Accounting Standards
No. 13 of the Financial Accounting Standards Board).
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entities as have been approved by a significant segment of the accounting
profession, which are in effect on the Issue Date.
"Global Note Legend" means the legend set forth in Section 2.06(g)(ii), which
is required to be placed on all Global Securities issued under this Indenture.
"Global Security" 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 Article 2 hereof.
"Guaranty" means a guaranty (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including,
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without limitation, letters of credit and reimbursement agreements in respect
thereof), of all or any part of any Indebtedness.
"Gulf Merger Agreement" means the Agreement and Plan of Merger, dated as of
November 3, 1995, among the Company, Gulf Resources Corporation and GFR, Inc.
"Gulf Oil Purchase Contract" means the Crude Oil Purchase Contract between
GFR, Inc. and Gulf Resources Corporation.
"Gulf Payments" means all payments (other than the initial purchase price of
$26.9 million under the Gulf Oil Purchase Contract) to Gulf Resources
Corporation, a Panamanian corporation, and/or any of its Affiliates, in each
case, pursuant to the Gulf Merger Agreement, the Gulf Oil Purchase Contract, the
Gulf Stockholders' Agreement and the Gulf Pledge Agreement, as each is in effect
on the date hereof.
"Gulf Pledge Agreement" means the Pledge Agreement among the Company, Gulf
Resources Corporation and Gulf Resources Holdings, Inc.
"Gulf Stockholders' Agreement" means the Stockholders' Agreement among the
Company, Gulf Resources Corporation and Gulf Resources Holdings, Inc.
"Holder" means a Person in whose name a Security is registered in the Security
Register.
"IAI Global Note" means the Global Security 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 Depository or its nominee
and that will be issued in a denomination equal to the outstanding principal
amount of the Notes sold to Institutional Accredited Investors.
"Indebtedness" with respect to any Person, means any indebtedness, including,
in the case of the Company, the indebtedness evidenced by the Notes, whether or
not contingent, in respect of borrowed money or evidenced by bonds, notes,
debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereof) or representing the balance deferred and unpaid
of the purchase price of any property (including pursuant to Capital Leases)
(except any such balance that constitutes a trade payable in the ordinary course
of business that is not overdue by more than 90 days from the invoice date or is
being contested in good faith), if and to the extent any of the foregoing
indebtedness would appear as a liability upon a balance sheet of such Person
prepared on a consolidated basis in accordance with GAAP, and shall also
include, to the extent not otherwise included, the Guaranty of Indebtedness of
other Persons not included in the financial statements of the Company, the
maximum fixed redemption or repurchase price of Disqualified Capital Stock (or
if not redeemable or subject to repurchase, the issue price) and the maximum
fixed redemption or repurchase price (or if not redeemable or subject to
repurchase, the issue price) of Preferred Stock issued by any Restricted
Subsidiary of the Company to any Person other than to the Company or a
Restricted Subsidiary.
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"Indenture" means this instrument as originally executed or 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, including, for
all purposes of this instrument, and any such supplemental indenture, the
provisions of the Trust Indenture Act that are deemed to be a part of and govern
this instrument and any such supplemental indenture, respectively.
"Indirect Participant" means a Person who holds a beneficial interest in a
Global Security through a Participant.
"Initial Purchaser" means an entity that purchases Securities directly from
the Company on the Issue Date.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
"Interest Expense" of any Person means, for any period, the aggregate amount
of interest expense in respect of Indebtedness (excluding (a) the Chevron
Payment, (b) the AOC Payment, (c) the Gulf Payments and (d) the amortization of
debt issuance expense relating to the Securities, the Senior Subordinated Notes
and the Loan Agreement, but including without limitation or duplication (i)
amortization of debt issuance expense with respect to other Indebtedness, (ii)
amortization of original issue discount on any Indebtedness and (iii) the
interest portion of any deferred payment obligation, all commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers'
acceptance financings and the net cost associated with Interest Swap
Obligations) paid, accrued or scheduled to be paid or accrued by such Person
during such period, determined in accordance with GAAP.
"Interest Payment Date" means each May 15 and November 15, or if any such day
is not a Business Day, on the next succeeding Business Day.
"Interest Swap Obligations" means, when used with reference to any Person, the
obligations of such person under (i) interest rate swap agreements, interest
rate exchange agreements, interest rate cap agreements, and interest rate collar
agreements, (ii) currency swap agreements and currency exchange agreements and
(iii) other similar agreements or arrangements, which are, in each such case,
designed solely to protect such Person against fluctuations in interest rates or
currency exchange rates.
"Investment" means, when used with reference to any Person, any direct or
indirect advances, loans or other extensions of credit or capital contributions
by such Person to (by means of transfers of property to others or payments for
property or services for the account or use of others, or otherwise), or
purchases or acquisitions by such Person of Capital Stock, bonds, notes,
debentures or other securities issued by, any other Person or any Guaranty or
assumption of any liability (contingent or otherwise) by such Person of any
Indebtedness or Obligations of any other Person and all other items that are or
would be classified as investments on a balance sheet prepared in accordance
with GAAP.
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"Investment Grade" means (i) a Moody's rating of Baa3 or higher and an S&P
rating of at least BB+ or (ii) an S&P rating of BBB- or higher and a Moody's
rating of at least Ba1 or, in each case, if Moody's or S&P shall change their
rating system, equivalent ratings.
"Investment Grade Rating Event" means the assignment of an Investment Grade
rating by Moody's or S & P.
"Issue Date" means November 21, 1997.
"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.
"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind (except for taxes not yet owing) in
respect of such asset, whether or not filed, retention agreement, any lease in
the nature thereof, any option or other agreement to sell and, with respect to
which, any filing of or agreement to give any financing statement under the
Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
"Loan Agreement" means the credit agreement, dated as of November 21, 1997,
among the Company, certain lenders, Goldman Sachs Credit Partners L.P., as
arranger, administrative agent and syndication agent and State Street Bank and
Trust Company of Missouri, N.A., as paying agent, as amended from time to time.
"Material Asset" means, with respect to the Company or any Restricted
Subsidiary of the Company, any asset, related group of assets, business or
division of the Company or any Restricted Subsidiary of the Company (including
any capital stock of any Restricted Subsidiary of the Company) which (i) for the
most recent fiscal year of the Company, accounted or would have accounted for
more than 3% of the consolidated revenues of the Company or (ii) as at the end
of such fiscal year, represented or would have represented more than 3% of the
consolidated assets of the Company or has a fair market value in excess of $10
million, all as shown (x) with respect to any sale or disposition, on the
consolidated financial statements of the Company for such fiscal year or such
shorter period as such assets, business or divisions were owned by the Company
or any Restricted Subsidiary of the Company and (y) with respect to any
acquisition, on consolidated pro forma financial statements of the Company for
the four full Quarters for which financial information in respect thereof is
available immediately prior to such acquisition, giving effect thereto on a pro
forma basis as if such acquisition had occurred at the beginning of such four
full Quarters.
"Maturity" means, with respect to any Notes, the date on which the principal
of such Notes becomes due and payable as provided herein, whether at the Stated
Maturity or by declaration of acceleration, call for redemption or otherwise.
"Moody's" means Moody's Investors Service, Inc. and its successors.
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"Net Available Proceeds" means cash or readily marketable cash equivalents
received (including by way of sale or discounting of a note, installment
receivable or other receivable, but excluding any other consideration received
in the form of assumption by the acquiree of Indebtedness or other obligations
relating to such properties or assets or received in any other noncash form) net
of (i) all legal and accounting expenses, commissions and other fees and
expenses incurred and all federal, state, provincial, foreign and local taxes
required to be accrued as a liability as a consequence of such issuance, and
(ii) all payments made by such Person or its Subsidiaries on any Indebtedness
which must, in order to obtain a necessary consent to such issuance or by
applicable law, be repaid out of the proceeds from such issuance.
"Net Income" of any Person for any period means the net income (loss) from
continuing operations of such Person for such period, determined in accordance
with GAAP.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the Company nor
any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Obligations" means any principal (and premium, if any), interest, penalties,
fees, indemnifications, reimbursements, damages and other liabilities payable
under the documentation governing any Indebtedness.
"Offer" has the meaning as specified in Section 10.09.
"Officers' Certificate" means a certificate signed by at least two officers of
the Company, one signature being that of the Chairman of the Board, a Vice
Chairman of the Board, the President or a Vice President, and the other
signature being that of the Treasurer, an Assistant Treasurer, the Secretary or
an Assistant Secretary, of the Company, and delivered to the Trustee. One of the
officers signing an Officers' Certificate given pursuant to Section 9.04 shall
be the principal executive, financial or accounting officer of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company, and whose opinion is reasonably acceptable to the Trustee.
"Outstanding", when used with respect to Securities, means, as of the date of
determination, all Securities theretofore authenticated and delivered under this
Indenture, except:
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(i) Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities 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; and
(iii) Securities which have been paid pursuant to Section 2.07 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 such Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Securities owned by the Company or any other obligor upon the Securities or
any Affiliate of the Company or of such other obligor shall be disregarded
and deemed not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which
a Responsible Officer of the Trustee actually 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 or any other
obligor upon the Securities or any Affiliate of the Company or of such
other obligor.
"Participant" means, with respect to the Depository, Euroclear or Cedel, a
Person who has an account with the Depository, Euroclear or Cedel, respectively
(and, with respect to The Depository Trust Company, shall include Euroclear and
Cedel).
"Paying Agent" means any Person authorized by the Company to pay the principal
of or any premium or interest on any Securities on behalf of the Company. The
Company initially appoints the Trustee as Paying Agent.
"Permitted Indebtedness" means Indebtedness incurred by the Company or its
Restricted Subsidiaries (i) to renew, extend, refinance or refund Indebtedness
that is permitted to be incurred pursuant to the Consolidated Operating Cash
Flow Ratio test set forth in Section 9.12 or clauses (ii) through (iv) and (xi)
below; provided, however, that such Indebtedness does not exceed the principal
amount of the Indebtedness so renewed, extended, refinanced or refunded 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 or such Restricted Subsidiary as
necessary to accomplish such refinancing by means of a tender offer or privately
negotiated repurchase, plus the expenses of the Company or
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such Restricted Subsidiary incurred in connection with such refinancing; and
provided, however, that Indebtedness the proceeds of which are used to refinance
or refund such Indebtedness shall only be permitted if (A) in the case of any
refinancing or refunding of Indebtedness that is pari passu with the Notes the
refinancing or refunding Indebtedness is made pari passu with the Notes or
subordinated to the Notes, (B) in the case of any refinancing or refunding of
Indebtedness that is subordinated to the Notes the refinancing or refunding of
Indebtedness is made subordinated to the Notes at least to the same extent as
such Indebtedness being refinanced or refunded was subordinated to the Notes and
(C) in the case of the refinancing or refunding of Indebtedness that is
subordinated to the Notes, the refinancing or refunding Indebtedness by its
terms, or by the terms of any agreement or instrument pursuant to which such
Indebtedness is issued, (x) does not provide for payments of principal of such
Indebtedness at the stated maturity thereof or by way of a sinking fund
applicable thereto or by way of any mandatory redemption, defeasance, retirement
or repurchase thereof by the Company or such Restricted Subsidiary (including
any redemption, retirement or repurchase which is contingent upon events or
circumstances, but excluding any retirement required by virtue of acceleration
of such Indebtedness upon an event of default thereunder), in each case prior to
the final stated maturity of the Indebtedness being refinanced or refunded and
(y) does not permit redemption or other retirement (including pursuant to an
offer to purchase made by the Company or such Restricted Subsidiary) of such
Indebtedness at the option of the holder thereof prior to the final stated
maturity of the Indebtedness being refinanced or refunded, other than a
redemption or other retirement at the option of the holder of such Indebtedness
(including pursuant to an offer to purchase made by the Company or such
Restricted Subsidiary), which is conditioned upon the change of control of the
Company or such Restricted Subsidiary); (ii) arising from time to time under the
Credit Agreement in an aggregate principal amount which, together with any
obligations under clause (xi) below, do not exceed the greater of (a) $500
million at any one time outstanding less the aggregate amount of all proceeds of
all Asset Dispositions that have been applied since the Issue Date to
permanently reduce the outstanding amount of such Indebtedness and (b) the
amount of the Borrowing Base as of such date (calculated on a pro forma basis
after giving effect to such borrowing and the application of the proceeds
therefrom); (iii) outstanding or incurred on the Issue Date; (iv) evidenced by
trade letters of credit incurred in the ordinary course of business not to
exceed $20 million in the aggregate at any time; (v) between or among the
Company and/or its Restricted Subsidiaries other than Restricted Subsidiaries
owned in any part by the Principal Shareholders; (vi) which is Subordinated
Debt; (vii) arising out of Sale and Leaseback Transactions or Capitalized Lease
Obligations relating to computers and other office equipment and elements,
catalysts or other chemicals used in connection with the refining of petroleum
or petroleum by-products; (viii) the proceeds of which are used to make the
Chevron Payment, the AOC Payment and the Gulf Payments; (ix) arising out of
Interest Swap Obligations; (x) in connection with capital projects qualifying
under Section 142(a) (or any successor provision) of the Internal Revenue Code
of 1986, as amended, in an amount not to exceed $75 million in the aggregate at
any time; (xi) obligations of the Company or any Restricted Subsidiary in
connection with any Qualified Securitization Transaction in an amount which,
together with any amount under clause (ii) above, does not exceed the greater of
(a) $500 million at any one time outstanding less the aggregate amount of all
proceeds of all Asset Dispositions that have been applied since the Issue Date
to permanently reduce the outstanding amount of such Indebtedness and (b) the
amount of the Borrowing Base as of such date (calculated on a pro forma basis
after giving effect to such borrowing and the application of the
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proceeds therefrom); (xii) any guarantee by the Company of Indebtedness of any
of its Restricted Subsidiaries so long as the incurrence of such Indebtedness is
permitted to be incurred under Section 9.12; (xiii) Indebtedness or preferred
stock of Persons that are acquired by the Company or any of its Restricted
Subsidiaries or merged into the Company or a Restricted Subsidiary in accordance
with the terms of this Indenture; provided that such Indebtedness or preferred
stock is not incurred in contemplation of such acquisition or merger; and
provided further that after giving effect to such acquisition or merger either
(A) the Company would be permitted to incur at least $1.00 of additional
Indebtedness under the Consolidated Operating Cash Flow Ratio test set forth in
Section 9.12 or (B) the Company's Consolidated Operating Cash Flow Ratio is
equal to or greater than such ratio immediately prior to such acquisition or
merger; (xiv) in an amount not greater than twice the aggregate amount of cash
contributions made to the capital of the Company; (xv) in exchange for, or the
proceeds of which are used to refund or refinance the 10 7/8% Notes; provided,
however, that after giving effect to such exchange, refunding or refinancing,
the Consolidating Operating Cash Flow Ratio exceeds 1.75 to 1.0 and such
Indebtedness shall be subordinated to the Securities to at least the same extent
as the Senior Subordinated Notes are subordinated to the Securities; and (xvi)
in addition to Indebtedness permitted by clauses (i) through (xv) above,
Indebtedness not to exceed on a consolidated basis for the Company and its
Restricted Subsidiaries at any time $75 million.
"Permitted Liens" means (i) Liens in favor of the Company; (ii) Liens on
property of a Person existing at the time such Person is merged into or
consolidated with the Company, provided that such Liens were in existence prior
to the contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with the
Company; (iii) Liens on property existing at the time of acquisition thereof by
the Company, provided that such Liens were in existence prior to the
contemplation of such acquisition; (iv) Liens to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business; (v)
Liens existing on the Issue Date; (vi) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently concluded, provided that any reserve or other appropriate provision
as shall be required in conformity with GAAP shall have been made therefor;
(vii) Liens imposed by law, such as mechanics', carriers', warehousemen's,
materialmen's, and vendors' Liens, incurred in good faith in the ordinary course
of business with respect to amounts not yet delinquent or being contested in
good faith by appropriate proceedings if a reserve or other appropriate
provisions, if any, as shall be required by GAAP shall have been made therefor;
(viii) zoning restrictions, easements, licenses, covenants, reservations,
restrictions on the use of real property or minor irregularities of title
incident thereto that do not, in the aggregate, materially detract from the
value of the property or the assets of the Company or impair the use of such
property in the operation of the Company's business; (ix) judgment Liens to the
extent that such judgments do not cause or constitute a Default or an Event of
Default; (x) Liens to secure the payment of all or a part of the purchase price
of property or assets acquired or the construction costs of property or assets
constructed in the ordinary course of business on or after the Issue Date,
provided that (a) such property or assets are used in the Principal Business of
the Company, (b) at the time of incurrence of any such Lien, the aggregate
principal amount of the obligations secured by such Lien shall not exceed the
lesser of the cost or fair market value of the assets or property (or portions
thereof) so acquired or constructed, (c) each such Lien shall
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encumber only the assets or property (or portions thereof) so acquired or
constructed and shall attach to such assets or property within 180 days of the
purchase or construction thereof and (d) any Indebtedness secured by such Lien
shall have been permitted to be incurred under the covenant set forth in Section
9.12; (xi) Liens incurred in the ordinary course of business of the Company with
respect to obligations that do not exceed 5% of Consolidated Net Tangible Assets
at any one time outstanding; (xii) Liens incurred in connection with Interest
Swap Obligations; (xiii) Liens on any Securitization Program Assets in
connection with any Qualified Securitization Transaction; and (xiv) Liens to
secure obligations owing from time to time under the Credit Agreement and
Guaranties thereof.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, estate, limited liability company,
unincorporated organization or government or any agency or political subdivision
thereof.
"Place of Payment" has the meaning specified in the third paragraph of Exhibit
A attached hereto.
"Port Arthur Refinery" means the refinery in Port Arthur, Texas and certain
other assets acquired from Chevron U.S.A., Inc.
"Preferred Stock" means any share of Capital Stock of any Person in respect of
which the holder thereof is entitled to receive payment before any other payment
is made with respect to any other Capital Stock of such Person.
"Preferred Stock Dividends" means, with respect to any Person for any period,
the amount of regularly scheduled dividends accrued, accruable, paid or payable
during such period, whether in cash or otherwise, with respect to any Preferred
Stock of such Person.
"Principal Business" means, with respect to the Company and its Restricted
Subsidiaries, (i) the business of the acquisition, processing, marketing,
refining, storage and/or transportation of hydrocarbons and/or royalty or other
interests in crude oil or associated products related thereto, (ii) the
acquisition, operation, improvement, leasing and other use of convenience
stores, retail service stations, truck stops and other public accommodations in
connection therewith, (iii) any business currently engaged in by the Company or
its Restricted Subsidiaries on the Issue Date, and (iv) any activity or business
that is a reasonable extension, development or expansion of, or reasonably
related to, any of the foregoing.
"Principal Property" means (i) any refinery and related pipelines,
terminalling and processing equipment or (ii) any other real property or
marketing assets or related group of such assets of the Company having a fair
market value in excess of $20 million.
"Principal Shareholders" means (i) Blackstone, (ii) Occidental Petroleum
Corporation, (iii) Gulf Resources Corporation and (iv) Affiliates of the Persons
described in the foregoing clauses (i) through (iii), other than the Company and
its Subsidiaries.
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"Private Placement Legend" means the legend set forth in Section 2.06(g)(i) to
be placed on all Initial Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"Purchase Date" has the meaning as specified in Section 10.09.
"Qualified Securitization Transaction" means any transaction or series of
transactions that may be entered into by the Company or any Subsidiary pursuant
to which the Company or any Subsidiary may sell, convey, grant a security
interest in or otherwise transfer to a Securitization Special Purpose Entity,
and such Securitization Special Purpose Entity may sell, convey, grant a
security interest in, or otherwise transfer to any other Person, any
Securitization Program Assets (whether now existing or arising in the future).
"Quarter" means a fiscal quarterly period of the Company.
"Rating Agencies" means (i) S&P and Moody's or (ii) if S&P or Moody's or both
of them are not making ratings of the Notes publicly available, a nationally
recognized U.S. rating agency or agencies, as the case may be, selected by the
Company, which will be substituted for S&P or Moody's or both, as the case may
be.
"Rating Category" means (i) with respect to S&P, any of the following
categories (any of which may include a "+" or "-"); AAA, AA, A, BBB, BB, B, CCC,
CC, C and D (or equivalent successor categories); (ii) with respect to Moody's,
any of the following categories (any of which may include a "1," "2" or "3");
Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C and D (or equivalent successor categories),
and (iii) the equivalent of any such categories of S&P or Moody's used by
another Rating Agency, if applicable.
"Rating Decline" means that at any time within 90 days (which period shall be
extended so long as the rating of the Notes is under publicly announced
consideration for possible down grade by any Rating Agency) after the date of
public notice of a Change of Control, or of the intention of the Company or of
any Person to effect a Change of Control, the rating of the Notes is decreased
by both Rating Agencies by one or more categories and the ratings on the Notes
following such downgrade is below Investment Grade.
"Receivables" means all rights of the Company or any Subsidiary of the Company
to payments (whether constituting accounts, chattel paper, instruments, general
intangibles or otherwise, and including the right to payment of any interest or
finance charges), which rights are identified in the accounting records of the
Company or such Subsidiary as accounts receivable.
"Redemption Date," when used with respect to any Note to be redeemed, means
the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price," when used with respect to any Note to be redeemed, means
the price at which it is to be redeemed pursuant to this Indenture.
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"Registration Rights Agreement" means the Exchange and Registration Rights
Agreement, dated as of the Issue Date, by and among the Company 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 Permanent Global Note" means a permanent global Security 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 Depository or its nominee, and issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period and authenticated as provided in Section
2.02 hereof.
"Regulation S Temporary Global Note" means a temporary global Security in the
form of Exhibit A-1 hereto bearing the Private Placement Legend and deposited
with or on behalf of and registered in the name of the Depository or its
nominee, issued in a denomination equal to the outstanding principal amount of
the Notes initially sold in reliance on Rule 903 of Regulation S.
"Regular Record Date" for the interest payable on any Interest Payment Date
means the May 1 or November 1 (whether or not a Business Day), as the case may
be, next preceding such Interest Payment Date.
"Responsible Officer" shall mean when used with respect to the Trustee, any
officer within the Corporate Trust Office including any Vice President, Managing
Director, Assistant Vice President, Secretary, Assistant Secretary or Assistant
Treasurer or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and also,
with respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge and familiarity with the particular
subject.
"Restricted Debt Prepayment" means any purchase, redemption, defeasance
(including, but not limited to, in-substance or legal defeasance) or other
acquisition or retirement for value (collectively a "prepayment") other than in
connection with a concurrent issuance of pari passu or Subordinated
Indebtedness, directly or indirectly, by the Company or a Restricted Subsidiary
of the Company, prior to the scheduled maturity on or prior to any scheduled
repayment of principal (and premium, if any) or sinking fund payment in respect
of Indebtedness of the Company (other than the Notes) which is subordinate in
right of payment to the Notes.
"Restricted Definitive Security" means a Definitive Security bearing the
Private Placement Legend.
"Restricted Global Note" means a Global Security bearing the Private Placement
Legend.
"Restricted Investment" means any direct or indirect Investment by the Company
or any Restricted Subsidiary of the Company in (i) any Affiliate of the Company
which is not a
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Restricted Subsidiary of the Company and (ii) any Unrestricted Subsidiary of the
Company, other than direct or indirect investments in (a) Polymer Asphalt
L.L.C., a Missouri limited liability company (b) Bagel Street Holdings, Inc. and
(c) any pipeline company in which the Company or any of its Restricted
Subsidiaries now owns or hereafter acquires any interest; provided that the
aggregate amount of Investments made by the Company or any of its Restricted
Subsidiaries pursuant to clauses (a), (b) and (c) above shall not exceed $25
million in the aggregate at any one time outstanding provided, that no
Investment in a Securitization Special Purpose Entity in connection with a
Qualified Securitization Transaction shall be a Restricted Investment.
"Restricted Payment" means (i) any Stock Payment, (ii) any Restricted
Investment, or (iii) any Restricted Debt Prepayment. Notwithstanding the
foregoing, Restricted Payments shall not include (a) payments by the Company to
any Restricted Subsidiary of the Company, (b) payments by any Restricted
Subsidiary of the Company to the Company or any other Restricted Subsidiary of
the Company, (c) the Chevron Payment, (d) the AOC Payment and (e) the Gulf
Payments.
"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not (i) an Unrestricted Subsidiary or (ii) a direct or indirect
Subsidiary of an Unrestricted Subsidiary.
"S&P" means Standard & Poor's Rating Services and its successors.
"Sale and Leaseback Transaction" of any Person means an arrangement with any
lender or investor or to which such lender or investor is a party providing for
the leasing by such Person of any property or asset of such Person which has
been or is being sold or transferred by such Person more than 365 days after the
acquisition thereof or the completion of construction or commencement of
operation thereof to such lender or investor or to any Person to whom funds have
been or are to be advanced by such lender or investor on the security of such
property or asset. The stated maturity of such arrangement shall be the date of
the last payment of rent or any other amount due under such arrangement prior to
the first date on which such arrangement may be terminated by the lessee without
payment of a penalty.
"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 Act of 1933, as amended.
"Securitization Program Assets" means (a) all Receivables and inventory which
are described as being transferred by the Company or any Subsidiary of the
Company pursuant to documents relating to any Qualified Securitization
Transaction, (b) all Securitization Related Assets, and (c) all collections
(including recoveries) and other proceeds of the assets described in the
foregoing clauses.
"Securitization Related Assets" means (i) any rights arising under the
documentation governing or relating to Receivables (including rights in respect
of Liens securing such
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Receivables and other credit support in respect of such Receivables) or to
inventory, (ii) any proceeds of such Receivables or inventory and any lockboxes
or accounts in which such proceeds are deposited, (iii) spread accounts and
other similar accounts (and any amounts on deposit therein) established in
connection with a Qualified Securitization Transaction, (iv) any warranty,
indemnity, dilution and other intercompany claim arising out of the documents
relating to such Qualified Securitization Transaction and (v) other assets which
are customarily transferred or in respect of which security interests are
customarily granted in connection with asset securitization transactions
involving accounts receivable or inventory.
"Securitization Special Purpose Entity" means a Person (including, without
limitation, a Subsidiary of the Company) created in connection with the
transactions contemplated by a Qualified Securitization Transaction, which
Person engages in no activities other than those incidental to such Qualified
Securitization Transaction.
"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 2.03.
"Shareholder/Affiliate Transaction" has the meaning as specified in Section
9.11.
"Special Interest" has the meaning as specified in the first paragraph of
Exhibit A attached hereto.
"Special Record Date" for the payment of any Defaulted Interest means a date
fixed by the Company with the consent of the Trustee pursuant to the third
paragraph of Exhibit A attached hereto.
"Stated Maturity" means November 15, 2007.
"Stock Payment" means, with respect to the Company, any dividend, either in
cash or in property (except dividends payable in Capital Stock of the Company
which is not convertible into Indebtedness), on, or the making by the Company of
any other distribution in respect of, its Capital Stock, now or hereafter
outstanding, or the redemption, repurchase, retirement, defeasance or any
acquisition for value by the Company, directly or indirectly, of its Capital
Stock or any warrants, rights or options to purchase or acquire shares of any
class of its Capital Stock, now or hereafter outstanding (other than in exchange
for the Company's Capital Stock (other than Disqualified Capital Stock) or
options, warrants or other rights to purchase the Company's Capital Stock (other
than Disqualified Capital Stock)).
"Stock Purchase and Redemption Agreement" means that certain Stock Purchase
and Redemption Agreement dated as of December 30, 1992, by and among AOC Limited
Partnership, P. Anthony Novelly, Samuel R. Goldstein, G&N Investments, Inc., The
Horsham Corporation, the Company and Clark USA.
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"Subordinated Indebtedness" means, with respect to the Notes, any Indebtedness
of the Company which is subordinated in right of payment to the Notes and with
respect to which no payments of principal (by way of sinking fund, mandatory
redemption, maturity or otherwise), including, without limitation, at the option
of the holder thereof (other than pursuant to an offer to repurchase such
Subordinated Indebtedness following a change of control, which offer may not be
completed until 45 days after completion of the Offer described in Section
12.01) are required to be made by the Company at any time prior to the Stated
Maturity of such Notes.
"Subsidiary" of any Person means (i) a corporation more than 50% of the total
voting power of all classes of the outstanding voting stock of which is owned,
directly or indirectly, by such Person or by one or more other Subsidiaries of
such Person or by such Person and one or more Subsidiaries thereof or (ii) any
other Person (other than a corporation) in which such Person, or one or more
other Subsidiaries of such Person or such Person and one or more other
Subsidiaries thereof, directly or indirectly, has at least a majority ownership
and the power to direct the policies, management and affairs thereof.
"Surviving Person" means, with respect to any Person involved in or that makes
any Disposition, the Person formed by or surviving such Disposition or the
Person to which such Disposition is made.
"Transaction Date" means the date on which the Indebtedness giving rise to the
need to calculate the Consolidated Operating Cash Flow Ratio was incurred or the
date on which, pursuant to the terms of this Indenture, the transaction giving
rise to the need to calculate the Consolidated Operating Cash Flow Ratio
occurred.
"Transfer Restricted Securities" means Securities that bear or are required to
bear the legend set forth in Section 2.06(g)(i) hereof.
"TrizecHahn" means the Trizec Hahn Corporation.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the
Issue Date; provided, however, that in the event the Trust Indenture Act of 1939
is amended after such date, "Trust Indenture Act" means, to the extent required
by any such amendment, the Trust Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument 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 Security" means one or more Definitive Securities
that do not bear and are not required to bear the Private Placement Legend.
"Unrestricted Global Note" means a permanent Global Security in the form of
Exhibit A attached hereto that bears the Global Note Legend and that has the
"Schedule of Exchanges of
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Interests in the Global Note" attached thereto, and that is deposited with or on
behalf of and registered in the name of the Depository, representing a series of
Securities that do not bear and are not required to bear the Private Placement
Legend.
"Unrestricted Subsidiary" means any Subsidiary that is designated by the board
of directors of the Company as an Unrestricted Subsidiary pursuant to a Board
Resolution; but only to the extent that such Subsidiary: (a) has no Indebtedness
other than Non-Recourse Debt; (b) is not party to any agreement, contract,
arrangement or understanding with the Company or any Restricted Subsidiary of
the Company unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or such Restricted Subsidiary
than those that might be obtained at the time from Persons who are not
Affiliates of the Company; (c) is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation (x) to subscribe for additional Capital Stock (including options,
warrants or other rights to acquire Capital Stock) or (y) to maintain or
preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results; and (d) has not guaranteed or
otherwise directly or indirectly provided credit support for any Indebtedness of
the Company or any of its Restricted Subsidiaries. The board of directors of the
Company may at any time designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that such designation shall be deemed to be an incurrence
of Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted under Section 9.12 hereof, and
(ii) no Default or Event of Default would be in existence following such
designation.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"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".
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person or by such Person and one or more Wholly Owned
Restricted Subsidiaries of such Person.
"Wholly Owned U.S. Restricted Subsidiary" of any Person means a Wholly Owned
Restricted Subsidiary of such Person which is organized under the laws of any
state in the United States or of the District of Columbia.
Section 1.02. Compliance Certificates and Opinions
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee such certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion
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shall be given in the form of an Officers' Certificate, if to be given by an
officer of the Company, or an Opinion of Counsel, if to be given by counsel, and
shall comply with the requirements of the Trust Indenture Act and any other
requirements set forth in 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.
Section 1.03. 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 that the certificate or
opinion or representations with respect to the matters upon which such
certificate or opinion is based are erroneous. Any such certificate or Opinion
of Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, 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 that the certificate or
opinion or representations with respect to such matters are 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 1.04. Acts of Holders; Record Dates.
(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
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person or by an agent 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 shall be 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 his 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 Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as the record date for the purpose of determining the
Holders entitled to give or take any request, demand, authorization, direction,
notice, consent, waiver or other action, or to vote on any action, authorized or
permitted to be given or taken by Holders. If not set by the Company prior to
the first solicitation of a Holder made by any Person in respect of any such
action, or, in the case of any such vote, prior to such vote, the record date
for any such action or vote shall be the 30th day (or, if later, the date of the
most recent list of Holders required to be provided pursuant to Section 6.01)
prior to such first solicitation or vote, as the case may be. With regard to
any record date, only the Holders on such date (or their duly designated
proxies) shall be entitled to give or take, or vote on, the relevant action.
(d) The ownership of Securities shall be proved by the Security
Register.
(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 1.05. Notices, Etc., to Trustee and Company.
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,
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(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, Attention: Corporate
Trust and Agency Services, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the
first paragraph of this instrument or at any other address previously
furnished in writing to the Trustee by the Company.
All such notices and communications 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 with first-class postage prepaid; if
mailed; when receipt acknowledged, if sent by facsimile; and the next business
day after timely delivery to the courier, if sent by recognized overnight
courier guaranteeing next-day delivery; provided that notice to the Trustee
shall be deemed given only when received by the Trustee.
Section 1.06. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, 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 (if any), and not earlier than the earliest date (if any),
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. 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 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 regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
All such notices and communications 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 with first-class postage prepaid, if
mailed; when receipt acknowledged, if sent by facsimile; and the next business
day after timely delivery to the courier, if sent by recognized overnight
courier guaranteeing next-day delivery; provided that notice to the Trustee
shall be deemed given only when received by the Trustee.
Section 1.07. Conflict with Trust Indenture Act.
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If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act, the latter 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 to be excluded, as the case
may be.
Section 1.08. 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 1.09. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
Section 1.10. Separability Clause.
In case any provision in this Indenture or in the Securities 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 1.11. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and the Holders, any benefit or any legal or equitable right, remedy
or claim under this Indenture.
Section 1.12. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO
THE CONFLICTS OF LAW PRINCIPLES THEREOF).
Section 1.13. Legal Holidays.
In any case where any Redemption Date, Purchase Date or Stated
Maturity of any Security shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or of the Securities) payment of 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
Redemption Date, Purchase Date or at the Stated Maturity.
Section 1.14. No Recourse Against Others.
A director, officer, employee, stockholder or incorporator, as such,
of the Company shall not have any liability for any obligations of the Company
under the Securities or this Indenture for any claim based on, in respect of or
by reason of such obligations or their
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creation. Each Holder by accepting a Security waives and releases all such
liability. Such waiver and release are part of the consideration for the
issuance of the Securities.
ARTICLE 2
---------
THE SECURITIES
--------------
Section 2.01. Form and Dating.
The Securities and the Trustee's certificate of authentication shall
be substantially in the form of Exhibit A hereto. The Securities may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Security shall be dated the date of its authentication. The
Securities will be issued in registered form, without coupons and only in
denominations of $100,000 and integral multiples of $1,000.
The terms and provisions contained in the Securities 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.
Global Securities. Notes issued in global form shall be substantially
in the form of Exhibits A and A-1 attached hereto (including the Global Note
Legend thereon and the "Schedule of Exchanges of Interests in the Global
Securities" attached thereto). Notes issued in definitive form shall be
substantially in the form of Exhibit A or A-1 attached hereto (but without the
Global Note Legend thereon and without the "Schedule of Exchanges of Interests
in the Global Securities" attached thereto). Each Global Security 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 Security 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 or the Security Custodian, at the direction
of the Trustee, in accordance with instructions given by the Holder thereof as
required by Section 2.06 hereof.
Temporary Global Securities. Notes offered and sold in reliance on
Regulation S shall be issued initially in the form of the Regulation S Temporary
Global Note, which shall be deposited on behalf of the purchasers of the Notes
represented thereby with the Trustee, at its New York office, as custodian for
the Depository, and registered in the name of the Depository or the nominee of
the Depository for the accounts of designated agents holding on behalf of
Euroclear or Cedel Bank, duly executed by the Company and authenticated by the
Trustee as hereinafter provided. The Restricted Period shall terminate upon the
last to occur of (i) the 40th day of the Restricted Period and (ii) the receipt
by the Trustee of (a) copies of certificates from Euroclear and Cedel Bank
certifying that they have received certification of non-United States beneficial
ownership of 100% of the aggregate principal amount of the Regulation S
Temporary Global Note (except to the extent of any beneficial owners thereof who
acquired an interest therein during the Restricted Period pursuant to another
exemption from registration under the
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Securities Act and who will take delivery of a beneficial ownership interest in
a 144A Global Note or an IAI Global Note bearing a Private Placement Legend, all
as contemplated by Section 2.06(a)(ii) hereof), and (b) an Officers' Certificate
from the Company stating that all conditions precedent to the issuance of the
Regulation S Permanent Global Note have been satisfied. Following the
termination of the Restricted Period, beneficial interests in the Regulation S
Temporary Global Note shall be exchanged for beneficial interests in Regulation
S Permanent Global Notes pursuant to the Applicable Procedures. Simultaneously
with the authentication of Regulation S Permanent Global Notes, the Trustee
shall cancel the Regulation S Temporary Global Note. The aggregate principal
amount of the Regulation S Temporary Global Note and the Regulation S Permanent
Global Notes may from time to time be increased or decreased by adjustments made
on the records of the Trustee and the Depository or its nominee, as the case may
be, in connection with transfers of interest as hereinafter provided.
Euroclear and Cedel Procedures Applicable. 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 Bank shall be applicable to transfers of beneficial interests
in the Regulation S Temporary Global Note and the Regulation S Permanent Global
Notes that are held by Participants through Euroclear or Cedel Bank.
Section 2.02. Execution and Authentication.
An Officer shall sign the Securities for the Company by manual or
facsimile signature.
If an Officer whose signature is on a Security no longer holds that
office at the time a Security is authenticated, the Security shall nevertheless
be valid.
A Security shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Security has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers, authenticate Securities for original issue up to the aggregate
principal amount stated in paragraph 1 of the Securities. The aggregate
principal amount of Securities outstanding at any time may not exceed such
amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. An authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate of the Company.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where Securities may be
presented for registration of transfer or for exchange ("Security Registrar")
and an office or
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agency where Securities may be presented for payment ("Paying Agent"). The
Security Registrar shall keep a register of the Securities and of their transfer
and exchange (the "Security Register"). The Company may appoint one or more co-
security registrars and one or more additional paying agents. The term "Security
Registrar" includes any co-security registrar and the term "Paying Agent"
includes any additional paying agent. The Company may change any Paying Agent or
Security Registrar without notice to any Holder. The Company shall 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
Security Registrar or Paying Agent, the Trustee shall act as such. The Company
or any of its Subsidiaries may act as Paying Agent or Security Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depository with respect to the Global Securities.
The Company initially appoints the Trustee to act as the Security
Registrar and Paying Agent and to act as Security Custodian with respect to the
Global Securities.
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, premium, if any, or interest on the Securities, and will notify the
Trustee in writing 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 Securities.
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 Security Registrar, the Company shall furnish to 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
Securities and the Company shall otherwise comply with TIA (S) 312(a).
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Global Securities. A Global Security
may not be transferred as a whole except by the Dep ository to a nominee of the
Depository, by a nominee of the Depository to the Depository or to another
nominee of the Depository, the Depository or any such nominee to a successor
Depository or a nominee of such successor
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Depository. All Global Notes (except the Regulation S Temporary Global Note)
will be exchanged by the Company for Definitive Securities if (i) the Company
delivers to the Trustee written notice from the Depository that it is unwilling
or unable to continue to act as Depository or that it is no longer a clearing
agency registered under the Exchange Act and, in either case, a successor
Depository is not appointed by the Company within 120 days after the date of
such notice from the Depository or (ii) the Company in its sole discretion
determines that the Global Securities (in whole but not in part) should be
exchanged for Definitive Securities and delivers a written notice to such effect
to the Trustee. Upon the occurrence of either of the preceding events in (i) or
(ii) above, Definitive Securities shall be issued in such names as the
Depository shall instruct the Trustee. Global Securities also may be exchanged
or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof.
Every Note authenticated and delivered in exchange for, or in lieu of, a Global
Security or any portion thereof, pursuant to this Section 2.06 or Section 2.07
or 2.10 hereof, shall be authenticated and delivered in the form of, and shall
be, a Global Security. A Global Security may not be exchanged for another Note
other than as provided in this Section 2.06(a), however, beneficial interests in
a Global Security 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
Securities. The transfer and exchange of beneficial interests in the Global
Securities shall be effected through the Depository, 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 Securities 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 Security.
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 transfers of beneficial interests in the Regulation S Temporary 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 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 required to be delivered
to the Security Registrar to effect the transfers described in this Section
2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Securities. In connection with all transfers and exchanges of
beneficial interests that are not subject to Section 2.06(b)(i) above, the
transferor of such beneficial interest must deliver to the Security
Registrar either (A) (1) a written order from a Participant or an Indirect
Participant given to the Depository in accordance with the Applicable
Procedures directing the Depository to credit or cause to be credited a
beneficial interest in another Global Security in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions
given in accordance with the Applicable Procedures
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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 Depository in accordance with the
Applicable Procedures directing the Depository to cause to be issued a
Definitive Security in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given by the Depository to
the Security Registrar containing information regarding the Person in whose
name such Definitive Security shall be registered to effect the transfer or
exchange referred to in (1) above; provided that in no event shall
Definitive Securities be issued upon the transfer or exchange of beneficial
interests in the Regulation S Temporary Global Note prior to (x) the
expiration of the Restricted Period and (y) the receipt by the Security
Registrar of any certificates required pursuant to Rule 903 under the
Securities Act. Upon consummation of 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
Security 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 Securities contained
in this Indenture and the Notes or otherwise applicable under the
Securities Act, the Trustee shall adjust the principal amount of the
relevant Global Securities 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 Section 2.06(b)(ii) above and the
Security Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the certifications in
item (1) thereof;
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Temporary Global Note or the Regulation
S Permanent Global Note, 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 transferee will take delivery in the form of a
beneficial interest in the IAI Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the certifications and
certificates and Opinion of Counsel required by item (3) thereof, if applicable.
(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 Section 2.06(b)(ii) above and:
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(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, certifies in the applicable Letter
of Transmittal that it 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) such transfer is effected pursuant to the Shelf
Registration Statement as defined in and in accordance with the Registration
Rights Agreement;
(C) 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 Security 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; or
(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, in each such case set forth in this subparagraph (D),
if the Security Registrar so requests or if the Applicable
Procedures so require, an Opinion of Counsel in form
reasonably acceptable to the Security Registrar and 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 no longer 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 more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.
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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
Securities.
(v) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Securities. If any holder of a beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Security or to transfer such beneficial interest to a
Person who takes delivery thereof in the form of a Restricted Definitive
Security, then, upon receipt by the Security 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
Restricted Definitive Security, 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 to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those listed in
subparagraphs (B) through (D) above, a certificate to the effect set forth in
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
(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,
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the Trustee shall cause the aggregate principal amount of the
applicable Global Security to be reduced accordingly pursuant to
Section 2.06(h) hereof, and the Company shall execute and the Trustee
shall authenticate and deliver to the Person designated in the
instructions a Definitive Security in the appropriate principal
amount. Any Definitive Security 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 Security Registrar through instructions
from the Depository and the Participant or Indirect Participant. The
Trustee shall deliver such Definitive Securities to the Persons in
whose names such Notes are so registered. Any Definitive Security
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.
Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a beneficial
interest in the Regulation S Temporary Global Note may not be
exchanged for a Definitive Security or transferred to a Person who
takes delivery thereof in the form of a Definitive Security.
(vi) Beneficial Interests in Restricted Global Notes to
Unrestricted Definitive Securities. A holder of a beneficial interest in a
Restricted Global Note may exchange such beneficial interest for an
Unrestricted Definitive Security or may transfer such beneficial interest
to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Security 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, certifies in the applicable Letter of
Transmittal that it 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) such transfer is effected pursuant to the Shelf
Registration Statement as defined in and in accordance with the Registration
Rights Agreement;
(C) such transfer is effected by a Participating Broker-
Dealer pursuant to the Exchange Offer Registration Statement as defined in and
in accordance with the Registration Rights Agreement; or
(D) the Security 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
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Security 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; or
(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 Security 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, in each such case set forth in this subparagraph (D), if the Security
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Security 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 no longer required in order
to maintain compliance with the Securities Act.
(vii) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Securities. If any holder of a beneficial interest
in an Unrestricted Global Note proposes to exchange such beneficial
interest for a Definitive Security or to transfer such beneficial interest
to a Person who takes delivery thereof in the form of a Definitive
Security, 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 Security to be reduced accordingly pursuant to
Section 2.06(h) hereof, and the Company shall execute and the Trustee shall
authenticate and deliver to the Person designated in the instructions a
Definitive Security in the appropriate principal amount. Any Definitive
Security issued in exchange for a beneficial interest pursuant to this
Section 2.06(c)(iii) 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 Security Registrar through instructions from
the Depository and the Participant or Indirect Participant. The Trustee
shall deliver such Definitive Securities to the Persons in whose names such
Notes are so registered. Any Definitive Security issued in exchange for a
beneficial interest pursuant to this Section 2.06(c)(iii) shall not bear
the Private Placement Legend.
(d) Transfer and Exchange of Definitive Securities for Beneficial
Interests.
(viii) Restricted Definitive Securities to Beneficial Interests
in Restricted Global Notes. If any Holder of a Restricted Definitive
Securities proposes to exchange such Note for a beneficial interest in a
Restricted Global Note or to transfer such Restricted Definitive Securities
to a Person who takes delivery thereof in the form of a beneficial interest
in a Restricted Global Note, then, upon receipt by the Security Registrar
of the following documentation:
(A) if the Holder of such Restricted Definitive Security
proposes to exchange such Note for a beneficial interest in a Restricted Global
Note, a
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certificate from such Holder in the form of Exhibit C hereto, including the
certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Security 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 Restricted Definitive Security 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 Restricted Definitive Security 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 Restricted Definitive Security is being
transferred to an Institutional Accredited Investor in reliance on an exemption
from the registration requirements of the Securities Act other than those listed
in subparagraphs (B) through (D) above, a certificate to the effect set forth in
Exhibit B hereto, including the certifications, certificates and Opinion of
Counsel required by item (3) thereof, if applicable;
(F) if such Restricted Definitive Security 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
(G) if such Restricted Definitive Security 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 Restricted Definitive Security,
increase or cause to be increased the aggregate principal amount
of, in the case of clause (A) above, the appropriate Restricted
Global Note, in the case of clause (B) above, the 144A Global
Note, in the case of clause (C) above, the Regulation S Permanent
Global Note, and in all other cases, the IAI Global Note.
(ix) Restricted Definitive Securities to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Securities
may exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Restricted Definitive Securities to a Person who
takes delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note only if:
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(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, certifies in the applicable Letter of Transmittal that it 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) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights Agreement;
(C) 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 Security Registrar receives the following:
(1) if the Holder of such Definitive Securities 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; or
(2) if the Holder of such Definitive Securities 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, in each such case set forth in this subparagraph (D),
if the Security Registrar so requests or if the Applicable
Procedures so require, an Opinion of Counsel in form
reasonably acceptable to the Security 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 no
longer required in order to maintain compliance with the
Securities Act.
Upon satisfaction of the conditions of any of the
subparagraphs in this Section 2.06(d)(ii), the Trustee shall
cancel the Definitive Securities and increase or cause to be
increased the aggregate principal amount of the Unrestricted
Global Note.
(x) Unrestricted Definitive Securities to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Security
may exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Definitive Securities 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
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Definitive Security and increase or cause to be increased the aggregate
principal amount of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Security to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) 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 more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of Definitive Securities so transferred.
(a) Transfer and Exchange of Definitive Securities for Definitive
Securities.
Upon request by a Holder of Definitive Securities and such Holder's
compliance with the provisions of this Section 2.06(e), the Security Registrar
shall register the transfer or exchange of Definitive Securities. Prior to such
registration of transfer or exchange, the requesting Holder shall present or
surrender to the Security Registrar the Definitive Securities duly endorsed or
accompanied by a written instruction of transfer in form satisfactory to the
Security 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, required
pursuant to the following provisions of this Section 2.06(e).
(i) Restricted Definitive Securities to Restricted Definitive
Securities. Any Restricted Definitive Security may be transferred to and
registered in the name of Persons who take delivery thereof in the form of
a Restricted Definitive Security if the Security 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 904, 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) Restricted Definitive Security to Unrestricted Definitive
Securities. Any Restricted Definitive Security may be exchanged by the
Holder thereof for an Unrestricted Definitive Security or transferred to a
Person or Persons who take delivery thereof in the form of an Unrestricted
Definitive Security 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, certifies in the applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating
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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 Security Registrar receives the following:
(1) if the Holder of such Restricted Definitive Securities
proposes to exchange such Notes for an Unrestricted Definitive Security, a
certificate from such Holder in the form of Exhibit C hereto, including the
certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive Securities
proposes to transfer such Notes to a Person who shall take delivery thereof in
the form of an Unrestricted Definitive Security, a certificate from such Holder
in the form of Exhibit B hereto, including the certifications in item (4)
thereof;
and, in each such case set forth in this subparagraph (D),
if the Security Registrar so requests, 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 no
longer required in order to maintain compliance with the
Securities Act.
(iii) Unrestricted Definitive Securities to Unrestricted
Definitive Securities. A Holder of Unrestricted Definitive Securities may
transfer such Notes to a Person who takes delivery thereof in the form of
an Unrestricted Definitive Security. Upon receipt of a request to register
such a transfer, the Security Registrar shall register the Unrestricted
Definitive Securities pursuant to the instructions from the Holder thereof.
(b) Exchange Offer. Upon the consummation of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an authentication order in accordance with Section 2.02, 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
certify in the applicable Letters of Transmittal that (x) they are not broker-
dealers, (y) they are not participating in a distribution of the Exchange Notes
and (z) they are not affiliates (as defined in Rule 144) of the Company, and
accepted for exchange in the Exchange Offer and (ii) Definitive Securities in an
aggregate principal amount equal to the principal amount of the Restricted
Definitive Securities accepted for exchange in the Exchange Offer. Concurrently
with the issuance of such Notes, the Trustee shall cause the aggregate principal
amount of the
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applicable Restricted Global Notes to be reduced accordingly, and the Company
shall execute and the Trustee shall authenticate and deliver to the Persons
designated by the Holders of Definitive Securities so accepted Definitive
Securities in the appropriate principal amount.
(c) Legends. The following legends shall appear on the face of all
Global Securities and Definitive Securities 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
Security and each Definitive Security (and all Notes issued in exchange therefor
or substitution thereof) shall bear the legend in substantially the following
form:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT") AND, ACCORDINGLY, MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR
FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST
HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT
IS NOT A U.S. PERSON, IS NOT ACQUIRING THIS NOTE FOR THE ACCOUNT OR BENEFIT
OF A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3)
OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "IAI"), (2) AGREES
THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO UNDER RULE 144(k)
(TAKING INTO ACCOUNT THE PROVISIONS OF RULE 144(d) UNDER THE SECURITIES
ACT, IF APPLICABLE) UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF
THE TRANSFER OF THIS NOTE, RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT
(A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A PERSON WHOM THE
HOLDER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QIB IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE),
(E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO
THE REGISTRATION OF TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM THE TRUSTEE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS, AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO
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WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE
OR ANY INTEREST HEREIN WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER
MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO
THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE.
EACH IAI THAT IS NOT A QIB WILL BE REQUIRED TO EFFECT ANY TRANSFER OF NOTES
OR INTERESTS THEREIN (OTHER THAN PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT) THROUGH ONE OF THE INITIAL PURCHASERS. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS
GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE
INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS."
(B) Notwithstanding the foregoing, any Global Security or
Definitive Security issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii),
(d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to 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 Security shall bear a
legend in substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITORY (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 SECTION 2.06 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 DEPOSITORY WITH THE PRIOR
WRITTEN CONSENT OF THE COMPANY."
(iii) Regulation S Temporary Global Note Legend. The
Regulation S Temporary Global Note shall bear a legend in substantially the
following form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR BENEFICIAL INTERESTS
IN THE REGULATION S PERMANENT GLOBAL NOTE, ARE AS SPECIFIED IN THE
INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS
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OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE
PAYMENT OF INTEREST HEREON."
(d) Cancellation and/or Adjustment of Global Security. At such time
as all beneficial interests in a particular Global Security have been exchanged
for Definitive Securities or a particular Global Security has been redeemed,
repurchased or canceled in whole and not in part, each such Global Security
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 Security is exchanged for or transferred to a Person who
will take delivery thereof in the form of a beneficial interest in another
Global Security or for Definitive Securities, the principal amount of Notes
represented by such Global Security shall be reduced accordingly and an
endorsement shall be made on such Global Security by the Trustee or by the
Depository 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
Security, such other Global Security shall be increased accordingly and an
endorsement shall be made on such Global Security by the Trustee or by the
Depository at the direction of the Trustee to reflect such increase.
(e) 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 Securities
and Definitive Securities upon the Company's order or at the Security
Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Security or to a Holder of a Definitive Security 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, 8.06, 9.16, 10.08 and 10.09 hereof).
(iii) The Security Registrar shall not be required to register
the transfer of or exchange any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Securities and Definitive Securities issued upon
any registration of transfer or exchange of Global Securities or Definitive
Securities shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the
Global Securities or Definitive Securities 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 any Notes during a period beginning at the
opening of business 15 days before the day of any selection of Notes for
redemption under Section 10.04 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
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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, the Security Registrar, any Paying Agent,
Authenticating 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.
(vii) The Trustee shall authenticate Global Securities and
Definitive Securities in accordance with the provisions of Section 2.02
hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Security Registrar pursuant to this Section
2.06 to effect a registration of transfer or exchange may be submitted by
facsimile.
Section 2.07. Replacement Securities.
If any mutilated Security is surrendered to the Trustee, or the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, 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 Security 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 Paying Agent, the Security
Registrar and any Authenticating Agent from any loss that any of them may suffer
if a Security is replaced. The Company may charge for its expenses in replacing
a Security.
Every replacement Security 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 Securities duly issued hereunder.
Section 2.08. Outstanding Securities.
The Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation, those reductions in the interest in a Global Security
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 Security does not cease to be outstanding because the Company or
an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.07 hereof, it ceases
to be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
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If the principal amount of any Security is considered paid under
Section 9.01 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 Securities payable on that date, then on and after that date
such Securities shall be deemed to be no longer outstanding and shall cease to
accrue interest.
Section 2.09. Treasury Securities.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company, or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company, shall
be 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 Securities that a Responsible Officer of the
Trustee actually knows are so owned shall be so disregarded.
Section 2.10. Temporary Securities.
Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities upon a written
order of the Company signed by two Officers of the Company. Temporary Securities
shall be substantially in the form of definitive Securities but may have
variations that the Company considers appropriate for temporary Securities and
as shall be reasonably acceptable to the Trustee. Without unreasonable delay,
the Company shall prepare and the Trustee shall authenticate definitive
Securities in exchange for temporary Securities.
Holders of temporary Securities shall be entitled to all of the
benefits of this Indenture.
Section 2.11. Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Security Registrar and Paying Agent shall forward to the
Trustee any Securities surrendered to them for registration of transfer,
exchange or payment. The Trustee and no one else shall cancel all Securities
surrendered for registration of transfer, exchange, payment, replacement or
cancellation and shall dispose of such Securities in accordance with the
Trustee's normal procedures as in effect from time to time. Certification of the
destruction of all canceled Securities shall be delivered to the Company. The
Company may not issue new Securities to replace Securities that it has paid or
that have been delivered to the Trustee for cancellation.
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Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Securities, 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 Securities and in Section 9.01 hereof. 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. 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.
ARTICLE 3.
----------
SATISFACTION AND DISCHARGE
--------------------------
Section 3.01. Satisfaction and Discharge of Indenture.
This Indenture shall, upon the request of the Company, cease to be of
further effect (except as to any surviving rights of registration of transfer or
exchange of Securities herein expressly provided for), and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other
than (i) Securities which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 2.07 and (ii) Securities
for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust, as provided in Section 9.03) have
been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) 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 (i), (ii) or (iii) above, has irrevocably
deposited or caused to be irrevocably deposited with the Trustee as trust funds
in trust for such purpose an amount
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sufficient to pay and discharge the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for principal and any
premium 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;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company;
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with; and
(4) the Trustee shall have received such other documents and
assurances as the Trustee shall have reasonably requested.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 5.07, the obligations of
the Trustee to any Authenticating Agent under Section 5.15 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 3.02 and the last
paragraph of Section 9.03 shall survive.
Section 3.02. Application of Trust Money.
--------------------------
Subject to provisions of the last paragraph of Section 9.03, all money
deposited with the Trustee pursuant to Section 3.01 shall be 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 any premium and
interest for whose payment such money has been deposited with the Trustee.
ARTICLE 4.
----------
REMEDIES
--------
Section 4.01. Events of Default.
-----------------
"Event 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):
(1) default in the payment of any interest upon any Security when it
becomes due and payable, and continuance of such default for a period of 30
days; or
(2) default in the payment of the principal of (or premium, if any,
on) any Security at its Maturity; or
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(3) failure by the Company to observe or perform any covenant,
condition on the part of the Company to be performed or observed pursuant
to Section 7.01 hereof; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in
this Section specifically dealt with), and continuance of such default or
breach for a period of 30 days after there has been given, by registered or
certified mail, to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in aggregate principal amount of the
Outstanding Securities a written notice specifying such default or breach
and requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
(5) a default occurs under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any
Restricted Subsidiary of the Company (or the payment of which is guaranteed
by the Company or a Restricted Subsidiary of the Company) , whether such
Indebtedness or guarantee now exists or shall be created hereafter, if (a)
either (i) such default results from the failure to pay principal (and
premium, if any) upon the expressed maturity of such Indebtedness (after
the expiration of any applicable grace period) or (ii) as a result of such
default the maturity of such Indebtedness has been accelerated prior to its
expressed maturity and (b) the principal amount of such Indebtedness,
together with the principal amount of any other such Indebtedness with
respect to which the principal amount unpaid upon its expressed maturity
(after the expiration of any applicable grace period), or the maturity of
which has been so accelerated, exceeds $25 million; or
(6) a final judgment or final judgments (not subject to appeal) for
the payment of money are entered by a court or courts of competent
jurisdiction against the Company or any Subsidiary of the Company and such
judgment or judgments remain unstayed, in effect and unpaid for a period of
60 consecutive days, provided that the aggregate of all such judgments (to
the extent not paid or to be paid by insurance) exceeds $50 million; or
(7) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company or any Subsidiary of
the Company in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other similar
law or (B) a decree or order adjudging the Company or any Subsidiary of the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company or any Subsidiary of the Company under any
applicable Federal or State law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of
the Company or any Subsidiary of the Company or of any substantial part of
the property of the Company or any Subsidiary of the Company, or ordering
the winding up or liquidation of the affairs of the Company or any
Subsidiary of the Company, 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
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(8) the commencement by the Company or any Subsidiary of the Company
of a voluntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by the Company or any Subsidiary of the Company to the entry of a
decree or order for relief in respect of the Company or any Subsidiary of
the Company 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 the Company or any Subsidiary of the Company, or the
filing by the Company or any Subsidiary of the Company of a petition or
answer or consent seeking reorganization or relief under any applicable
Federal or State law, or the consent by the Company or any Subsidiary of
the Company to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or any Subsidiary of
the Company or of any substantial part of their respective property, or the
making by the Company or any Subsidiary of the Company of an assignment for
the benefit of creditors, or the admission by either the Company or any
Subsidiary of the Company in writing of an inability to pay debts generally
as they become due, or the taking of corporate action by the Company or any
Subsidiary of the Company in furtherance of any such action.
Section 4.02. Acceleration of Maturity; Rescission and Annulment.
--------------------------------------------------
If an Event of Default (other than an Event of Default specified in
clause 4.01(7) or (8)) with respect to the Securities at the time Outstanding
occurs and is continuing, then in every such case the Trustee or the Holders of
not less than 25% in principal amount of the Outstanding Securities may declare
all of the Securities to be due and payable immediately, by a notice in writing
to the Company (and to the Trustee if given by Holders), and upon any such
declaration the Notes shall become immediately due and payable.
In the event of a declaration of acceleration because an Event of
Default specified in Section 4.01(5) has occurred and is continuing, such
declaration of acceleration shall be automatically annulled if the holders of
the Indebtedness which is the subject of such Event of Default have rescinded
their declaration of acceleration in respect of such Indebtedness within 90-days
thereof and the Trustee has received written notice of such cure, waiver or
rescission and no other Event of Default has occurred during such 90-day period
which has not been cured or waived. If an Event of Default specified in clauses
(7) or (8) of Section 4.01 occurs, the Securities then outstanding shall ipso
facto become and be immediately due and payable without any declaration or other
act on the part of the Trustee or any Holder.
At any time after such a declaration of acceleration with respect to
Securities has been made and before a judgment or decree for payment of the
money due has been obtained by the Trustee as hereinafter in this Article
provided, the Holders of a majority in principal amount of the Outstanding
Securities, by written notice to the Company and the Trustee, may rescind and
annul such declaration and its consequences if
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(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest, including Special Interest, on all
Securities,
(B) the principal of (and premium, if any, on) any Securities
which have become due otherwise than by such declaration of acceleration
(including any Securities required to have been purchased on the Purchase
Date pursuant to an Offer to purchase made by the Company) and any interest
thereon at the rate or rates prescribed therefor in such Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest, including Special Interest, and principal
(and premium, if any) at a rate of 8 3/8% per annum, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
(2) all Events of Default with respect to the Securities, other than
the non-payment of the principal of Securities which have become due solely
by such declaration of acceleration, have been cured or waived as provided
in Section 4.13.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 4.03. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for a
period of 30 days, or
(2) 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 pursuant to an Offer to purchase
made by the Company, at the Purchase Date thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and any premium and interest and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal (and premium, if any) and on any overdue interest, at the rate or
rates prescribed therefor in such 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.
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If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and 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 and collect the moneys adjudged or decreed to be payable in
the manner provided by law out of the property of the Company, wherever
situated.
If an Event of Default with respect to the Securities 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 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 4.04. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company (or any
other obligor upon the Securities), its property or its creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same in accordance with Section 4.06 hereof; and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
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 to
the Trustee any amount due 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 5.07.
No provision of this Indenture 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 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 4.05. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities
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
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
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 4.06. Application of Money Collected.
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Any money or other property 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 case of the distribution of such money or other property 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
5.07; and
SECOND: To the payment of the amounts then due and unpaid for
principal of and any premium 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.
Section 4.07. Limitation on Suits.
No Holder of any Security of any series 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
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Securities;
(2) 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;
(3) such Holder or Holders have offered to the Trustee indemnity
reasonably satisfactory to the Trustee against the costs, expenses and
liabilities to be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
aggregate principal amount of the Outstanding Securities;
it being understood and intended that not one or more of such 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 of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders 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.
Section 4.08. Unconditional Right of Holders to Receive Principal, Premium and
Interest.
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Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Section 2.12) interest on such Security on the respective Stated Maturity or
Maturities expressed in such Security (or, in the case of redemption, on the
Redemption Date or in the case of an Offer to Purchase made by the Company and
required to be accepted as to such Security, on the Purchase 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 4.09. 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 Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
Section 4.10. 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 2.07, 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 4.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Securities
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. Subject to Section 4.07, 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 4.12. Control by Holders.
The Holders of 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, with respect to the Securities,
provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
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(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
(3) the Trustee shall have the right to decline to follow such
direction if a Responsible Officer or Officers of the Trustee shall, in
good faith, determine that the proceeding so directed would involve the
Trustee in personal liability from which it has not been adequately
indemnified.
Section 4.13. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities, upon written notice to the Trustee and the Company, may
on behalf of the Holders of all the Securities waive any past default hereunder
with respect to such series and its consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest on any Security (including any Security which is required to have
been purchased pursuant to an Offer to purchase which has been made by the
Company), or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
Section 4.14. 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, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided that neither this Section nor the Trust Indenture Act
shall be deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Trustee or Holders of more than
10% in aggregate principal amount of the outstanding Notes.
Section 4.15. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede pursuant to any such law
the
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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 5.
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THE TRUSTEE
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Section 5.01. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided by
the Trust Indenture Act provided, however, that if an Event of Default occurs,
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
such person's own affairs. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to 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. Whether or not therein
expressly so provided, every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section 5.01.
Section 5.02. Notice of Defaults.
If a default occurs hereunder with respect to the Securities, the
Trustee shall give the Holders notice of such default as and to the extent
provided by the Trust Indenture Act; provided, however, that in the case of any
default of the character specified in Section 4.01(4), no such notice to Holders
shall be given until at least 30 days after the occurrence thereof. For the
purpose of this Section, the term "default" means any event which is, or after
notice or lapse of time or both would become, an Event of Default with respect
to Securities of such series.
Section 5.03. Certain Rights of Trustee.
Subject to the provisions of Section 5.01:
(a) the Trustee may conclusively rely and shall be fully 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;
(b) 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;
(c) 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)
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may, in the absence of bad faith on its part, conclusively rely upon an
Officers' Certificate;
(d) the Trustee may consult with counsel and the 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;
(e) 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 security or indemnity reasonably satisfactory
to it against the costs, expenses and liabilities which might be incurred
by it in compliance with such request or direction;
(f) 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 sole 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; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents,
attorneys, custodians and nominees and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent, attorney,
custodian or nominee appointed with due care by it hereunder.
(h) the rights and protections afforded to the Trustee under this
Section 5.03 shall be afforded to the Paying Agent, Security Registrar and
Authenticating Agent if the Trustee is acting in such capacity.
Section 5.04. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, 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. The Trustee shall not be accountable for the use
or application by the Company, of Securities or the proceeds thereof.
Section 5.05. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
5.07 and 5.13, may otherwise deal with the
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Company with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Security Registrar or such other agent, as
the case may be.
Section 5.06. 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.
Section 5.07. Compensation and Reimbursement.
The Company agrees
(1) 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);
(2) 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
and any other persons not regularly in its employ), except any such
expense, disbursement or advance as may be attributable to its gross
negligence or bad faith; and
(3) to indemnify the Trustee, its officers, directors, employees and
agents for, and to hold it harmless against, any and all loss, liability,
damage or expense including taxes (excluding income taxes of the
Trustee)incurred without gross negligence or bad faith on its part, arising
out of or in connection with the acceptance or administration of the
Indenture, the Securities, the issuance of any Securities or series of
Securities or the trust or trusts hereunder, including the costs and
expenses of any litigation, threatened or otherwise, in connection with the
exercise or performance of any of its powers or duties hereunder.
As security for the performance of the obligations of the Company
under this Section 5.07, the Trustee shall have a lien prior to the Securities
upon all property and funds held or collected by the Trustee as such.
The obligations of the Company under this Section 5.07 to compensate
and indemnify the Trustee and each predecessor Trustee and to pay or reimburse
the Trustee and each predecessor Trustee for expenses, disbursements and
advances shall constitute additional indebtedness hereunder and shall survive
the satisfaction and discharge of this Indenture or the rejection or termination
of this Indenture under bankruptcy law. Such additional indebtedness shall be a
senior claim to that of the Securities upon all property and funds held or
collected by the Trustee as such, except funds held in trust for the benefit of
the Holders of particular Securities or coupons, and the Securities are hereby
subordinated to such senior claim. If the Trustee renders services and incurs
expenses following an Event of Default under Section 4.01(7) or Section 4.01(8)
hereof, the parties hereto and the Holders by their acceptance of the
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Securities hereby agree that such expenses are intended to constitute expenses
of administration under any bankruptcy law.
Section 5.08. Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture. Further, it is
understood that the Trustee shall be entitled to any and all rights that the
Trustee may have in its individual capacity or any other capacity with respect
to any Indebtedness of the Company, and no provision of this Indenture shall be
construed as to limit or diminish any such right.
Section 5.09. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such and
has a combined capital and surplus of at least $50,000,000. If such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus of such Person 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 5.10. 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 5.11.
(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 5.11 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 a
majority in principal amount of the Outstanding Securities, delivered to the
Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 5.08 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
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(2) the Trustee shall cease to be eligible under Section 5.09 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(3) 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 with respect to all Securities, or (ii) subject to Section 4.14, 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 or Trustees.
(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 or
Trustees. 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 in accordance
with the applicable requirements of Section 5.11, become the successor Trustee
and supersede the successor Trustee appointed by the Company. If no successor
Trustee shall have been so appointed by the Company or the Holders and accepted
appointment in the manner required by Section 5.11, 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.
(f) The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee to all Holders in the
manner provided in Section 1.06. Each notice shall include the name of the
successor Trustee and the address of its Corporate Trust Office.
Section 5.11. 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 its charges,
including, without limitation, all monies due and owing to the retiring Trustee,
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
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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 5.12. 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 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.
Section 5.13. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon 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).
Section 5.14. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect
to the Securities which shall be authorized to act on behalf of the Trustee to
authenticate Securities issued upon original issue and upon exchange,
registration of transfer or partial redemption thereof or pursuant to Section
2.07, and Securities so authenticated shall be entitled to the benefits of this
Indenture and shall be valid and obligatory for all purposes as if authenticated
by the Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing business
under the laws of the United States of America, any State thereof or the
District of Columbia, authorized under such laws to act as Authenticating Agent,
having a combined capital and surplus of not less than $50,000,000 and subject
to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent 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 an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such
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Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders of
Securities of the series with respect to which such Authenticating Agent will
serve, as their names and addresses appear in the Security Register. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
If an appointment is made pursuant to this Section, the Securities may
have endorsed thereon, in addition to or in lieu of the Trustee's certificate of
authentication, an alternative certificate of authentication in the following
form:
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This is one of the Securities described in the within-mentioned
Indenture.
Bankers Trust Company
As Trustee
By:
--------------------------------------
As Authenticating Agent
By:
--------------------------------------
Authorized Officer
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ARTICLE 6.
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HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
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Section 6.01. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee at
any time, and from time to time as the Trustee may request in writing, within 30
days after the receipt by the Company of any such request, a list of the names
and addresses of the Holders as of a date not more than 15 days prior to the
time such list is furnished.
Section 6.02. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 6.01. The Trustee may
destroy any list furnished to it as provided in Section 6.01 upon receipt of a
new list so furnished.
(b) The rights of the Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
Section 6.03. Reports by Trustee.
(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant thereto.
(b) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee in writing when any Securities are listed on any stock
exchange.
Section 6.04. Reports by Company.
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant to the Trust Indenture Act; provided
that any such information, documents or reports required to be filed with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be filed
with the Trustee within 15 days after the same is so required to be filed with
the Commission.
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ARTICLE 7.
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CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
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Section 7.01. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate or merge with or into (whether or
not the Company is the Surviving Person), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions to another Person unless:
(a) the Surviving Person is a corporation organized and existing under
the laws of the United States, any state thereof or the District of
Columbia;
(b) the Surviving Person (if other than the Company) assumes by
supplemental indenture in a form reasonably satisfactory to the Trustee all
the obligations of the Company under the Securities and this Indenture;
(c) at the time of and immediately after such transaction no Default
or Event of Default shall have occurred and be continuing;
(d) except with respect to a merger of the Company with or into Clark
USA that does not result in a Rating Decline, after giving pro forma effect
to the transaction either (1) the Surviving Person would be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Operating Cash Flow Ratio test set forth in Section 9.12
hereof or (2) the Consolidated Operating Cash Flow Ratio of the Surviving
Person would be no less than such ratio for the Company immediately prior
to the transaction; and
(e) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required
in connection with such transaction, such supplemental indenture comply
with this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with.
Section 7.02. Successor Substituted.
Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer, lease or other disposition
of the properties and assets of the Company substantially as an entirety in
accordance with Section 7.01, the successor Person formed by such consolidation
or into which the Company is merged or to which such conveyance, transfer, lease
or other disposition 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 thereafter, except in the case of a lease, the predecessor Person shall be
relieved of all obligations and covenants under this Indenture and the
Securities; provided, however, that the predecessor Company shall not be
relieved from the obligation to pay principal of and interest on the Securities,
except in the
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case of a transfer, conveyance, sale or other disposition (excluding by lease)
of all of the Company's assets that meets the requirements of Section 7.01
hereof.
ARTICLE 8.
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SUPPLEMENTAL INDENTURES
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Section 8.01. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, 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:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company herein
and in the Securities; or
(2) 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
(3) to add any additional Events of Default; or
(4) to secure the Securities; or
(5) to establish the form or terms of Securities as permitted by
Section 2.01; or
(6) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee; or
(7) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising
under this Indenture, provided that such action pursuant to this clause (7)
shall not adversely affect the interests of the Holders in any material
respect; or
(8) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act.
Section 8.02. Supplemental Indentures 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, 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
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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,
(1) change the Stated Maturity of the principal of, or any installment
of interest on, any Security, or
(2) reduce the principal amount of (or the premium), or interest,
including Special Interest, on, any Securities, or
(3) change the place or currency of payment of principal of (or
premium), or interest on, any Securities, or
(4) impair the right to institute suit for the enforcement of any
payment on or with respect to any Securities, or
(5) reduce the above-stated percentage of Outstanding Securities
necessary to modify or amend the Indenture, or
(6) reduce the percentage of aggregate principal amount of Outstanding
Securities necessary for waiver of compliance of certain covenants, as set
forth in Article 4.13 or 9.19 hereof, or
(7) modify any provisions of this Indenture relating to the
modification and amendment of this Indenture or the waiver of past defaults
or covenants, except as otherwise specified herein.
It shall not be necessary for any Act of 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 8.03. 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 8.04. 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.
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Section 8.05. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
Section 8.06. 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 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 and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
Section 8.07. Notice of Supplemental Indentures.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 8.02, the Company
shall give notice to all Holders of such fact, setting forth in general terms
the substance of such supplemental indenture, in the manner provided in Section
1.06. Any failure of the Company to give such notice, or any defect therein,
shall not in any way impair or affect the validity of any such supplemental
indenture.
ARTICLE 9.
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COVENANTS
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Section 9.01. Payment of Principal, Premium and Interest.
The Company covenants and agrees that it shall duly and punctually pay
the principal of (and premium, if any) and interest, including Special Interest,
on the Securities in accordance with the terms of the Securities and this
Indenture.
Section 9.02. Maintenance of Office or Agency.
The Company shall maintain an office or agency in the Borough of
Manhattan, City of New York 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 and this Indenture may be served. The Company initially appoints
Bankers Trust Company as Paying Agent and Security Registrar. The Company shall
give prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company terminates the
appointment of a Paying Agent or Security Registrar or otherwise shall fail to
maintain any such required office or agency, the Company shall use its
reasonable best efforts to appoint a successor Paying Agent or Security
Registrar reasonably acceptable to the Trustee. If the Company fails to maintain
a Paying Agent or Security Registrar, the Trustee shall act as such, and the
Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and
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demands. The Company shall forward copies of all presentations, surrenders,
notices and demands to the Trustee promptly upon their receipt.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
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, City of New York, for such purposes. The Company shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
Section 9.03. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it
shall, on or prior to 11:00 a.m. New York City time on each due date of the
principal of or any premium 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 any premium and interest so becoming due until such
sums shall be paid to such Persons or otherwise disposed of as herein provided
and shall promptly notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it will,
prior to each due date of the principal of or any premium or interest on any
Securities, deposit with a Paying Agent a sum sufficient to pay such amount,
such sum to be held as provided by the Trust Indenture Act, and (unless such
Paying Agent is the Trustee) the Company will promptly notify the Trustee of its
action or 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 (i) comply with the provisions of the Trust Indenture Act
applicable to it as a Paying Agent and (ii) during the continuance of any
default by the Company (or any other obligor upon the Securities) in the making
of any payment in respect of the Securities, and upon the written request of the
Trustee, forthwith pay to the Trustee all sums held in trust by such Paying
Agent for payment in respect of the Securities.
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 money.
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 or any premium or
interest, including Special Interest, on any Security and remaining unclaimed
for two years after such principal, premium or interest, including Special
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
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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 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, 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 9.04. Statement by Officers as to Default.
(a) The Company shall deliver to the Trustee, within 120 days after
the end of each fiscal year of the Company, an Officers' Certificate stating
that a review of the activities of the Company and its Subsidiaries during the
preceding fiscal year 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) and that
to the best of such officers' knowledge no event has occurred and remains in
existence by reason of which payments on account of the principal of (and
premium, if any) or interest, including Special Interest, if any, on the
Securities are prohibited or if such event has occurred, a description of the
event and what action the Company is taking or proposes to take with respect
thereto.
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the financial statements
delivered pursuant to Section 9.08 shall be accompanied by a written statement
of the Company's independent public accountants (who shall be a firm of
established national reputation reasonably satisfactory to the Trustee) that in
making the examination necessary for certification of such financial statements
nothing has come to their attention which would lead them to believe that the
Company has violated any provisions of Articles Eight or Ten of this Indenture
or, if any such violation has occurred, specifying the nature and period of
existence thereof, it being understood that such accountants shall not be liable
directly or indirectly to any Person for any failure to obtain knowledge of any
such violation.
(c) The Company shall, so long as any of the Securities are
outstanding, deliver to the Trustee, forthwith upon any officer becoming aware
of (i) any default or Event of Default or (ii) any event of default under any
other mortgage, indenture or instrument as described in Section 4.01(5), an
Officers' Certificate specifying such default, Event of Default or event of
default and what action the Company is taking or proposes to take with respect
thereto.
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Section 9.05. Existence.
Subject to Article 7, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided, however, that the
Company shall not be required to preserve any such right or franchise 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 that the loss
thereof is not disadvantageous in any material respect to the Holders.
Section 9.06. Maintenance of Properties.
The Company shall cause all properties used or useful in the conduct
of its business or the business of any Subsidiary of the Company to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and shall cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this Section shall prevent the Company from
discontinuing the operation or 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 any Subsidiary of the Company and not
disadvantageous in any material respect to the Holders.
Section 9.07. Payment of Taxes and Other Claims.
The Company shall, or shall cause its Subsidiaries to, pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (1) all taxes, assessments and governmental charges levied or
imposed upon the Company or any Subsidiary of the Company or upon the income,
profits or property of the Company or any Subsidiary of the Company, and (2) 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 Subsidiary of the Company;
provided, however, that the Company and its Subsidiaries 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.
Section 9.08. Provision of Financial Information.
So long as the Notes are outstanding, whether or not the Company is
required to be subject to Section 13(a) or 15(d) of the Exchange Act, or any
successor provision thereto, the Company shall file with the Commission the
annual reports, quarterly reports and other documents (including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and,
with respect to the annual information only, a report thereon by the Company's
certified independent accountants) which the Company would have been required to
file with the Commission pursuant to such Section 13(a) or 15(d) or any
successor provision thereto if the Company were so required, such documents to
be filed with the Commission on or prior to the respective dates (the "Required
Filing Dates") by which the Company would have been required so to file such
documents if the Company were so required. The Company shall also in any event
(a) within 15 days of each Required Filing Date (i) transmit by mail to all
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Holders, as their names and addresses appear in the Security Register, without
cost to such Holders, and (ii) file with the Trustee, in each case, copies of
the annual reports, quarterly reports and other documents which the Company
would have been required to file with the Commission pursuant to Section 13(a)
or 15(d) of the Exchange Act or any successor provisions thereto if the Company
were required to be subject to such Sections and (b) if filing such documents by
the Company with the Commission is not permitted under the Exchange Act,
promptly upon written request supply copies of such documents to any prospective
Holder. In addition, the Company shall, for so long as any Securities remain
outstanding, furnish to all Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144(d)(4) under the Securities Act.
Section 9.09. Limitation on Restricted Payments.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, make any Restricted Payment, unless (i)
at the time of and immediately after giving effect to the proposed Restricted
Payment, no Default or Event of Default shall have occurred and be continuing,
or would occur as a consequence thereof, (ii) either the Company would (a) at
the time of such Restricted Payment and after giving pro forma effect thereto,
have a Consolidated Adjusted Net Worth exceeding $200 million or (b) be
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Operating Cash Flow Ratio test set forth in Section 9.12, and (iii)
at the time of and immediately after giving effect to the proposed Restricted
Payment (the value of any such payment if other than cash, as determined in good
faith by the board of directors of the Company and evidenced by a Board
Resolution), the aggregate amount of all Restricted Payments (including
Restricted Payments permitted by clauses (b), (j), (l) and (m) of the next
succeeding paragraph and excluding the other Restricted Payments permitted by
such paragraph) declared or made subsequent to the Issue Date shall not exceed
the sum of (a) 50% of the aggregate Consolidated Net Operating Income (or, if
such aggregate Consolidated Net Operating Income is a deficit, minus 100% of
such deficit) of the Company for the period (taken as one accounting period)
from the first day of the fiscal quarter that begins after the Issue Date to the
end of the Company's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted Payment plus
(b) 100% of the aggregate net proceeds, including cash and the fair market value
of property other than cash (as determined in good faith by the board of
directors of the Company and evidenced by a Board Resolution), received by the
Company since the Issue Date, from any Person other than a Subsidiary of the
Company as a result of the issuance of Capital Stock (other than any
Disqualified Capital Stock) of the Company including such Capital Stock issued
upon conversion of Indebtedness or upon exercise of warrants and any
contributions to the capital of the Company (other than Excluded Contributions)
received by the Company from any such Person plus (c) to the extent that any
Restricted Investment that was made after the Issue Date, is sold for cash or
otherwise liquidated or repaid for cash, the cash return of capital with respect
to such Restricted Investment (less the cost of disposition, if any). For
purposes of any calculation pursuant to the preceding sentence which is required
to be made within 60 days after the declaration of a dividend by the Company,
such dividend shall be deemed to be paid at the date of declaration.
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The foregoing provisions of this covenant shall not be violated by
reason of (a) the payment of any dividends or distributions payable solely in
shares of the Company's Capital Stock (other than Disqualified Capital Stock) or
in options, warrants or other rights to acquire the Company's Capital Stock
(other than Disqualified Capital Stock), (b) the payment of any dividend within
60 days after the date of declaration thereof if, at such date of declaration,
such payment complied with the provisions described above, (c) the payment of
cash dividends or the making of loans or advances to Clark USA after October 1,
2002, in an amount sufficient to enable Clark USA to make cash payments of
interest or dividends required to be made in respect of the Exchangeable
Preferred Stock or the Exchange Debentures in accordance with the terms thereof
in effect on the date of this Indenture, (d) the payment of cash dividends or
the making of loans or advances in an amount sufficient to enable Clark USA to
make payments required to be made in respect of the 10 7/8% Notes in accordance
with the terms thereof in effect on the date of this Indenture, (e) the
retirement of any shares of the Company's Capital Stock in exchange for, or out
of the proceeds of, the substantially concurrent sale (other than to a
Subsidiary of the Company) of, other shares of its Capital Stock (other than
Disqualified Capital Stock) or options, warrants or other rights to purchase the
Company's Capital Stock (other than Disqualified Capital Stock) and the
declaration and payment of dividends on such new Capital Stock in an aggregate
amount no greater than the amount of dividends declarable and payable on such
retired Capital Stock immediately prior to such retirement, (f) the Chevron
Payment, (g) the AOC Payment, (h) the Gulf Payments, (i) other Restricted
Payments in an aggregate amount not to exceed $50 million, (j) the making of any
payment in redemption of Capital Stock of the Company or Clark USA or options to
purchase such Capital Stock granted to officers or employees of the Company or
Clark USA pursuant to any stock option, stock purchase or other stock plan
approved by the board of directors of the Company or Clark USA in connection
with the severance or termination of officers or employees not to exceed $8
million per annum or the payment of cash dividends or the making of loans or
advances to Clark USA to permit it to make such payments, (k) the declaration
and payment of dividends to holders of any class or series of preferred stock of
the Company and its Restricted Subsidiaries issued in accordance with Section
9.12, (l) the payment of dividends on the Company's Common Stock, following the
first public offering of the Company's or Clark USA's Common Stock after the
Issue Date, of up to 6% per annum of the net proceeds received by the Company in
such public offering or the payment of funds to Clark USA in amounts necessary
to permit Clark USA to make such payments to the extent the proceeds of such
offering were contributed to the equity capital of the Company; (m) so long as
no Default or Event of Default shall have occurred and be continuing (or would
result therefrom), the payment to Clark USA (in the form of dividends, loans,
advances or otherwise) of 100% of the proceeds of Indebtedness incurred pursuant
to clause (xv) of the definition of "Permitted Indebtedness" to redeem,
repurchase, defease or otherwise acquire or retire for value the 10 7/8% Notes;
provided, however, that at the time of such redemption, repurchase, defeasance
or other acquisition or retirement for value, the Consolidated Operating Cash
Flow Ratio of the Company, after giving effect to the incurrence of Indebtedness
in connection therewith, would be greater than 1.75 to 1.0; (n) the payment of
dividends or the making of loans or advances by the Company to Clark USA in an
amount not to exceed $2 million in any fiscal year for costs and expenses
incurred by Clark USA in its capacity as a holding company or for services
rendered to the Company; (o) Restricted Investments not to exceed at any one
time an aggregate of $75 million; and (p) Restricted Investments made with
Excluded Contributions.
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The board of directors of the Company may designate any Restricted
Subsidiary to be an Unrestricted Subsidiary if such designation would not cause
a Default or Event of Default; provided that, in no event shall the business
currently operated by the Company or Clark USA be transferred to or held by an
Unrestricted Subsidiary, unless after giving pro forma effect to such transfer
the Company could have incurred an additional $1.00 of Indebtedness pursuant to
the Consolidated Operating Cash Flow Ratio test set forth in Section 9.12. For
purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash) in
the Subsidiary so designated shall be deemed to be Restricted Payments at the
time of such designation and shall reduce the amount available for Restricted
Payments under the first paragraph of this Section 9.09. All such outstanding
Investments shall be deemed to constitute Investments in an amount equal to the
greatest of (x) the net book value of such Investments at the time of such
designation, (y) the fair market value of such Investments at the time of such
designation, and (z) the original fair market value of such Investments at the
time they were made. Such designation shall only be permitted if such Restricted
Payment would be permitted at such time and if such Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary.
Section 9.10. Limitation on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries.
The Company shall not, and shall not permit any Restricted Subsidiary
of the Company (other than a Securitization Special Purpose Entity) to, create
or otherwise cause or suffer to exist or become effective, any consensual
encumbrance or restriction which, by its terms, restricts the ability of any
Restricted Subsidiary of the Company (other than a Securitization Special
Purpose Entity) to (i) pay dividends or make any other distributions on any such
Restricted Subsidiary's Capital Stock or pay any Indebtedness owed to the
Company or any Restricted Subsidiary of the Company, (ii) make any loans or
advances to the Company or any Restricted Subsidiary of the Company, or (iii)
transfer any of its property or assets to the Company or any Restricted
Subsidiary of the Company, except for, in the case of clauses (i), (ii) and
(iii) above, any restrictions (a) existing under this Indenture and any
restrictions existing or created on the Issue Date pursuant to any agreement
relating to Existing Indebtedness of the Company or any Restricted Subsidiary,
(b) pursuant to an agreement relating to Indebtedness incurred by such
Restricted Subsidiary prior to the date on which such Restricted Subsidiary was
acquired by the Company and outstanding on such date and not incurred in
anticipation of becoming a Restricted Subsidiary, (c) imposed by virtue of
applicable corporate law or regulation and relating solely to the payment of
dividends or distributions to stockholders, (d) with respect to restrictions of
the nature described in clause (iii) above, included in a contract entered into
in the ordinary course of business and consistent with past practices that
contains provisions restricting the assignment of such contract, (e) pursuant to
an agreement effecting a renewal, extension, refinancing, refunding or
replacement of Indebtedness referred to in (a) or (b) above; provided, however,
that the provisions contained in such renewal, extension, refinancing, refunding
or replacement agreement relating to such encumbrance or restriction, taken as a
whole, are not materially more restrictive than the provisions contained in the
agreement the subject thereof, as determined in good faith by the board of
directors, or (f) which shall not in the
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aggregate cause the Company not to have the funds necessary to pay the principal
of, premium, if any, or interest, including Special Interest, on the Notes at
their Stated Maturity.
Section 9.11. Limitation on Transactions with Shareholders and Affiliates.
The Company shall not, and shall not permit any Restricted Subsidiary
of the Company to, directly or indirectly, conduct any business or enter into
any transaction or series of similar transactions (including, without
limitation, the purchase, sale, transfer, lease or exchange of any property or
the rendering of any service) with (i) any direct or indirect holder of more
than 5% of any class of Capital Stock of the Company or of any Restricted
Subsidiary of the Company (other than transactions between or among the Company
and/or its Restricted Subsidiaries except for Restricted Subsidiaries owned in
any part by the Principal Shareholders) or (ii) any Affiliate of the Company
(other than transactions between or among the Company and/or its Restricted
Subsidiaries except for Restricted Subsidiaries owned in any part by the
Principal Shareholders) (each of the foregoing, a "Shareholder/Affiliate
Transaction") unless the terms of such business, transaction or series of
transactions (a) are set forth in writing and (b) are as favorable to the
Company or such Restricted Subsidiary in all material respects as terms that
would be obtainable at the time for a comparable transaction or series of
similar transactions in arm's-length dealings with a Person which is not such a
stockholder or Affiliate and, if such transaction or series of transactions
involves payment for services of such a stockholder or Affiliate, (x) for
amounts greater than $10 million and less than $25 million per annum, the
Company shall deliver an Officers' Certificate to the Trustee certifying that
such Shareholder/Affiliate Transaction complies with clause (b) above or (y) for
amounts equal to or greater than $25 million per annum, then (A) a majority of
the disinterested members of the board of directors shall in good faith
determine that such payments are fair consideration for the services performed
or to be performed (evidenced by a Board Resolution) or (B) the Company must
receive a favorable opinion from a nationally recognized investment banking firm
chosen by the Company or, if no such investment banking firm is in a position to
provide such opinion, a similar firm chosen by the Company (having expertise in
the specific area which is the subject of the opinion), that such payments are
fair consideration for the services performed or to be performed (a copy of
which shall be delivered to the Trustee); provided that the foregoing
requirements shall not apply to (i) Shareholder/Affiliate Transactions involving
the purchase or sale of crude oil in the ordinary course of the Company's
business, so long as such transactions are priced in line with the market price
of a crude benchmark and the pricing of such transactions are equivalent to the
pricing of comparable transactions with unrelated third parties; and provided
further that the Gulf Payments shall not be deemed a Shareholder/Affiliate
Transaction, (ii) Restricted Payments permitted by the provisions of this
Indenture described in Section 9.09, (iii) payments made in connection with the
Blackstone Transaction, including fees to Blackstone, (iv) payment of annual
management, consulting, monitoring and advisory fees and related expenses to
Blackstone and its Affiliates, (v) payment of reasonable and customary fees paid
to, and indemnity provided on behalf of, officers, directors, employees or
consultants of the Company or any Restricted Subsidiary, (vi) payments by the
Company or any of its Restricted Subsidiaries to Blackstone and its Affiliates
made for any financial advisory, financing, underwriting or placement services
or in respect of other investment banking activities, including, without
limitation, in connection with acquisitions or divestitures which payments are
approved by a majority of the board of directors of the Company in good faith,
(vii) payments or loans to employees or consultants which are approved
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by a majority of the board of directors of the Company in good faith, (viii) any
agreement in effect on the Issue Date and any amendment thereto (so long as any
such amendment is not disadvantageous to the holders of the Notes in any
material respect) or any transaction contemplated thereby, or (ix) any
stockholder agreement or registration rights agreement to which the Company is a
party on the Issue Date and any similar agreements which it may enter into
thereafter; provided that the performance by the Company or any of its
Restricted Subsidiaries of obligations under any future amendment or under such
a similar agreement entered into after the Issue Date shall only be permitted by
this clause (ix) to the extent that the terms of any such amendment or new
agreement are not disadvantageous to the holders of the Notes in any material
respect.
Section 9.12. Limitation on Indebtedness.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, incur any Indebtedness (including Acquired Debt)
other than (i) the Notes, the Senior Subordinated Notes, and obligations
outstanding under the Loan Agreement, and (ii) Permitted Indebtedness, unless
after giving effect to the incurrence of such Indebtedness and the receipt and
application of the proceeds therefrom, the Company's Consolidated Operating Cash
Flow Ratio is greater than 2 to 1. Notwithstanding the foregoing, the Company's
Unrestricted Subsidiaries may incur Non-Recourse Debt; provided, however, that
if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted
Subsidiary, such event shall be deemed to constitute an incurrence of
Indebtedness by a Restricted Subsidiary of the Company.
Section 9.13. Limitation on Issuance of Guarantees of Indebtedness.
The Company shall not permit any Restricted Subsidiary, directly or
indirectly, to guarantee or secure the payment of any Indebtedness of the
Company unless such Restricted Subsidiary simultaneously executes and delivers
supplemental indentures to this Indenture providing for the guarantee or
security of the payment of the Notes by such Restricted Subsidiary (other than
the grant of security interests in cash and cash equivalents, receivables and
product inventories to secure obligations under the Credit Agreement). If the
Indebtedness to be guaranteed is subordinated to the Notes, the guarantee or
security of such Indebtedness shall be subordinated to the guarantee or security
of the Notes to the same extent as the Indebtedness to be guaranteed is
subordinated to the Notes under this Indenture. Notwithstanding the foregoing,
any such guarantee or security by a Restricted Subsidiary of the Notes shall
provide by its terms that it shall be automatically and unconditionally released
and discharged upon either (i) the release or discharge of such guarantee or
security of payment of such other Indebtedness, except a discharge by or as a
result of payment under such guarantee or security, or (ii) any sale, exchange
or transfer, to any Person not an Affiliate of the Company, of all of the
Company's Capital Stock in, or all or substantially all the assets of, such
Restricted Subsidiary, which sale, exchange or transfer is made in compliance
with the applicable provision of this Indenture.
Section 9.14. Other Agreements.
The Company shall not, and shall not permit any Subsidiary of the
Company to, enter into or become a party (including, without limitation, as an
assignee or successor) to any
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agreement (including, without limitation, a refinancing or refunding of the
Credit Agreement) that would conflict with this Indenture.
Section 9.15. Limitation on Liens.
The Company shall not, directly or indirectly, create, incur, assume
or suffer to exist any Lien (other than Permitted Liens) on any asset now owned
or hereafter acquired, or on any income or profits therefrom, or assign or
convey any right to receive income therefrom to secure any Indebtedness which is
pari passu with or subordinate in right of payment to the Notes, unless the
Notes are secured equally and ratably simultaneously with or prior to the
creation, incurrence or assumption of such Lien for so long as such Lien exists;
provided, that in any case involving a Lien securing Indebtedness which is
subordinated in right of payment to the Notes, such Lien is subordinated to the
Lien securing the Notes to the same extent that such subordinated debt is
subordinated to the Notes.
Section 9.16. Limitation on Certain Asset Dispositions.
The Company shall not, and shall not permit any Restricted Subsidiary
of the Company to, make any Asset Disposition unless (i) the Company or such
Restricted Subsidiary receives consideration at the time of such disposition (or
in the case of a lease, over the term of such lease) at least equal to the fair
market value of the shares or assets disposed of (which shall be as determined
in good faith by the Company), and (ii) at least 75% of the consideration for
such disposition consists of cash or Cash Equivalents; provided that the
following shall be deemed to be cash for purposes of this covenant: (1) the
amount of any liabilities (as shown on the Company's or such Restricted
Subsidiary's most recent balance sheet or in the notes thereto) of the Company
or such Restricted Subsidiary (other than liabilities that are by their terms
subordinated to the Notes) that are assumed by the transferee of any such
assets, and (2) any notes or other obligations received by the Company or such
Restricted Subsidiary from a transferee that are converted by the Company or
such Restricted Subsidiary into cash within 180 days after such Asset
Disposition; provided, further, that the 75% limitation referred to above in
clause (ii) shall not apply to (x) any disposition of assets in which the cash
portion of such consideration received therefor on an after-tax basis,
determined in accordance with the foregoing proviso, is equal to or greater than
what the after-tax net proceeds would have been had such transaction complied
with the aforementioned 75% limitation, (y) any disposition of assets (other
than the Port Arthur Refinery) in exchange for assets of comparable fair market
value related to the Principal Business of the Company, provided that in any
such exchange of assets of the Company or a Restricted Subsidiary with a fair
market value in excess of $20 million occurring when Blackstone fails to hold,
directly or indirectly, 30% or more of the total voting power of all classes of
stock of the Company, the Company shall obtain an opinion or report from a
nationally recognized investment banking firm, valuation expert or accounting
firm confirming that the assets received by the Company and such Restricted
Subsidiary in such exchange have a fair market value at least equal to the
assets so exchanged or (z) any disposition of Securitization Program Assets to
any Securitization Special Purpose Entity in exchange for Indebtedness of,
procurement of letters of credit and similar instruments by, or equity or other
interests in, such Securitization Special Purpose Entity.
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Within 360 days of the later of (a) the receipt of the Net Available
Proceeds and (b) the date of such Asset Disposition, the Company may elect to
(i) apply the Net Available Proceeds from such Asset Disposition to permanently
redeem or repay Indebtedness of the Company or any Restricted Subsidiary, other
than Indebtedness of the Company which is subordinated to the Notes, or (ii)
apply the Net Available Proceeds from such Asset Disposition to invest in assets
related to the Principal Business of the Company or Capital Stock of any Person
primarily engaged in the Principal Business if, as a result of such acquisition,
such Person becomes a Restricted Subsidiary. Pending the final application of
any such Net Available Proceeds, the Company may temporarily invest such Net
Available Proceeds in any manner permitted by this Indenture. Any Net Available
Proceeds from an Asset Disposition not applied or invested as provided in the
first sentence of this paragraph shall be deemed to constitute "Excess
Proceeds."
As soon as practical, but in no event later than 10 Business Days
after any date (an "Asset Disposition Trigger Date") that the aggregate amount
of Excess Proceeds exceeds $25 million, the Company shall commence an Offer (as
described in Section 10.09) to purchase the maximum principal amount of Notes
that may be purchased out of the Excess Proceeds and to purchase or prepay the
maximum amount of other Indebtedness of Clark USA or the Company having similar
rights to be so prepaid or purchased out of such Excess Proceeds, in each case
at an Offer price in cash in an amount equal to 100% of the principal amount
thereof, plus accrued and unpaid interest, including Special Interest, to the
date of purchase. To the extent that any Excess Proceeds remain after completion
of an Offer, the Company may use the remaining amount for general corporate
purposes. Upon completion of such Offer, the amount of Excess Proceeds shall be
reset to zero.
Section 9.17. Restrictions on Secured Indebtedness.
The following provision shall apply only upon and after the occurrence
of an Investment Grade Rating Event. If the Company shall incur, issue, assume
or guarantee any Indebtedness secured by a Lien on any Principal Property of the
Company or on any share of stock or Indebtedness of any Restricted Subsidiary
(other than a Securitization Special Purpose Entity), the Company shall secure
the Notes equally and ratably with (or, at the Company's option, prior to) such
secured Indebtedness so long as such Indebtedness shall be so secured, unless
the aggregate amount of all such secured Indebtedness, together with all
Attributable Indebtedness of the Company with respect to any sale and leaseback
transactions involving Principal Properties (with the exception of such
transactions which are excluded as described in clauses (i) through (v) in
Section 9.18 below), would not exceed 10% of Consolidated Net Tangible Assets.
The above restriction does not apply to, and there shall be excluded from
secured Indebtedness in any computation under such restriction, Indebtedness
secured by: (i) Liens on property of, or on any share of stock or Indebtedness
of, any corporation existing at the time such corporation becomes a Restricted
Subsidiary and Liens on any property acquired from a corporation which is merged
with or into the Company or a Subsidiary, (ii) Liens in favor of the Company;
(iii) Liens in favor of governmental bodies to secure progress, advance or other
payments; (iv) Liens upon any property acquired after the date of this
Indenture, securing the purchase price thereof or created or incurred
simultaneously with (or within 270 days after) such acquisition to finance the
acquisition of such property or existing on such property at the time of such
acquisition, or Liens on improvements after such date, in each case subject to
certain
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conditions and provided that the principal amount of the obligation or
indebtedness secured by such Lien shall not exceed 100% of the cost or fair
value (as determined in good faith by the Company), whichever shall be lower, of
the property at the time of the acquisition, construction or improvement
thereof; (v) Liens securing industrial revenue or pollution control bonds; (vi)
Liens arising out of any final judgment for the payment of money aggregating not
in excess of $25 million which remains unstayed, in effect and unpaid for a
period of 60 consecutive days or Liens arising out of any judgments which are
being contested in good faith; (vii) Permitted Liens in existence on the date of
the Investment Grade Rating Event; (viii) Liens to secure obligations arising
from time to time under the Credit Agreement including Guaranties thereof; or
(ix) any extension, renewal, or replacement of any Lien referred to in the
foregoing clauses (i) through (viii) inclusive.
Section 9.18. Restrictions on Sales and Leasebacks.
The following provision shall apply only upon and after the occurrence
of an Investment Grade Rating Event. The Company may not enter into any sale and
leaseback transaction involving any Principal Property, unless the aggregate
amount of all Attributable Indebtedness of the Company with respect to such
transaction plus all secured Indebtedness (with the exception of secured
Indebtedness which is excluded as described in clauses (i) through (ix) in
Section 9.17 above) would not exceed 10% of Consolidated Net Tangible Assets.
This restriction does not apply to, and there shall be excluded from
Attributable Indebtedness in any computation under such restriction, any sale
and leaseback transaction if: (i) the lease is for a period, including renewal
rights, not in excess of three years; (ii) the sale of the Principal Property is
made within 270 days after its acquisition, construction or improvements; (iii)
the lease secures or relates to industrial revenue or pollution control bonds;
(iv) the transaction is between the Company and a Restricted Subsidiary; or (v)
the Company, within 270 days after the sale is completed, applies to the
retirement of Indebtedness of the Company or a Restricted Subsidiary, or to the
purchase of other property which shall constitute a Principal Property, an
amount not less than the greater of (1) the net proceeds of the sale of the
Principal Property leased or (2) the fair market value (as determined by the
Company in good faith) of the Principal Property leased. The amount to be
applied to the retirement of Indebtedness shall be reduced by (x) the principal
amount of any debentures or notes (including the Notes) of the Company or a
Restricted Subsidiary surrendered within 270 days after such sale to the trustee
for retirement and cancellation, (y) the principal amount of Indebtedness, other
than the items referred to in the preceding clause (x), voluntarily retired by
the Company or a Restricted Subsidiary within 270 days after such sale and (z)
associated transaction expenses.
Section 9.19. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any
term, provision or condition set forth in Sections 9.06 to 9.18, inclusive, with
respect to the Securities if before the time for such compliance the Holders of
at least a majority in principal amount of the Outstanding Securities shall, by
Act of such Holders, either waive such compliance in such instance or generally
waive compliance 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
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full force and effect; provided, however, with respect to an Offer to purchase
as to which an Offer has been mailed, no such waiver may be made or shall be
effective against any Holder tendering Securities pursuant to such Offer, and
the Company may not omit to comply with the terms of such Offer as to such
Holder.
Section 9.20. Effect of Investment Grade Rating.
Notwithstanding the foregoing, upon the occurrence of an Investment
Grade Rating Event, Sections 7.01(d) and 7.01(e), 9.09, 9.10, 9.11, 9.12, 9.15
and 9.16 shall be of no further force or effect and shall cease to apply to the
Company and, in lieu thereof, Sections 9.17 and 9.18 shall take effect.
ARTICLE 10.
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REDEMPTION OF SECURITIES
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Section 10.01. Right of Redemption.
The Securities may be redeemed at the election of the Company, as a
whole or from time to time in part, at any time on and after November 15, 2002
at the Redemption Prices specified in the form of Security attached hereto,
together with accrued and unpaid interest to the Redemption Date.
In addition, the Company may, at its option, use the net cash proceeds
of one or more Equity Offerings to the extent the net cash proceeds thereof are
contributed to the equity capital of the Company to redeem for cash at any time
prior to November 15, 2001 up to 35% in aggregate initial principal amount of
the Securities, in whole or in part, at a redemption price equal to 108.375% of
the aggregate principal amount so redeemed, plus accrued interest, to the
Redemption Date; provided that at least 65% of the principal amount of
Securities originally issued remain outstanding immediately after such
redemption. Any such redemption will be required to occur on or prior to 120
days after the receipt by the Company of the proceeds of any such Equity
Offering and upon not less than 30 nor more than 60 days' notice mailed to each
holder of Securities to be redeemed at such holder's address appearing in the
Company's Security Register, in principal amounts of $1,000 or an integral
multiple of $1,000. The Company may not use the net cash proceeds of any Equity
Offerings which alone or combined with a related series of transactions result
in a Change of Control to redeem Securities pursuant to this paragraph.
Section 10.02. Applicability of Article.
Redemption of the Securities at the election of the Company, as
permitted by any provision of this Indenture, shall be made in accordance with
such provision and this Article.
Section 10.03. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities pursuant to
Section 10.01 shall be evidenced by a Board Resolution, which Board Resolution
shall be delivered to the
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Trustee at least 60 days prior to the Redemption Date fixed by the Company
(unless a shorter notice shall be satisfactory to the Trustee). In case of any
redemption at the election of the Company of less than all the Securities, the
Company shall notify the Trustee in writing of such Redemption Date and of the
principal amount of Securities to be redeemed upon delivery of the Board
Resolution related to such redemption.
Section 10.04. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities not previously
called for redemption, by lot or by such method as the Trustee shall deem fair
and appropriate (and in a manner that complies with applicable legal and
securities exchange requirements, if any) and which may provide for the
selection for redemption of portions (equal to $1,000 or any integral multiple
thereof) of the principal amount of Securities of a denomination larger than
$1,000.
The Trustee shall promptly notify the Company and each Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.
In the event that the Company is required to make an Offer to purchase
pursuant to Sections 10.09 or 9.16 and the amount available for such Offer is
not an integral multiple of $1,000, the Trustee shall promptly refund to the
Company any remaining excess proceeds, which shall be less than $1,000.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
Section 10.05. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at his address appearing in
the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price, plus accrued interest,
(3) if less than all the Outstanding Securities are to be redeemed,
the identification (and, in the case of partial redemption of any
Securities, the principal amounts) of the particular Securities to be
redeemed,
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(4) that Securities called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price,
(5) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security or portion thereof to be redeemed and
that, unless the Company defaults in making the redemption payment,
interest thereon will cease to accrue on and after said date,
(6) the place or places where such Securities are to be surrendered
for payment of the Redemption Price.
(7) if any of the Securities are being redeemed in part, that on or
after the redemption date a new Security in principal amount equal to the
unredeemed portion thereof will be issued,
(8) the provision of the Securities pursuant to which the Securities
called for redemption are being redeemed,
(9) the aggregate principal amount of Securities that are being
redeemed, and
(10) the CUSIP number of the Securities that are being redeemed.
Notice of redemption of Securities to be redeemed 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.
Section 10.06. Deposit of Redemption Price.
Prior to 11:00 a.m. New York City time on any Redemption Date, the
Company shall deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 9.03) an amount of money sufficient to pay the Redemption
Price of, and (except if the Redemption Date shall be an Interest Payment Date)
accrued interest on, all the Securities which are to be redeemed on that date.
Section 10.07. 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, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall not 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 interest 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 2.12.
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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 prescribed
therefor in the Security.
Section 10.08. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered
at a Place of Payment therefor (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 his 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 the same series and of like tenor, 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 of
the Security so surrendered.
Section 10.09. Offer to Purchase.
Within 30 days following a Change of Control resulting in a Rating
Decline and on any Asset Disposition Trigger Date, the Company shall mail to
each holder of Securities, at such holder's registered address, a notice
stating: (i) that an offer (an "Offer") is being made as a result of a Change of
Control or one or more Asset Dispositions, the length of time the Offer shall
remain open, and the maximum aggregate principal amount of Securities that shall
be accepted for payment pursuant to such Offer, (ii) the purchase price, the
amount of accrued and unpaid interest (including Special Interest) as of the
purchase date, and the purchase date (the "Purchase Date"), (iii) in the case of
a Change of Control, the circumstances and material facts regarding such Change
of Control, to the extent known to the Company (including, but not limited to,
information with respect to pro forma and historical financial information after
giving effect to such Change of Control, and information regarding the Person or
Persons acquiring control) and (iv) such other information required by this
Indenture and applicable laws and regulations.
On the Purchase Date for any Offer, the Company shall (1) in the case
of an Offer resulting from a Change of Control, accept for payment all
Securities tendered pursuant to such Offer and, in the case of an Offer
resulting from one or more Asset Dispositions, accept for payment the maximum
principal amount of Securities tendered pursuant to such Offer that can be
purchased out of Excess Proceeds from such Asset Dispositions, which amount
shall equal the product of (a) the amount of such Excess Proceeds and (b) a
fraction whose numerator is the aggregate amount of all obligations owing under
Securities tendered pursuant to such offering and whose denominator is the sum
of the aggregate amount of all obligations owing under Securities tendered
pursuant to such offering and the aggregate amount of all obligations owing
under other Indebtedness of Clark USA or the Company tendered pursuant to
similar rights to prepayment or repurchase, (2) deposit with the Paying Agent
the aggregate purchase price of all Securities accepted for payment and any
accrued and unpaid interest, including Special Interest, on such Securities as
of the Purchase Date, and (3) deliver or cause to be delivered to the Trustee
all Securities tendered pursuant to the Offer. If less than all Securities
tendered pursuant to any Offer are accepted for payment by the Company for any
reason, selection of the Securities to be purchased shall be in compliance with
the requirements of the principal national securities
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exchange, if any, on which the Securities are listed or, if the Securities are
not so listed, by lot or by such method as the Trustee shall deem fair and
appropriate; provided that Securities accepted for payment in part shall only be
purchased in integral multiples of $1,000. The Paying Agent shall promptly mail
to each holder of Securities accepted for payment an amount equal to the
Purchase price for such Securities plus any accrued and unpaid interest,
including Special Interest thereon, the Trustee shall promptly authenticate and
mail to such holder of Securities accepted for payment in part new Securities
equal in principal amount to any unpurchased portion of the Securities, and any
Securities not accepted for payment in whole or in part shall be promptly
returned to the holder thereof. On and after a Purchase Date, interest shall
cease to accrue on the Securities accepted for payment. The Company shall
announce the results of the Offer to holders of the Securities on or as soon as
practicable after the Purchase Date.
The Company shall comply with all applicable requirements of Rule 14e-
1 under the Exchange Act and all other applicable securities laws and
regulations thereunder, to the extent applicable, in connection with any Offer.
Other than as specifically provided in this Section 10.09, any
purchase pursuant to this Section 10.09 shall be made pursuant to the provisions
of Sections 10.01 through 10.08 hereof.
ARTICLE 11.
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This Article intentionally left blank.
ARTICLE 12.
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CHANGE OF CONTROL TRIGGERING EVENT
----------------------------------
Section 12.01. Change of Control Triggering Event.
In the event that there shall occur a Change of Control Triggering
Event, then the Company shall make an Offer in accordance with Section 10.09
hereof to purchase all or any part (equal to $1,000 or an integral multiple
thereof) of each Holder's Securities at a purchase price equal to 101% of the
aggregate principal amount thereof, plus accrued and unpaid interest, including
Special Interest to the date of purchase.
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ARTICLE 13.
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DEFEASANCE AND COVENANT DEFEASANCE
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Section 13.01. Company's Option to Effect Defeasance or Covenant Defeasance.
The Company may at its option by Board Resolution, at any time, elect
to have either Section 13.02 or Section 13.03 applied to the Outstanding
Securities upon compliance with the conditions set forth below in this Article
Thirteen.
Section 13.02. Defeasance and Discharge.
Upon the Company's exercise of the option provided in Section 13.01
applicable to this Section, the Company shall be deemed to have been discharged
from its obligations with respect to the Outstanding Securities, on and after
the date the conditions set forth below are satisfied (hereinafter,
"defeasance"). For this purpose, such defeasance means that the Company shall be
deemed to have paid and discharged the entire indebtedness represented by the
Outstanding Securities, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 13.05 hereof and the other Sections of this
Indenture referred to in (A) and (B) below, and to have satisfied all its 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 such Securities to receive, solely from the trust fund described in
Section 13.04 and as more fully set forth in such Section, payments in respect
of the principal of (and premium, if any) and interest, including Special
Interest, on such Securities when such payments are due, (B) the Company's
obligations with respect to such Securities under Article 2 and Section 9.02
hereof, (C) the rights, powers, trusts, duties and immunities of the Trustee
hereunder and (D) this Article Thirteen. Subject to compliance with this Article
Thirteen, the Company may exercise its option under this Section 13.02
notwithstanding the prior exercise of its option under Section 13.03.
Section 13.03. Covenant Defeasance.
Upon the Company's exercise of the option provided in Section 13.01
applicable to this Section, (i) the Company shall be released from its
obligations under Sections 9.06 through 9.18, inclusive and Section 9.20,
Section 10.09, Article 12, and Article 7 hereof and (ii) the occurrence of an
event specified in Sections 4.01(3), 4.01(4) (with respect to any of Sections
9.06 through 9.18, inclusive and 9.20, Section 10.09 and Article 12), 4.01(5)
and 4.01(6) shall not be deemed to be an Event of Default (hereinafter,
"covenant defeasance"), and the Securities shall thereafter be deemed not
"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, 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, such covenant defeasance means that
the Company may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such Section, Clause or
Article, whether directly or indirectly by reason of any reference elsewhere
herein to any such Section, Clause or Article or by reason of any reference in
any such Section, Clause or
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Article to any other provision herein or in any other document shall not
constitute a Default or an Event of Default under Section 4.01 hereof, but,
except as specified above, the remainder of this Indenture and such Securities
shall be unaffected thereby.
Section 13.04. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either Section
13.02 or Section 13.03 to the then Outstanding Securities:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 5.10 who shall agree to comply with the provisions of this
Article Thirteen 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)
money 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 (premium, if any) and each installment of interest, including Special
Interest, on the Securities on the Stated Maturity of such principal in
accordance with the terms of this Indenture and of such Securities. For
this purpose, "U.S. Government Obligations" means securities that are (x)
direct obligations of the United States of America for the 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 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 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.
(2) In the case of an election under Section 13.02, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (x) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling, or (y) since the date of this Indenture there has
been a change in the applicable Federal income tax law, in either case to
the effect that, and based
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thereon such opinion shall confirm that, the Holders of the Outstanding
Securities will not recognize gain or loss for Federal income tax purposes
as a result of such deposit, defeasance and discharge and will be subject
to Federal income tax on the same amount, in the same manner and at the
same times as would have been the case if such deposit, defeasance and
discharge had not occurred.
(3) In the case of an election under Section 13.03, 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 gain or loss for
Federal income tax purposes as a result of such deposit and covenant
defeasance and will be subject to Federal income tax on the same amount, in
the same manner and at the same times as would have been the case if such
deposit and covenant defeasance had not occurred.
(4) The Company shall have delivered to the Trustee an Officer's
Certificate to the effect that the Securities, if then listed on any
securities exchange, will not be delisted as a result of such deposit.
(5) No Event of Default or event which with notice or lapse of time
or both would become an Event of Default shall have occurred and be
continuing on the date of such deposit or, insofar as subsections 4.01(7)
and (8) are concerned, at any time during the period ending on the 90th day
after the date of such deposit (it being understood that this condition
shall not be deemed satisfied until the expiration of such period).
(6) Such defeasance or covenant defeasance shall not cause the
Trustee to have a conflicting interest within the meaning of the Trust
Indenture Act (assuming all Securities are in default within the meaning of
the Trust Indenture Act).
(7) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, any other agreement
or instrument to which the Company is a party or by which it is bound.
(8) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the defeasance under Section
13.02 or the covenant defeasance under Section 13.03 (as the case may be)
have been complied with.
(9) Such defeasance or covenant defeasance shall not result in the
trust arising from such deposit constituting an investment company as
defined in the Investment Company Act of 1940, as amended, or such trust
shall be qualified under such act or exempt from regulation thereunder.
(10) The Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that after the passing of 90 days following such
deposit, the
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trust funds will not be subject to the effect of any proceeding or any
bankruptcy, insolvency, reorganization, or similar laws regarding
creditors' rights generally.
Section 13.05. 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 9.03, 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 13.05, the "Trustee") pursuant to Section 13.04 in respect of the
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, including Special 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 its officers,
directors, employees and agents against any tax, fee or other charge imposed on
or assessed against the U.S. Government Obligations deposited pursuant to
Section 13.04 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. The indemnity of this Section 13.05 shall
survive the termination of this Indenture or the earlier resignation or removal
of the Trustee.
Anything in this Article Thirteen 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 Obligations held by it as provided in
Section 13.04 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 defeasance or covenant
defeasance.
Section 13.07. Reinstatement.
If the Trustee or the Paying Agent is unable to apply any money in
accordance with Section 13.02 or 13.03 by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Company's obligations under this indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to this Article Thirteen until such time as the Trustee or Paying Agent
is permitted to apply all such money in accordance with Section 13.02 or 13.03;
provided, however, that if the Company makes any payment of principal of (and
premium, if any) or any applicable interest on any Security following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Securities to receive such payment from the money held by
the Trustee or the Paying Agent.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, as of the day and year first above written.
CLARK REFINING & MARKETING, INC.
By
------------------------------
Attest:
- ------------------------------
Bankers Trust Company
as Trustee
By
------------------------------
Authorized Signatory
Attest:
- ------------------------------
<PAGE>
TABLE OF CONTENTS
---------
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture
<TABLE>
<CAPTION>
Page
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PARTIES........................................................................ 1
RECITALS OF THE COMPANY........................................................ 1
ARTICLE 1. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION............ 1
Section 1.01. Definitions.................................................. 1
Section 1.02. Compliance Certificates and Opinions.........................24
Section 1.03. Form of Documents Delivered to Trustee.......................24
Section 1.04. Acts of Holders; Record Dates................................25
Section 1.05. Notices, Etc., to Trustee and Company........................26
Section 1.06. Notice to Holders; Waiver....................................26
Section 1.07. Conflict with Trust Indenture Act............................27
Section 1.08. Effect of Headings and Table of Contents.....................27
Section 1.09. Successors and Assigns.......................................27
Section 1.10. Separability Clause..........................................27
Section 1.11. Benefits of Indenture........................................27
Section 1.12. Governing Law................................................27
Section 1.13. Legal Holidays...............................................27
Section 1.14. No Recourse Against Others...................................28
ARTICLE 2 THE SECURITIES......................................................28
Section 2.01. Form and Dating..............................................28
Section 2.02. Execution and Authentication.................................29
Section 2.03. Registrar and Paying Agent...................................30
Section 2.04. Paying Agent to Hold Money in Trust..........................30
</TABLE>
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<TABLE>
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Section 2.05. Holder Lists........................................................31
Section 2.06. Transfer and Exchange...............................................31
Section 2.07. Replacement Securities..............................................44
Section 2.08. Outstanding Securities..............................................45
Section 2.09. Treasury Securities.................................................45
Section 2.10. Temporary Securities................................................45
Section 2.11. Cancellation........................................................46
Section 2.12. Defaulted Interest..................................................46
ARTICLE 3. SATISFACTION AND DISCHARGE.............................................46
Section 3.01. Satisfaction and Discharge of Indenture.............................46
Section 3.02. Application of Trust Money..........................................48
ARTICLE 4. REMEDIES...............................................................48
Section 4.01. Events of Default...................................................48
Section 4.02. Acceleration of Maturity; Rescission and Annulment..................50
Section 4.03. Collection of Indebtedness and Suits for Enforcement by Trustee.....51
Section 4.04. Trustee May File Proofs of Claim....................................51
Section 4.05. Trustee May Enforce Claims Without Possession of Securities.........52
Section 4.06. Application of Money Collected......................................52
Section 4.07. Limitation on Suits.................................................52
Section 4.08. Unconditional Right of Holders to Receive Principal, Premium and
Interest............................................................53
Section 4.09. Restoration of Rights and Remedies..................................53
Section 4.10. Rights and Remedies Cumulative......................................53
Section 4.11. Delay or Omission Not Waiver........................................54
Section 4.12. Control by Holders..................................................54
Section 4.13. Waiver of Past Defaults.............................................54
Section 4.14. Undertaking for Costs...............................................55
Section 4.15. Waiver of Stay, Extension or Usury Laws.............................55
</TABLE>
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ARTICLE 5. THE TRUSTEE..................................................................................55
Section 5.01. Certain Duties and Responsibilities.......................................................55
Section 5.02. Notice of Defaults........................................................................56
Section 5.03. Certain Rights of Trustee.................................................................56
Section 5.04. Not Responsible for Recitals or Issuance of Securities....................................57
Section 5.05. May Hold Securities.......................................................................57
Section 5.06. Money Held in Trust.......................................................................57
Section 5.07. Compensation and Reimbursement............................................................57
Section 5.08. Administrative Expense..........................................Error! Bookmark not defined.
Section 5.09. Disqualification; Conflicting Interests...................................................58
Section 5.10. Corporate Trustee Required; Eligibility...................................................59
Section 5.11. Resignation and Removal; Appointment of Successor.........................................59
Section 5.12. Acceptance of Appointment by Successor....................................................60
Section 5.13. Merger, Conversion, Consolidation or Succession to Business...............................60
Section 5.14. Preferential Collection of Claims Against Company.........................................61
Section 5.15. Appointment of Authenticating Agent.......................................................61
ARTICLE 6. HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY............................................64
Section 6.01. Company to Furnish Trustee Names and Addresses of Holders.................................64
Section 6.02. Preservation of Information; Communications to Holders....................................64
Section 6.03. Reports by Trustee........................................................................64
Section 6.04. Reports by Company........................................................................64
ARTICLE 7. CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE.........................................65
Section 7.01. Company May Consolidate, Etc., Only on Certain Terms......................................65
Section 7.02. Successor Substituted.....................................................................65
ARTICLE 8. SUPPLEMENTAL INDENTURES......................................................................66
Section 8.01. Supplemental Indentures Without Consent of Holders........................................66
Section 8.02. Supplemental Indentures with Consent of Holders...........................................66
</TABLE>
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<TABLE>
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Section 8.03. Execution of Supplemental Indentures.....................................................67
Section 8.04. Effect of Supplemental Indentures........................................................67
Section 8.05. Conformity with Trust Indenture Act......................................................68
Section 8.06. Reference in Securities to Supplemental Indentures.......................................68
Section 8.07. Notice of Supplemental Indentures........................................................68
ARTICLE 9. COVENANTS...................................................................................68
Section 9.01. Payment of Principal, Premium and Interest...............................................68
Section 9.02. Maintenance of Office or Agency..........................................................68
Section 9.03. Money for Securities Payments to Be Held in Trust........................................69
Section 9.04. Statement by Officers as to Default......................................................70
Section 9.05. Existence................................................................................71
Section 9.06. Maintenance of Properties................................................................71
Section 9.07. Payment of Taxes and Other Claims........................................................71
Section 9.08. Provision of Financial Information.......................................................71
Section 9.09. Limitation on Restricted Payments........................................................72
Section 9.10. Limitation on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries..................................................................74
Section 9.11. Limitation on Transactions with Shareholders and Affiliates..............................75
Section 9.12. Limitation on Indebtedness...............................................................76
Section 9.13. Limitation on Issuance of Guarantees of Indebtedness.....................................77
Section 9.14. Other Agreements.........................................................................77
Section 9.15. Limitation on Liens......................................................................77
Section 9.16. Limitation on Certain Asset Dispositions.................................................77
Section 9.17. Restrictions on Secured Indebtedness.....................................................79
Section 9.18. Restrictions on Sales and Leasebacks.....................................................79
Section 9.19. Waiver of Certain Covenants..............................................................80
Section 9.20. Effect of Investment Grade Rating........................................................80
ARTICLE 10. REDEMPTION OF SECURITIES...................................................................80
</TABLE>
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Section 10.01. Right of Redemption......................................................................80
Section 10.02. Applicability of Article.................................................................81
Section 10.03. Election to Redeem; Notice to Trustee....................................................81
Section 10.04. Selection by Trustee of Securities to Be Redeemed........................................81
Section 10.05. Notice of Redemption.....................................................................82
Section 10.06. Deposit of Redemption Price..............................................................83
Section 10.07. Securities Payable on Redemption Date....................................................83
Section 10.08. Securities Redeemed in Part..............................................................83
Section 10.09. Offer to Purchase........................................................................83
ARTICLE 11...............................................................................................85
ARTICLE 12. CHANGE OF CONTROL TRIGGERING EVENT..........................................................85
Section 12.01. Change of Control Triggering Event.......................................................85
ARTICLE 13. DEFEASANCE AND COVENANT DEFEASANCE..........................................................85
Section 13.01. Company's Option to Effect Defeasance or Covenant Defeasance.............................85
Section 13.02. Defeasance and Discharge.................................................................85
Section 13.03. Covenant Defeasance......................................................................86
Section 13.04. Conditions to Defeasance or Covenant Defeasance..........................................86
Section 13.05. Deposited Money and U.S. Government Obligations to be Held in Trust
Other Miscellaneous Provisions...........................................................88
Section 13.06. Reinstatement............................................................................89
</TABLE>
EXHIBITS
--------
Exhibit A FORM OF SECURITY
Exhibit B CERTIFICATE OF TRANSFER
Exhibit C CERTIFICATE OF EXCHANGE
Exhibit D CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
v
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- --------------------------------------------------------------------------------
Clark Refining & Marketing, Inc.
TO
Bankers Trust Company
Trustee
_______________________
INDENTURE
Dated as of November 21, 1997
8 3/8% Senior Notes due 2007
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT A
(Face of Security)
CLARK REFINING & MARKETING, INC.
8 3/8% SENIOR NOTES DUE 2007
No. __________ $98,500,000
Clark Refining & Marketing, Inc., a corporation duly organized and
existing under the laws of Delaware (herein called the "Company," which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum set forth above or such other principal sum indicated on the
Schedule attached hereto (which shall not exceed $100,000,000) in United States
Dollars on November 15, 2007, and to pay interest at the rate of 8 3/8% per
annum from the Issue Date or from the most recent Interest Payment Date to which
interest has been paid or duly provided for in cash in arrears on each May 15
and November 15 to the person whose name the Security is registered at the close
of business on the May 1 or November 1 next preceding such Interest Payment
Date, until the principal hereof is paid or made available for payment;
provided, however, in the event that (i) the Company has not filed the
registration statement relating to the Exchange Offer within 90 days following
the Issue Date, or (ii) such registration statement has not become effective
within 180 days following the Issue Date, (iii) the resale registration
statement has not become effective within 105 days of the date on which the
obligation to file such resale registration statement arose, or (iv) the
Exchange Offer has not been consummated within 30 business days after the
effectiveness deadline of the Exchange Offer Registration Statement, (v) the
Company has not filed the resale registration statement within 45 days after the
obligation to file such resale registration statement arose, or (vi) any
registration statement required by the Registration Rights Agreement is filed
and declared effective but shall thereafter cease to be effective (except as
specifically permitted therein) without being succeeded within 30 days by an
additional registration statement filed and declared effective (any such event
referred to in Clauses (i) through (vi), the "Registration Default"), then, as
liquidated damages for such Registration Default, subject to the Registration
Rights Agreement, the per annum interest rate on the Notes will increase by
0.25% ("Special Interest") for the period from the occurrence of the
Registration Default until such time as no Registration Default is in effect (at
which time the interest rate will be reduced to its initial rate). If the
Company has not consummated the Exchange Offer (or, if applicable, the resale
registration has not become effective), within 270 days following the Issue
Date, then the per annum dividend rate on the Securities will increase by an
additional 0.25% for so long as the Company has not consummated the Exchange
Offer (or until such resale registration becomes effective).
Any accrued and unpaid interest on this Security upon the issuance of
an Exchange Note in exchange for this Security shall cease to be payable to the
Holder hereof but such accrued and unpaid interest shall be payable on the next
Interest Payment Date for such Exchange Note to the Holder thereof on the
related Regular Record Date.
A-1
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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 May 1 or November 1 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date at the
office or agency of the Company at New York, New York maintained for such
purpose and at any other office or agency maintained by the Company for such
purchase (any such location being called a "Place of Payment"); provided,
however, that at the option of the Company payment of interest may be made by
check to the address of the Person entitled thereto as such address shall appear
on the Security Register. Interest shall be payable in cash. Any such interest
not so punctually paid or duly provided, and interest on such defaulted interest
at the interest rate borne by the Securities, to the extent lawful, shall
forthwith cease to be payable to the Holder on such Regular Record Date and
shall 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 ("Special Record Date") for the payment of such defaulted interest
to be fixed by the Company with the consent of 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 (if applicable) of any securities exchange on
which the Securities may be listed, and upon such notice as may be required by
such securities exchange, all as more fully provided in said Indenture.
If this Security is a Global Security, all payments in respect of this
Security will be payable to the Global Security Holder in its capacity as the
registered Holder under the Indenture. If this Security is not a Global
Security, payment of the principal of, premium, if any, and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in the City and State of New York, 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, or at the option of the Company, payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register; provided,
however, that payment by wire transfer of immediately available funds will be
required with respect to principal of, premium, if any, and interest on, all
Global Securities and all other Securities the Holders of which shall have
provided wire transfer instructions to the Company or the Paying Agent.
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 executed by
the Trustee by manual signature, this Security shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose.
A-2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated: November 21, 1997
CLARK REFINING & MARKETING, INC.
By
-----------------------------
Name:
Title:
Certificate of Authentication
This is one of the 8 3/8% Senior Notes due 2007 referred to in the
within-mentioned Indenture.
BANKERS TRUST COMPANY,
as Trustee
By:
-----------------------------
Authorized Signatory
A-3
<PAGE>
(Back of Security)
THIS GLOBAL NOTE IS HELD BY THE DEPOSITORY (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 SECTION 2.06 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 DEPOSITORY WITH THE PRIOR WRITTEN CONSENT OF
THE COMPANY.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") AND, ACCORDINGLY, MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS NOT A U.S.
PERSON, IS NOT ACQUIRING THIS NOTE FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON
AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER
THE SECURITIES ACT) (AN "IAI"), (2) AGREES THAT IT WILL NOT, WITHIN THE TIME
PERIOD REFERRED TO UNDER RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF RULE
144(d) UNDER THE SECURITIES ACT, IF APPLICABLE) UNDER THE SECURITIES ACT AS IN
EFFECT ON THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR OTHERWISE TRANSFER
THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A PERSON
WHOM THE HOLDER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QIB IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE
904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (E) TO AN IAI
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE REGISTRATION
OF TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN
INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
A-4
<PAGE>
LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE OR ANY INTEREST HEREIN
WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE
BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND
SUBMIT THIS CERTIFICATE TO THE TRUSTEE. EACH IAI THAT IS NOT A QIB WILL BE
REQUIRED TO EFFECT ANY TRANSFER OF NOTES OR INTERESTS THEREIN (OTHER THAN
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT) THROUGH ONE OF THE INITIAL
PURCHASERS. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES"
AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S
UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE
FOREGOING RESTRICTIONS.
This Security is one of a duly authorized issue of securities of the
Company designated as its 8 3/8% Senior Notes due 2007 (herein called the
"Securities"), issued and to be issued in one or more series under an Indenture,
dated as of November 21, 1997 (as it may from time to time be supplemented or
amended by one or more supplemental indentures, herein called the "Indenture"),
between the Company and Bankers Trust Company, as Trustee (herein called the
"Trustee," which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company and the Trustee of the Securities and of
the terms upon which the Securities are, and are to be, authenticated and
delivered. This issue of Securities is limited in aggregate principal amount to
$100,000,000.
The Securities are subject to redemption at the option of the Company,
in whole or in part at any time on or after November 15, 2002, upon not less
than 30 nor more than 60 days' notice mailed to each holder of Securities to be
redeemed at such holder's address appearing on the Company' Securities
Registrar, in principal amounts of $1,000 or an integral multiple of $1,000, at
the following redemption prices (expressed as percentages of the principal
amount) if redeemed during the 12-month period commencing on November 15 of each
of the years set forth below, plus, in each case, interest accrued thereon to,
but excluding, the date of redemption.
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2002 104.187%
2003 102.094%
2004 and thereafter 100.000%
</TABLE>
In addition, the Company may, at its option, use the net cash proceeds
of one or more Equity Offerings to the extent the net cash proceeds thereof are
contributed to the equity capital of the Company to redeem for cash up to 35% in
aggregate principal amount of the Securities originally issued under the
Indenture at any time prior to November 15, 2001, at a redemption price equal to
108.375% of the aggregate principal amount so redeemed, plus accrued interest,
including Special Interest, to the Redemption Date; provided that at least 65%
of the principal amount of Securities originally issued remain outstanding
immediately after such
A-5
<PAGE>
redemption. Any such redemption shall be required to occur on or prior to 120
days after the receipt by the Company of the Net Available Proceeds of such
Equity Offering and upon not less than 30 nor more than 60 days' notice mailed
to each holder of Securities to be redeemed at such holder's address appearing
in the Company's Security Register, in principal amounts of $1,000 or an
integral multiple of $1,000. The Company may not use the Net Available Proceeds
of any Equity Offerings which alone or combined with a related series of
transactions result in a Change of Control to redeem Securities pursuant to this
paragraph.
If less than all of the Securities are to be redeemed at any time, the
Trustee shall select, in such manner as it shall deem fair and appropriate, the
particular Securities to be redeemed; provided that Securities redeemed in part
will only be redeemed in integral multiples of $1,000.
The Indenture provides that, subject to certain conditions, if (i)
certain Net Available Proceeds are available to the Company as a result of Asset
Dispositions or (ii) a Change of Control Triggering Event occurs, the Company
shall be required to make an Offer to purchase for some or all of the Securities
in accordance with the terms of the Indenture.
The Indenture contains provisions for defeasance at any time of (i)
the entire indebtedness of this Security or (ii) certain restrictive covenants
and Events of Default with respect to this Security, in each case upon
compliance with certain conditions set forth therein.
In the event of redemption or purchase pursuant to a mandatory offer
to purchase of this Security in part only, a new Security or Securities for the
unredeemed or unpurchased portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof.
If an Event of Default shall occur and be continuing, the principal of
the Securities may be declared due and payable in the manner and with the effect
provided in the Indenture.
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 rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of a
majority in principal amount of the Securities at the time Outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities at the time Outstanding, on
behalf of the Holders of all Securities, to waive compliance by the Company with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. The Indenture also provides that, without
notice to or consent of any Holder, the Company and the Trustee may enter into
one or more supplemental indentures to, among other things, cure any ambiguity,
defect or inconsistency, provide for uncertificated securities in addition to or
in place of certificated Securities, or make any other change, in each case,
that does not adversely affect the rights of any Holder of a Security in any
material respect. Any such consent or waiver by the Holder of this Security
shall be conclusive and binding upon such Holder and upon all 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.
A-6
<PAGE>
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) and
interest, including Special Interest, if any, on this Security at the times,
place and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture, the transfer of this Security is
registrable in the Security Register, upon surrender of this Security for
registration of transfer at the office or agency of the Company in any place
where the principal of (and premium, if any) and interest, including Special
Interest, if any, on this Security are payable, 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 $100,000 and any integral multiples of $1,000. As provided in
the Indenture and subject to certain limitations therein set forth, 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 to the Holder for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Company, 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 be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
No director, officer, employee, stockholder or incorporator, as such, of
the Company shall have any liability for any obligations of the Company under
the Securities or the Indenture for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. Such waiver and release are
part of the consideration for the issuance of the Securities.
Interest on this Security shall be computed on the basis of a 360-day year
comprised of twelve 30-day months.
All terms used in this Security that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
The Indenture and this Security shall be governed by and construed in
accordance with the laws of the State of New York (without giving effect to
conflicts of law principles thereof).
A-7
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased in its entirety by the
Company pursuant to Sections 10.09 and 9.16 of the Indenture, check the box: [_]
If you want to elect to have only a part of this Security purchased by the
Company pursuant to Sections 10.09 and 9.16 of the Indenture, state the amount
(which must be $1,000 or integral multiples thereof): $____________________.
Dated: ___________ Your Signature: _________________________________
(Sign exactly as name appears on the other side of this Security)
Signature Guarantee: ___________________________________________________
(Signature must be guaranteed by a member firm
of a national securities exchange or a commercial
bank or trust company)
A-8
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign and transfer
this Security 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 Security on the books of the Company. The agent may substitute
another to act for him.
Dated: _________ Your Signature: _________________________________
(Sign exactly as name appears on the other side of this Security)
Signature Guarantee:
A-9
<PAGE>
SCHEDULE OF EXCHANGES OF SECURITIES
The following exchanges of a part of this Global Note for another Global
Note or for Definitive Securities have been made:
<TABLE>
<S> <C> <C> <C> <C>
Principal Amount of Signature of
Amount of decrease in Amount of increase in this Global Security authorized officer of
Principal Amount of Principal Amount of following such decrease Trustee or Security
Date of Exchange this Global Security this Global Security (or increase) Custodian
- ---------------- --------------------- --------------------- ----------------------- ---------------------
</TABLE>
A-10
<PAGE>
EXHIBIT A-1
(Face of Temporary Global Security)
CLARK REFINING & MARKETING, INC.
8 3/8% SENIOR NOTES DUE 2007
No. __________ $1,500,000
Clark Refining & Marketing, Inc., a corporation duly organized and
existing under the laws of Delaware (herein called the "Company," which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of up to $100,000,000 in United States Dollars on November 15,
2007, and to pay interest at the rate of 8 3/8% per annum from the Issue Date or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for in cash in arrears on each May 15 and November 15 to the
person whose name the Security is registered at the close of business on the May
1 or November 1 next preceding such Interest Payment Date, until the principal
hereof is paid or made available for payment; provided, however, in the event
that (i) the Company has not filed the registration statement relating to the
Exchange Offer within 90 days following the Issue Date, or (ii) such
registration statement has not become effective within 180 days following the
Issue Date, (iii) the resale registration statement has not become effective
within 105 days of the date on which the obligation to file such resale
registration statement arose, or (iv) the Exchange Offer has not been
consummated within 30 business days after the effectiveness deadline of the
Exchange Offer Registration Statement, (v) the company has not filed the resale
registration statement within 45 days after the obligation to file such resale
registration statement arose, or (vi) any registration statement required by the
Registration Rights Agreement is filed and declared effective but shall
thereafter cease to be effective (except as specifically permitted therein)
without being succeeded within 30 days by an additional registration statement
filed and declared effective (any such event referred to in Clauses (i) through
(vi), the "Registration Default"), then, as liquidated damages for such
Registration Default, subject to the Registration Rights Agreement, the per
annum interest rate on the Notes will increase by 0.25% ("Special Interest") for
the period from the occurrence of the Registration Default until such time as no
Registration Default is in effect (at which time the interest rate will be
reduced to its initial rate). If the Company has not consummated the Exchange
Offer (or, if applicable, the resale registration has not become effective),
within 270 days following the Issue Date, then the per annum dividend rate on
the Securities will increase by an additional 0.25% for so long as the Company
has not consummated the Exchange Offer (or until such resale registration
becomes effective).
Any accrued and unpaid interest on this Security upon the issuance of
an Exchange Note in exchange for this Security shall cease to be payable to the
Holder hereof but such accrued and unpaid interest shall be payable on the next
Interest Payment Date for such Exchange Note to the Holder thereof on the
related Regular Record Date.
A-1-1
<PAGE>
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 May 1 or November 1 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date at the
office or agency of the Company at New York, New York maintained for such
purpose and at any other office or agency maintained by the Company for such
purchase (any such location being called a "Place of Payment"); provided,
however, that at the option of the Company payment of interest may be made by
check to the address of the Person entitled thereto as such address shall appear
on the Security Register. Interest shall be payable in cash. Any such interest
not so punctually paid or duly provided, and interest on such defaulted interest
at the interest rate borne by the Securities, to the extent lawful, shall
forthwith cease to be payable to the Holder on such Regular Record Date and
shall 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 ("Special Record Date") for the payment of such defaulted interest
to be fixed by the Company with the consent of 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 (if applicable) of any securities exchange on
which the Securities may be listed, and upon such notice as may be required by
such securities exchange, all as more fully provided in said Indenture.
If this Security is a Global Security, all payments in respect of this
Security will be payable to the Global Security Holder in its capacity as the
registered Holder under the Indenture. If this Security is not a Global
Security, payment of the principal of, premium, if any, and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in the City and State of New York, 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, or at the option of the Company, payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register; provided,
however, that payment by wire transfer of immediately available funds will be
required with respect to principal of, premium, if any, and interest on, all
Global Securities and all other Securities the Holders of which shall have
provided wire transfer instructions to the Company or the Paying Agent.
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 executed by
the Trustee by manual signature, this Security shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose.
A-1-2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated: November 21, 1997
CLARK REFINING & MARKETING, INC.
By __________________________
Name:
Title:
Certificate of Authentication
Dated: November 21, 1997
This is one of the 8 3/8% Senior Notes due 2007 referred to in the
within-mentioned Indenture.
BANKERS TRUST COMPANY,
as Trustee
By: _____________________________
Authorized Signatory
A-1-3
<PAGE>
(Back of Temporary Global Note)
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR BENEFICIAL INTERESTS IN THE
REGULATION S PERMANENT GLOBAL NOTE, ARE AS SPECIFIED IN THE INDENTURE (AS
DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION
S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON.
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITORY (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 SECTION 2.06 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 DEPOSITORY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY."
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS NOT A U.S.
PERSON, IS NOT ACQUIRING THIS NOTE FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON
AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER
THE SECURITIES ACT) (AN "IAI"), (2) AGREES THAT IT WILL NOT, WITHIN THE TIME
PERIOD REFERRED TO UNDER RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF RULE
144(d) UNDER THE SECURITIES ACT, IF APPLICABLE) UNDER THE SECURITIES ACT AS IN
EFFECT ON THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR OTHERWISE TRANSFER
THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A PERSON
WHOM THE HOLDER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QIB IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE
904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (E) TO AN IAI
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING
A-1-4
<PAGE>
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE REGISTRATION OF TRANSFER
OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) OR (F)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN
EACH CASE, IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, AND (3) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION
WITH ANY TRANSFER OF THIS NOTE OR ANY INTEREST HEREIN WITHIN THE TIME PERIOD
REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE
REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS
CERTIFICATE TO THE TRUSTEE. EACH IAI THAT IS NOT A QIB WILL BE REQUIRED TO
EFFECT ANY TRANSFER OF NOTES OR INTERESTS THEREIN (OTHER THAN PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT) THROUGH ONE OF THE INITIAL PURCHASERS. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT.
THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS."
This Security is one of a duly authorized issue of securities of the
Company designated as its 8 3/8% Senior Notes due 2007 (herein called the
"Securities"), issued and to be issued in one or more series under an Indenture,
dated as of November 21, 1997 (as it may from time to time be supplemented or
amended by one or more supplemental indentures, herein called the "Indenture"),
between the Company and Bankers Trust Company, as Trustee (herein called the
"Trustee," which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company and the Trustee of the Securities and of
the terms upon which the Securities are, and are to be, authenticated and
delivered. This issue of Securities is limited in aggregate principal amount to
$100,000,000.
The Securities are subject to redemption at the option of the Company,
in whole or in part at any time on or after November 15, 2002, upon not less
than 30 nor more than 60 days' notice mailed to each holder of Securities to be
redeemed at such holder's address appearing on the Company' Securities
Registrar, in principal amounts of $1,000 or an integral multiple of $1,000, at
the following redemption prices (expressed as percentages of the principal
amount) if redeemed during the 12-month period commencing on November 15 of each
of the years set forth below, plus, in each case, interest accrued thereon to,
but excluding, the date of redemption.
A-1-5
<PAGE>
Year Percentage
---- ----------
2002 104.187%
2003 102.094%
2004 and thereafter 100.000%
In addition, the Company may, at its option, use the net cash proceeds
of one or more Equity Offerings to the extent the net cash proceeds thereof are
contributed to the equity capital of the Company to redeem for cash up to 35% in
aggregate principal amount of the Securities originally issued under the
Indenture at any time prior to November 15, 2001, at a redemption price equal to
108.375% of the aggregate principal amount so redeemed, plus accrued interest,
including Special Interest, to the Redemption Date; provided that at least 65%
of the principal amount of Securities originally issued remain outstanding
immediately after such redemption. Any such redemption shall be required to
occur on or prior to 120 days after the receipt by the Company of the Net
Available Proceeds of such Equity Offering and upon not less than 30 nor more
than 60 days' notice mailed to each holder of Securities to be redeemed at such
holder's address appearing in the Company's Security Register, in principal
amounts of $1,000 or an integral multiple of $1,000. The Company may not use the
Net Available Proceeds of any Equity Offerings which alone or combined with a
related series of transactions result in a Change of Control to redeem
Securities pursuant to this paragraph.
If less than all of the Securities are to be redeemed at any time, the
Trustee shall select, in such manner as it shall deem fair and appropriate, the
particular Securities to be redeemed; provided that Securities redeemed in part
will only be redeemed in integral multiples of $1,000.
The Indenture provides that, subject to certain conditions, if (i)
certain Net Available Proceeds are available to the Company as a result of Asset
Dispositions or (ii) a Change of Control Triggering Event occurs, the Company
shall be required to make an Offer to purchase for some or all of the Securities
in accordance with the terms of the Indenture.
The Indenture contains provisions for defeasance at any time of (i)
the entire indebtedness of this Security or (ii) certain restrictive covenants
and Events of Default with respect to this Security, in each case upon
compliance with certain conditions set forth therein.
In the event of redemption or purchase pursuant to a mandatory offer
to purchase of this Security in part only, a new Security or Securities for the
unredeemed or unpurchased portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof.
If an Event of Default shall occur and be continuing, the principal of
the Securities may be declared due and payable in the manner and with the effect
provided in the Indenture.
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 rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of a
majority in principal amount of the Securities at the
A-1-6
<PAGE>
time Outstanding. The Indenture also contains provisions permitting the Holders
of specified percentages in principal amount of the Securities at the time
Outstanding, on behalf of the Holders of all Securities, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. The Indenture also provides that,
without notice to or consent of any Holder, the Company and the Trustee may
enter into one or more supplemental indentures to, among other things, cure any
ambiguity, defect or inconsistency, provide for uncertificated securities in
addition to or in place of certificated Securities, or make any other change, in
each case, that does not adversely affect the rights of any Holder of a Security
in any material respect. Any such consent or waiver by the Holder of this
Security shall be conclusive and binding upon such Holder and upon all 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.
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) and
interest, including Special Interest, if any, on this Security at the times,
place and rate, and in the coin or currency, herein prescribed.
Until this Regulation S Temporary Global Note is exchanged for one or
more Regulation S Permanent Global Notes, the Holder hereof shall not be
entitled to receive payments of interest hereon; until so exchanged in full,
this Regulation S Temporary Global Note shall in all other respects be entitled
to the same benefits as other Notes under the Indenture.
As provided in the Indenture, the transfer of this Security is
registrable in the Security Register, upon surrender of this Security for
registration of transfer at the office or agency of the Company in any place
where the principal of (and premium, if any) and interest, including Special
Interest, if any, on this Security are payable, 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 $100,000 and any integral multiples of $1,000. As provided in
the Indenture and subject to certain limitations therein set forth, Securities
are exchangeable for a like aggregate principal amount of Securities of a
different authorized denomination, as requested by the Holder surrendering the
same.
This Regulation S Temporary Global Note is exchangeable in whole or in
part for one or more Global Notes only (i) on or after the termination of the
40-day restricted period (as defined in Regulation S) and (ii) upon presentation
of certificates (accompanied by an Opinion of Counsel, if applicable) required
by Article 2 of the Indenture. Upon exchange of this Regulation S Temporary
Global Note for one or more Global Notes, the Trustee shall cancel this
Regulation S Temporary Global Note.
A-1-7
<PAGE>
No service charge shall be made to the Holder for any such
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, 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 be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
No director, officer, employee, stockholder or incorporator, as such,
of the Company shall have any liability for any obligations of the Company under
the Securities or the Indenture for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. Such waiver and release are
part of the consideration for the issuance of the Securities.
Interest on this Security shall be computed on the basis of a 360-day
year comprised of twelve 30-day months.
All terms used in this Security that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
The Indenture and this Security shall be governed by and construed in
accordance with the laws of the State of New York (without giving effect to
conflicts of law principles thereof).
A-1-8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased in its entirety
by the Company pursuant to Sections 10.09 and 9.16 of the Indenture, check the
box: [_]
If you want to elect to have only a part of this Security purchased by
the Company pursuant to Sections 10.09 and 9.16 of the Indenture, state the
amount (which must be $1,000 or integral multiples thereof):
$____________________.
Dated: ___________ Your Signature: _________________________________
(Sign exactly as name appears on the other side of this Security)
Signature Guarantee: ___________________________________
(Signature must be guaranteed by a member firm
of a national securities exchange or a commercial
bank or trust company)
A-1-9
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign and transfer
this Security 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 Security on the books of the Company. The agent may substitute
another to act for him.
Dated: _________ Your Signature: _________________________________
(Sign exactly as name appears on the other side of this Security)
Signature Guarantee:
A-1-10
<PAGE>
SCHEDULE OF EXCHANGES OF SECURITIES
The following exchanges of a part of this Regulation S Temporary Global
Note for an interest in another Global Note or for Definitive Securities, or of
other Restricted Global Notes or Definitive Securities for an interest in this
Regulation S Temporary Global Note, have been made:
<TABLE>
<S> <C> <C> <C> <C>
Principal Amount of Signature of
Amount of decrease in Amount of increase in this Global Security authorized officer of
Date of Exchange Principal Amount of Principal Amount of following such decrease Trustee or Security
- ------------------- this Global Security this Global Security (or increase) Custodian
--------------------- ----------------------- ----------------------- ---------------------
</TABLE>
A-1-11
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Clark Refining & Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 631105
Bankers Trust Company
Four Albany Street
New York, New York 10006
Re: Clark Refining & Marketing, Inc. ____________________ [notes]
Reference is hereby made to the Indenture with respect to the above-
referenced securities, dated as of November 21, 1997 (the "Indenture"), between
Clark Refining & Marketing, Inc., as issuer (the "Company"), and Bankers Trust
Company, 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 Note[s] specified in Annex A hereto, in the
principal amount of U.S. $_________ 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 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 Permanent 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,
B-1
<PAGE>
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, (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 Permanent Global Note,
the Regulation S Temporary 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 beneficial
interest in the IAI Global Note or 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;
or
(d) [_] such Transfer is being effected to an Institutional
Accredited Investor and pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904,
and the Transferor hereby further certifies that it has not engaged in any
general solicitation within the meaning of Regulation D under the Securities Act
and the Transfer complies with the transfer restrictions applicable to
beneficial
B-2
<PAGE>
interests in a Restricted Global Note or Restricted Definitive Notes and the
requirements of the exemption claimed, which certification is supported by (1) a
certificate executed by the Transferee in the form of Exhibit D to the Indenture
and (2) if such Transfer is in respect of a principal amount of Notes at the
time of transfer of less than U.S. $250,000, an Opinion of Counsel provided by
the Transferor or the Transferee (a copy of which the Transferor has attached to
this certification), to the effect that such Transfer is in 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 be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the IAI Global Note and/or the Definitive Notes and
in the Indenture and the Securities Act.
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 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, 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.
B-3
<PAGE>
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-4
<PAGE>
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
(iii) [_] IAI 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) [_] IAI Global Note (CUSIP ________); or
(iv) [_] Unrestricted Global Note (CUSIP ________); or
(b) [_] a Restricted Definitive Note; or
(c) [_] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-5
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Clark Refining & Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 631105
Bankers Trust Company
Four Albany Street
New York, New York 10006
Re: Clark Refining & Marketing, Inc. ____________________ [notes]
(CUSIP ______________)
Reference is hereby made to the Indenture with respect to the above-
referenced securities, dated as of November 21, 1997 (the "Indenture"), between
Clark Refining & Marketing, Inc., as issuer (the "Company"), and Bankers Trust
Company, 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 U.S.
$____________ 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 Unrestricted Global Note is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.
C-1
<PAGE>
(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 beneficial 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 restrictions on transfer enumerated in
the Private Placement Legend printed on the Restricted Definitive Note and in
the Indenture and the Securities Act.
C-2
<PAGE>
(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, ___ IAI 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
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Clark Refining & Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 631105
Bankers Trust Company
Four Albany Street
New York, New York 10006
Re: Clark Refining & Marketing, Inc. ________________________ [notes]
Reference is hereby made to the Indenture with respect to the
above-referenced securities, dated as of November 21, 1997 (the "Indenture"),
between Clark Refining & Marketing, Inc., as issuer (the "Company"), and Bankers
Trust Company, as trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
In connection with our proposed purchase of U.S. $____________
aggregate principal amount of:
(a) [_] a beneficial interest in a Global Note, or
(b) [_] a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or
any interest therein is subject to certain restrictions and conditions set forth
in the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not
been registered under the Securities Act, and that the Notes and any interest
therein may not be offered or sold except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for which we
are acting as hereinafter stated, that if we should sell the Notes or any
interest therein, we will do so only (A) to the Company or any subsidiary
thereof, (B) in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein), (c) to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a U.S. broker-dealer) to you and to the
D-1
<PAGE>
Company a signed letter substantially in the form of this letter and, if such
transfer is in respect of a principal amount of Notes, at the time of transfer
of less than U.S. $250,000, an Opinion of Counsel in form reasonably acceptable
to the Company to the effect that such transfer is in compliance with the
Securities Act, (D) outside the United States in accordance with Rule 904 of
Regulation S under the Securities Act, (E) pursuant to the provisions of Rule
144(k) under the Securities Act or (F) pursuant to an effective registration
statement under the Securities Act, and we further agree to provide to any
person purchasing the Definitive Note or beneficial interest in a Global Note
from us in a transaction meeting the requirements of clauses (A) through (E) of
this paragraph a notice advising such purchaser that resales thereof are
restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by us
will bear a legend to the foregoing effect. We further understand that any
subsequent transfer by us of the Notes or beneficial interest therein acquired
by us must be effected through one of the Placement Agents.
4. We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Notes, and
we and any accounts for which we are acting are each able to bear the economic
risk of our or its investment.
5. We are acquiring the Notes or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this letter and 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.
-----------------------------------
[Insert Name of Owner]
By:
-----------------------------------
Name:
Title:
Dated: ________________, ____
D-2
<PAGE>
EXHIBIT 4.6
INDENTURE, dated as of November 21, 1997 between Clark Refining &
Marketing, Inc., a corporation duly organized and existing under the laws of the
State of Delaware (herein called the "Company"), having its principal office at
8182 Maryland Avenue, St. Louis, Missouri, 63105, and Marine Midland Bank, a New
York banking corporation and trust company, as Trustee (herein called the
"Trustee").
RECITALS
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured, senior
subordinated debentures, notes or other evidences of indebtedness (herein called
the "Initial Notes"), to be issued in one or more series as in this Indenture
provided which, subject to certain conditions, are exchangeable for notes that
are registrable under the Securities Act (the "Exchange Notes" and together with
the Initial Notes, the "Notes" or the "Securities").
All things necessary 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, and to make this Indenture a
valid agreement of the Company, in accordance with their and its terms, have
been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities or of series thereof, as
follows:
ARTICLE 1.
----------
DEFINITIONS AND OTHER PROVISIONS
--------------------------------
OF GENERAL APPLICATION
----------------------
Section 1.01. Definitions
-----------
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean
<PAGE>
such accounting principles as are generally accepted and consistently
applied in the United States which are in effect on the date of this
Indenture; and
(4) 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.
"9 1/2% Notes" means the Company's 9 1/2% Senior Notes due 2004.
"10 1/2% Notes" means the Company's 10 1/2% Senior Notes due 2001.
"10 7/8 % Notes" means the 10 7/8 % Senior Notes due 2005 of Clark USA.
"144A Global Note" means a 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 Depository 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.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Act", when used with respect to any Holder, has the meaning specified in
Section 1.04.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"AOC Payment" means all payments made to AOC Limited Partnership, a limited
partnership organized under the laws of the State of Missouri, constituting
"Additional Redemption Consideration" required to be paid by Clark USA pursuant
to Section 2.4 of the Stock Purchase and Redemption Agreement.
"Applicable Procedures" means, with respect to any transfer or exchange of
or for beneficial interests in any Global Security, the rules and procedures of
the Depository, Euroclear and Cedel that apply to such transfer or exchange.
"Asset Disposition" by any Person means any transfer, conveyance, sale,
lease or other disposition by such Person or any of its Restricted Subsidiaries
(including a consolidation or
2
<PAGE>
merger or other sale of any such Restricted Subsidiaries with, into or to
another Person in a transaction in which such Restricted Subsidiary ceases to be
a Restricted Subsidiary, but excluding a disposition by a Restricted Subsidiary
of such Person to such Person or a Restricted Subsidiary of such Person or by
such Person to a Restricted Subsidiary of such Person) of (i) shares of Capital
Stock (other than directors' qualifying shares) or other ownership interests of
a Restricted Subsidiary of such Person, (ii) substantially all of the assets of
such Person or any of its Restricted Subsidiaries representing a division or
line of business or (iii) other assets or rights of such Person or any of its
Restricted Subsidiaries outside of the ordinary course of business, which in the
case of either clause (i), (ii) or (iii), whether in a single transaction or a
series of related transactions, result in Net Available Proceeds in excess of
$10 million; provided that (x) any transfer, conveyance, sale, lease or other
disposition of assets securing the Credit Agreement in connection with the
enforcement of the security interests therein and (y) any sale of crude oil
pursuant to the contracts governing the transactions contemplated by the Gulf
Merger Agreement and the Gulf Oil Purchase Contract shall not be deemed an Asset
Disposition hereunder.
"Asset Disposition Trigger Date" has the meaning as specified in
Section 9.16.
"Attributable Indebtedness" means the total net amount of rent required to
be paid during the remaining primary term of any particular lease under which
any person is at the time liable, discounted at the rate per annum equal to the
weighted average interest rate borne by the Notes.
"Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 5.15 to act on behalf of the Trustee to authenticate Securities of
one or more series.
"Blackstone" means Blackstone Capital Partners III Merchant Banking Fund
L.P. and its affiliates.
"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 the Board
of Directors and to be in full force and effect on the date of such
certification, and set forth in an Officers' Certificate delivered to the
Trustee.
"Blackstone Transaction" means the acquisition of 13,500,000 shares of
common stock of Clark USA previously held by Trizec Hahn Corporation and certain
of its subsidiaries.
"Borrowing Base" means, as of any date, an amount equal to the sum of (i)
95% of the accounts receivable owned by the Company and its Restricted
Subsidiaries (excluding any accounts receivable from Restricted Subsidiaries and
any accounts receivable that are more than 90 days past due) as of such date,
plus (ii) 90% of the market value of inventory owned by the Company and its
Restricted Subsidiaries as of such date, plus (iii) 100% of the cash and Cash
Equivalents owned by the Company and its Restricted Subsidiaries as of such date
that are, as of such date, held in one or more separate accounts under the
direct control of the agent bank under the Credit Agreement and that are as of
such date pledged to secure working capital borrowings under the Credit
Agreement, minus (iv) the principal amount of borrowings outstanding as of such
date under the Credit Agreement to the extent that the amount of such borrowings
exceeds
3
<PAGE>
the sum of clauses (i) and (ii) above, all of the foregoing calculated on a
consolidated basis in accordance with GAAP.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in the Borough of Manhattan,
City of New York, are authorized or obligated by law, regulation or executive
order to close.
"Capital Lease" means, at the time any determination thereof is to be made,
any lease of property, real or personal or mixed, in respect of which the
present value of the minimum rental commitment would be capitalized on a balance
sheet of the lessee in accordance with GAAP.
"Capitalized Lease Obligation" of any Person means any lease of any
property (whether real, personal or mixed) by such Person as lessee which, in
conformity with GAAP, is required to be accounted for as a Capital Lease on the
balance sheet of that Person.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of any association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock and (iii) in the case of a partnership, partnership interests
(whether general or limited).
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof, (iii) certificates of deposit and
eurodollar time deposits with maturities of six months or less from the date of
acquisition, bankers' acceptances with maturities not exceeding six months and
overnight bank deposits, in each case with any domestic commercial bank having
capital and surplus in excess of $500 million and a Keefe Bank Watch Rating of
"B" or better, (iv) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clauses (ii) and (iii)
entered into with any financial institution meeting the qualifications specified
in clause (iii) above and (v) commercial paper having the highest rating
obtainable from Moody's or S&P and, in each case, maturing within six months
after the date of acquisition.
"Cedel Bank" means Cedel Bank, SA.
"Change of Control" means any transaction the result of which is that any
Person (an "Acquiring Person") other than Blackstone, or a Person a majority of
whose voting equity is owned by Blackstone, becomes the Beneficial Owner,
directly or indirectly, of shares of stock of the Company or Clark USA entitling
such Acquiring Person to exercise 50% or more of the total voting power of all
classes of stock of the Company or Clark USA, as the case may be, entitled to
vote in elections of directors. The term "Beneficial Owner" shall be determined
in accordance with Rule 13d-3 under the Exchange Act.
"Change of Control Triggering Event" means the occurrence of a Change of
Control resulting in a Rating Decline.
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"Chevron Payment" means that certain contingent payment obligation of Clark
USA to Chevron U.S.A. Inc. based on industry refining margins and the volume of
refined oil products produced at the Port Arthur Refinery over a five-year
period, pursuant to Section 3.1(d) of the Asset Purchase Agreement, dated as of
August 18, 1994, between Clark USA and Chevron U.S.A. Inc., as amended.
"Clark USA" means Clark USA, Inc., a Delaware corporation and the direct
parent of the Company.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or, if at
any time after the execution of this instrument 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.
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President or a Vice President, and by its Treasurer,
an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered
to the Trustee.
"Consolidated Adjusted Net Worth" of any Person means the total amount of
consolidated stockholder's equity (par value plus additional paid-in capital
(including all Capital Stock except as excluded below) plus retained earnings or
minus accumulated deficit) of such Person as reflected on the consolidated
balance sheet of such Person and its Restricted Subsidiaries for the most recent
Quarter prior to the event requiring such determination to be made, after
excluding (to the extent otherwise included therein and without duplication) the
following (the amount of such stockholder's equity and deductions therefrom to
be computed, except as noted below, in accordance with GAAP consistently
applied): (i) any amount receivable but not paid from sales of Capital Stock of
such Person or its Restricted Subsidiaries determined on a consolidated basis;
(ii) any revaluation or other write-up in book value of assets subsequent to the
date hereof (other than write-ups of oil inventory previously written down and
other than reevaluations or write-ups upon the acquisition of assets acquired in
a transaction to be accounted for by purchase accounting under GAAP); (iii)
treasury stock; (iv) an amount equal to the excess, if any, of the amount
reflected on the books and records of such Person or its Restricted Subsidiaries
for the securities of any Person which is not a Restricted Subsidiary of such
Person over the lesser of cost or market value (as determined in good faith by
the board of directors of such Person or such Restricted Subsidiary); (v)
Disqualified Capital Stock; (vi) equity securities of such Person or its
Restricted Subsidiaries which are not Disqualified Capital Stock but which are
exchangeable for or convertible into debt securities of such Person or such
Restricted Subsidiary, as the case may be, other than at the option of such
Person or such Restricted Subsidiary except to the extent that the exchange or
conversion rights in such other equity securities cannot, under any
circumstances, be exercised prior to Maturity; (vii) the cumulative foreign
currency translation
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adjustment, if any; and (viii) write-offs of non-cash items in an amount not to
exceed $80 million.
"Consolidated Net Operating Income" means, when used with reference to any
Person, for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP, provided that (i) the Net Income of any Person which is
not a Subsidiary of such Person or is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid to such Person or its Restricted Subsidiaries, (ii) the Net
Income of any Unrestricted Subsidiary shall be excluded (except to the extent
distributed to the Company or one of its Subsidiaries), (iii) the Net Income of
any Person acquired in a pooling of interests transaction for any period prior
to the date of such acquisition shall be excluded, (iv) extraordinary gains and
losses and gains and losses from the sale of assets outside the ordinary course
of such Person's business shall be excluded, (v) the cumulative effect of
changes in accounting principles in the year of adoption of such changes shall
be excluded and (vi) the tax effect of any of the items described in clauses (i)
through (v) above shall be excluded.
"Consolidated Net Tangible Assets" of a Person means the consolidated total
assets of such Person and its Restricted Subsidiaries determined in accordance
with GAAP, less the sum of (i) all current liabilities and current liability
items, and (ii) all goodwill, trade names, trademarks, patents, organization
expense, unamortized debt discount and expense and other similar intangibles
properly classified as intangibles in accordance with GAAP.
"Consolidated Operating Cash Flow" means with respect to any Person,
Consolidated Net Operating Income of such Person and its Restricted Subsidiaries
without giving effect to gains and losses on securities transactions (net of
related taxes) for the period described below, increased by the sum of (i)
consolidated Fixed Charges of such Person and its Restricted Subsidiaries which
reduced Consolidated Net Operating Income for such period, (ii) consolidated
income tax expense (net of taxes relating to gains and losses on securities
transactions) of such Person and its Restricted Subsidiaries which reduced
Consolidated Net Operating Income for such period, (iii) consolidated
depreciation and amortization expense (including amortization of purchase
accounting adjustments) of such Person and its Restricted Subsidiaries and other
noncash items to the extent any of which reduced Consolidated Net Operating
Income for such period, (iv) expenses incurred in connection with the Blackstone
Transaction in an amount not to exceed $9 million, and (v) any annual management
monitoring, consulting and advisory fees and related expenses paid to Blackstone
and its affiliates in an amount not to exceed $2 million, less noncash items
which increased Consolidated Net Operating Income for such period, all as
determined for such Person and its consolidated Restricted Subsidiaries in
accordance with GAAP for the four full Quarters for which financial information
in respect thereof is available immediately prior to the Transaction Date.
"Consolidated Operating Cash Flow Ratio" means, with respect to any Person,
the ratio of (i) Consolidated Operating Cash Flow of such Person and its
Restricted Subsidiaries for the four Quarters for which financial information in
respect thereof is available immediately prior to the Transaction Date to (ii)
the aggregate Fixed Charges of such Person and its Restricted Subsidiaries for
such four Quarters, such Fixed Charges to be calculated on the basis of the
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amount of the Indebtedness and Capitalized Lease Obligations of such Person and
its Restricted Subsidiaries outstanding on the Transaction Date and assuming the
continuation of market interest rate levels prevailing on the Transaction Date
in any calculation of interest rates in respect of floating interest rate
obligations; provided, however, that if such Person or any Restricted Subsidiary
of such Person shall have acquired, sold or otherwise disposed of any Material
Asset or engaged in an Equity Offering during the four full Quarters for which
financial information in respect thereof is available immediately prior to the
Transaction Date or during the period from the end of such fourth full Quarter
to and including the Transaction Date, the calculation required in clause (i)
above will be made giving effect to such acquisition, sale or disposition or the
other investment of the Net Available Proceeds of such Equity Offering on a pro
forma basis as if such acquisition, sale, disposition or investment had occurred
at the beginning of such four full Quarter period without giving effect to
clause (iii) of the definition of "Consolidated Net Operating Income" (that is,
including in such calculation the Net Income for the relevant prior period of
any Person acquired in a pooling of interests transaction, notwithstanding the
provisions of said clause (iii)); provided, further, that Fixed Charges of such
Person during the applicable period shall not include the amount of consolidated
interest expense which is directly attributable to Indebtedness to the extent
such Indebtedness is reduced by the proceeds of the incurrence of such
Indebtedness which gave rise to the need to calculate the Consolidated Operating
Cash Flow Ratio. Any such pro forma calculation may include adjustments
appropriate, in the reasonable determination of the Company as set forth in an
Officer's Certificate, to (i) reflect operating expense reductions reasonably
expected to result from the acquisition by the Company of such Material Asset or
(ii) eliminate the effect of any extraordinary accounting event with respect to
any acquired Person on Consolidated Net Operating Income.
"Corporate Trust Office" means the principal office of the Trustee at which
at any particular time its corporate trust business shall be administered, which
office at the date of the execution of this Indenture is located at 140
Broadway, 12th Floor, New York, New York 10005, Attention: Corporate Trust
Services-Clark or at any other time at such other address as the Trustee may
designate from time to time by notice to the Noteholders.
"Credit Agreement" means that certain Credit Agreement, dated as of
September 25, 1997, by and among the Company and the financial institutions
party thereto, including any related notes, recorded or otherwise perfected
under applicable law (including any conditional sale or other title guarantees,
collateral documents, instruments and agreements executed in connection
therewith), and in each case as amended, modified, extended, renewed, refunded,
replaced or refinanced from time to time.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 2.12.
"Definitive Securities" means certificated Securities that are in the form
of the Securities set forth in Article Two hereof, that do not include the
information called for by Section 2.06(g)(ii).
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"Depository" means, with respect to Securities issuable or issued in whole
or in part in global form, the Person specified in Section 2.03 hereof as the
Depository with respect to the Securities, until a successor shall have been
appointed and become such Depository pursuant to the applicable provisions of
this Indenture, and, thereafter, "Depository" shall mean or include such
successor.
"Designated Senior Debt" means (i) any Indebtedness outstanding under the
Credit Agreement, (ii) the Senior Notes, (iii) the term loan under the Loan
Agreement, and (iv) any other Senior Debt permitted under this Indenture, the
principal amount of which is $20.0 million or more and that has been designated
by the Company as "Designated Senior Debt."
"Disposition" means, with respect to any Person, any merger, consolidation
or other business combination involving such Person (whether or not such Person
is the Surviving Person) or the sale, assignment, transfer, lease, conveyance or
other disposition of all or substantially all of such Person's assets.
"Disqualified Capital Stock" means any Capital Stock of the Company that,
either by its terms or by the terms of any security into which it is convertible
or exchangeable, is, or upon the happening of any event or passage of time would
be, required to be redeemed or purchased (other than pursuant to an offer to
repurchase such Capital Stock following a change of control, which offer may not
be completed until 45 days after completion of the Offer described in Section
12.01), including at the option of the holder, in whole or in part, or has, or
upon the happening of an event or passage of time would have, a redemption,
sinking fund or similar payment due, on or prior to November 15, 2007.
"Equity Offering" means any public or private sale of Capital Stock
(including options, warrants or rights with respect thereto) of the Company or
of Clark USA.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"Event of Default" has the meaning as specified in Section 4.01.
"Excess Proceeds" has the meaning as specified in Section 9.16.
"Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time.
"Exchange Debentures" means the 11 1/2% Subordinated Exchange Debentures
due 2009 which may be exchanged for the Exchangeable Preferred Stock of Clark
USA, at the option of Clark USA.
"Exchange Offer" means the offer that may be made by the Company pursuant
to the Registration Rights Agreement to exchange Initial Notes for Exchange
Notes.
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"Exchangeable Preferred Stock" means the 11 1/2% Senior Cumulative
Exchangeable Preferred Stock of Clark USA.
"Excluded Contribution" means the net cash proceeds received by the Company
after the Issue Date from (a) contributions to its common equity capital and (b)
the sale (other than to a Subsidiary or to any Company or Subsidiary management
equity plan or stock option plan or any other management or employee benefit
plan or agreement) of Capital Stock of the Company (other than Disqualified
Capital Stock), in each case, designated as Excluded Contributions pursuant to
an Officers' Certificate.
"Existing Indebtedness" means any Indebtedness of the Company and its
Subsidiaries incurred on or outstanding as of the Issue Date and in any event
Indebtedness evidenced by the Credit Agreement whether or not outstanding on the
Issue Date.
"Fixed Charges" of any Person means, for any period, the sum of (i)
consolidated Interest Expense of such Person and its Restricted Subsidiaries,
plus (ii) all but the principal component of rentals in respect of consolidated
Capitalized Lease Obligations of such Person and its Restricted Subsidiaries
paid, accrued or scheduled to be paid or accrued by such Person and its
Restricted Subsidiaries during such period, and determined in accordance with
GAAP plus (iii) all cash dividend payments (excluding items eliminated in
consolidation) on any series of preferred stock of such Person. For purposes of
this definition, (a) interest on Indebtedness which accrues on a fluctuating
basis for periods succeeding the date of determination shall be deemed to accrue
at a rate equal to the average daily rate of interest in effect during such
immediately preceding Quarter, and (b) interest on a Capitalized Lease
Obligation shall be deemed to accrue at an interest rate reasonably determined
in good faith by the chief financial officer, treasurer or controller of such
Person to be the rate of interest implicit in such Capitalized Lease Obligation
in accordance with GAAP (including Statement of Financial Accounting Standards
No. 13 of the Financial Accounting Standards Board).
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entities as have been approved by a significant segment of the accounting
profession, which are in effect on the Issue Date.
"Global Note Legend" means the legend set forth in Section 2.06(g)(ii),
which is required to be placed on all Global Securities issued under this
Indenture.
"Global Security" 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 Article 2 hereof.
"Guaranty" means a guaranty (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including,
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without limitation, letters of credit and reimbursement agreements in respect
thereof), of all or any part of any Indebtedness.
"Gulf Merger Agreement" means the Agreement and Plan of Merger, dated as of
November 3, 1995, among the Company, Gulf Resources Corporation and GFR, Inc.
"Gulf Oil Purchase Contract" means the Crude Oil Purchase Contract between
GFR, Inc. and Gulf Resources Corporation.
"Gulf Payments" means all payments (other than the initial purchase price
of $26.9 million under the Gulf Oil Purchase Contract) to Gulf Resources
Corporation, a Panamanian corporation, and/or any of its Affiliates, in each
case, pursuant to the Gulf Merger Agreement, the Gulf Oil Purchase Contract, the
Gulf Stockholders' Agreement and the Gulf Pledge Agreement, as each is in effect
on the date hereof.
"Gulf Pledge Agreement" means the Pledge Agreement among the Company, Gulf
Resources Corporation and Gulf Resources Holdings, Inc.
"Gulf Stockholders' Agreement" means the Stockholders' Agreement among the
Company, Gulf Resources Corporation and Gulf Resources Holdings, Inc.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"IAI 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 or on behalf of and registered in the name of the Depository or its nominee
and that will be issued in a denomination equal to the outstanding principal
amount of the Notes sold to Institutional Accredited Investors.
"Indebtedness" with respect to any Person, means any indebtedness,
including, in the case of the Company, the indebtedness evidenced by the Notes,
whether or not contingent, in respect of borrowed money or evidenced by bonds,
notes, debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereof) or representing the balance deferred and unpaid
of the purchase price of any property (including pursuant to Capital Leases)
(except any such balance that constitutes a trade payable in the ordinary course
of business that is not overdue by more than 90 days from the invoice date or is
being contested in good faith), if and to the extent any of the foregoing
indebtedness would appear as a liability upon a balance sheet of such Person
prepared on a consolidated basis in accordance with GAAP, and shall also
include, to the extent not otherwise included, the Guaranty of Indebtedness of
other Persons not included in the financial statements of the Company, the
maximum fixed redemption or repurchase price of Disqualified Capital Stock (or
if not redeemable or subject to repurchase, the issue price) and the maximum
fixed redemption or repurchase price (or if not redeemable or subject to
repurchase, the issue price) of Preferred Stock issued by any Restricted
Subsidiary of the Company to any Person other than to the Company or a
Restricted Subsidiary.
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"Indenture" means this instrument as originally executed or 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, including, for
all purposes of this instrument, and any such supplemental indenture, the
provisions of the Trust Indenture Act that are deemed to be a part of and govern
this instrument and any such supplemental indenture, respectively.
"Indirect Participant" means a Person who holds a beneficial interest in a
Global Security through a Participant.
"Initial Purchaser" means an entity that purchases Securities directly from
the Company on the Issue Date.
"Interest Expense" of any Person means, for any period, the aggregate
amount of interest expense in respect of Indebtedness (excluding (a) the Chevron
Payment, (b) the AOC Payment, (c) the Gulf Payments and (d) the amortization of
debt issuance expense relating to the Securities, the Senior Notes and the Loan
Agreement, but including without limitation or duplication (i) amortization of
debt issuance expense with respect to other Indebtedness, (ii) amortization of
original issue discount on any Indebtedness and (iii) the interest portion of
any deferred payment obligation, all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financings and the net cost associated with Interest Swap Obligations) paid,
accrued or scheduled to be paid or accrued by such Person during such period,
determined in accordance with GAAP.
"Interest Payment Date" means the date or dates set forth on the face of
the Security, or if any such day is not a Business Day, on the next succeeding
Business Day.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
"Interest Swap Obligations" means, when used with reference to any Person,
the obligations of such person under (i) interest rate swap agreements, interest
rate exchange agreements, interest rate cap agreements, and interest rate collar
agreements, (ii) currency swap agreements and currency exchange agreements and
(iii) other similar agreements or arrangements, which are, in each such case,
designed solely to protect such Person against fluctuations in interest rates or
currency exchange rates.
"Investment" means, when used with reference to any Person, any direct or
indirect advances, loans or other extensions of credit or capital contributions
by such Person to (by means of transfers of property to others or payments for
property or services for the account or use of others, or otherwise), or
purchases or acquisitions by such Person of Capital Stock, bonds, notes,
debentures or other securities issued by, any other Person or any Guaranty or
assumption of any liability (contingent or otherwise) by such Person of any
Indebtedness or Obligations of any other Person and all other items that are or
would be classified as investments on a balance sheet prepared in accordance
with GAAP.
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"Investment Grade" means (i) a Moody's rating of Baa3 or higher and an S&P
rating of at least BB+ or (ii) an S&P rating of BBB- or higher and a Moody's
rating of at least Ba1 or, in each case, if Moody's or S&P shall change their
rating system, equivalent ratings.
"Investment Grade Rating Event" means the assignment of an Investment Grade
rating by Moody's or S & P.
"Issue Date" means the date set forth in the first paragraph on the face of
the Security.
"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.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind (except for taxes not yet
owing) in respect of such asset, whether or not filed, retention agreement, any
lease in the nature thereof, any option or other agreement to sell and, with
respect to which, any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
"Loan Agreement" means the credit agreement, dated as of November 21, 1997,
among the Company, certain lenders, Goldman Sachs Credit Partners L.P., as
arranger, administrative agent and syndication agent and State Street Bank and
Trust Company of Missouri, N.A., as paying agent, as amended from time to time.
"Material Asset" means, with respect to the Company or any Restricted
Subsidiary of the Company, any asset, related group of assets, business or
division of the Company or any Restricted Subsidiary of the Company (including
any capital stock of any Restricted Subsidiary of the Company) which (i) for the
most recent fiscal year of the Company, accounted or would have accounted for
more than 3% of the consolidated revenues of the Company or (ii) as at the end
of such fiscal year, represented or would have represented more than 3% of the
consolidated assets of the Company or has a fair market value in excess of $10
million, all as shown (x) with respect to any sale or disposition, on the
consolidated financial statements of the Company for such fiscal year or such
shorter period as such assets, business or divisions were owned by the Company
or any Restricted Subsidiary of the Company and (y) with respect to any
acquisition, on consolidated pro forma financial statements of the Company for
the four full Quarters for which financial information in respect thereof is
available immediately prior to such acquisition, giving effect thereto on a pro
forma basis as if such acquisition had occurred at the beginning of such four
full Quarters.
"Maturity" means, with respect to any Notes, the date on which the
principal of such Notes becomes due and payable as provided herein, whether at
the Stated Maturity or by declaration of acceleration, call for redemption or
otherwise.
"Moody's" means Moody's Investors Service, Inc. and its successors.
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"Net Available Proceeds" means cash or readily marketable cash equivalents
received (including by way of sale or discounting of a note, installment
receivable or other receivable, but excluding any other consideration received
in the form of assumption by the acquiree of Indebtedness or other obligations
relating to such properties or assets or received in any other noncash form) net
of (i) all legal and accounting expenses, commissions and other fees and
expenses incurred and all federal, state, provincial, foreign and local taxes
required to be accrued as a liability as a consequence of such issuance, and
(ii) all payments made by such Person or its Subsidiaries on any Indebtedness
which must, in order to obtain a necessary consent to such issuance or by
applicable law, be repaid out of the proceeds from such issuance.
"Net Income" of any Person for any period means the net income (loss) from
continuing operations of such Person for such period, determined in accordance
with GAAP.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the Company
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Obligations" means any principal (and premium, if any), interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Offer" has the meaning as specified in Section 10.09.
"Officers' Certificate" means a certificate signed by at least two officers
of the Company, one signature being that of the Chairman of the Board, a Vice
Chairman of the Board, the President or a Vice President, and the other
signature being that of the Treasurer, an Assistant Treasurer, the Secretary or
an Assistant Secretary, of the Company, and delivered to the Trustee. One of the
officers signing an Officers' Certificate given pursuant to Section 9.04 shall
be the principal executive, financial or accounting officer of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company, which shall be reasonably acceptable to the Trustee.
"Outstanding", when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:
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(i) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Securities 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;
and
(iii) Securities which have been paid pursuant to Section 2.07 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 such Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Securities owned by the Company or any other obligor upon the Securities or
any Affiliate of the Company or of such other obligor shall be disregarded
and deemed not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which
a Responsible Officer of the Trustee actually 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 or any other
obligor upon the Securities or any Affiliate of the Company or of such
other obligor.
"Participant" means, with respect to the Depository, Euroclear or Cedel, a
Person who has an account with the Depository, Euroclear or Cedel, respectively
(and, with respect to The Depository Trust Company, shall include Euroclear and
Cedel).
"Paying Agent" means any Person authorized by the Company to pay the
principal of or any premium or interest on any Securities on behalf of the
Company. The Company initially appoints the Trustee as Paying Agent.
"Permitted Indebtedness" means Indebtedness incurred by the Company or its
Restricted Subsidiaries (i) to renew, extend, refinance or refund Indebtedness
that is permitted to be incurred pursuant to the Consolidated Operating Cash
Flow Ratio test set forth in Section 9.12 or clauses (ii) through (iv) and (xi)
below; provided, however, that such Indebtedness does not exceed the principal
amount of the Indebtedness so renewed, extended, refinanced or refunded 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 or
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such Restricted Subsidiary as necessary to accomplish such refinancing by means
of a tender offer or privately negotiated repurchase, plus the expenses of the
Company or such Restricted Subsidiary incurred in connection with such
refinancing; and provided, however, that Indebtedness the proceeds of which are
used to refinance or refund such Indebtedness shall only be permitted if (A) in
the case of any refinancing or refunding of Indebtedness that is pari passu with
the Notes the refinancing or refunding Indebtedness is made pari passu with the
Notes or subordinated to the Notes, (B) in the case of any refinancing or
refunding of Indebtedness that is subordinated to the Notes the refinancing or
refunding of Indebtedness is made subordinated to the Notes at least to the same
extent as such Indebtedness being refinanced or refunded was subordinated to the
Notes and (C) in the case of the refinancing or refunding of Indebtedness that
is subordinated to the Notes, the refinancing or refunding Indebtedness by its
terms, or by the terms of any agreement or instrument pursuant to which such
Indebtedness is issued, (x) does not provide for payments of principal of such
Indebtedness at the stated maturity thereof or by way of a sinking fund
applicable thereto or by way of any mandatory redemption, defeasance, retirement
or repurchase thereof by the Company or such Restricted Subsidiary (including
any redemption, retirement or repurchase which is contingent upon events or
circumstances, but excluding any retirement required by virtue of acceleration
of such Indebtedness upon an event of default thereunder), in each case prior to
the final stated maturity of the Indebtedness being refinanced or refunded and
(y) does not permit redemption or other retirement (including pursuant to an
offer to purchase made by the Company or such Restricted Subsidiary) of such
Indebtedness at the option of the holder thereof prior to the final stated
maturity of the Indebtedness being refinanced or refunded, other than a
redemption or other retirement at the option of the holder of such Indebtedness
(including pursuant to an offer to purchase made by the Company or such
Restricted Subsidiary), which is conditioned upon the change of control of the
Company or such Restricted Subsidiary); (ii) arising from time to time under the
Credit Agreement in an aggregate principal amount which, together with any
obligations under clause (xi) below, do not exceed the greater of (a) $500
million at any one time outstanding less the aggregate amount of all proceeds of
all Asset Dispositions that have been applied since the Issue Date to
permanently reduce the outstanding amount of such Indebtedness and (b) the
amount of the Borrowing Base as of such date (calculated on a pro forma basis
after giving effect to such borrowing and the application of the proceeds
therefrom); (iii) outstanding or incurred on the Issue Date; (iv) evidenced by
trade letters of credit incurred in the ordinary course of business not to
exceed $20 million in the aggregate at any time; (v) between or among the
Company and/or its Restricted Subsidiaries other than Restricted Subsidiaries
owned in any part by the Principal Shareholders; (vi) which is Subordinated
Debt; (vii) arising out of Sale and Leaseback Transactions or Capitalized Lease
Obligations relating to computers and other office equipment and elements,
catalysts or other chemicals used in connection with the refining of petroleum
or petroleum by-products; (viii) the proceeds of which are used to make the
Chevron Payment, the AOC Payment and the Gulf Payments; (ix) arising out of
Interest Swap Obligations; (x) in connection with capital projects qualifying
under Section 142(a) (or any successor provision) of the Internal Revenue Code
of 1986, as amended, in an amount not to exceed $75 million in the aggregate at
any time; (xi) obligations of the Company or any Restricted Subsidiary in
connection with any Qualified Securitization Transaction in an amount which,
together with any amount under clause (ii) above, does not exceed the greater of
(a) $500 million at any one time outstanding less the aggregate amount of all
proceeds of all Asset Dispositions that have been applied since the Issue Date
to permanently reduce the outstanding amount of such Indebtedness and (b) the
amount of the Borrowing Base as of such date (calculated on a pro forma basis
after giving effect to such borrowing and the application of the
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proceeds therefrom); (xii) any guarantee by the Company of Indebtedness of any
of its Restricted Subsidiaries so long as the incurrence of such Indebtedness is
permitted to be incurred under Section 9.12; (xiii) Indebtedness or preferred
stock of Persons that are acquired by the Company or any of its Restricted
Subsidiaries or merged into the Company or a Restricted Subsidiary in accordance
with the terms of this Indenture; provided that such Indebtedness or preferred
stock is not incurred in contemplation of such acquisition or merger; and
provided further that after giving effect to such acquisition or merger either
(A) the Company would be permitted to incur at least $1.00 of additional
Indebtedness under the Consolidated Operating Cash Flow Ratio test set forth in
Section 9.12 or (B) the Company's Consolidated Operating Cash Flow Ratio is
equal to or greater than such ratio immediately prior to such acquisition or
merger; (xiv) in an amount not greater than twice the aggregate amount of cash
contributions made to the capital of the Company; (xv) in exchange for, or the
proceeds of which are used to refund or refinance the 10 7/8% Notes; provided,
however, that after giving effect to such exchange, refunding or refinancing,
the Consolidating Operating Cash Flow Ratio exceeds 1.75 to 1.0 and such
Indebtedness shall be subordinated to the Securities to at least the same extent
as the Securities are subordinated to the Securities; and (xvi) in addition to
Indebtedness permitted by clauses (i) through (xv) above, Indebtedness not to
exceed on a consolidated basis for the Company and its Restricted Subsidiaries
at any time $75 million.
"Permitted Junior Securities" means Capital Stock (and all warrants, options
or other rights to acquire Capital Stock) in the Company or debt securities that
are subordinated to Senior Debt (and any debt securities issued in exchange for
Senior Debt) to substantially the same extent as, or to a greater extent than,
the Securities are subordinated to Senior Debt pursuant to this Indenture.
"Permitted Liens" means (i) Liens in favor of the Company; (ii) Liens on
property of a Person existing at the time such Person is merged into or
consolidated with the Company, provided that such Liens were in existence prior
to the contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with the
Company; (iii) Liens on property existing at the time of acquisition thereof by
the Company, provided that such Liens were in existence prior to the
contemplation of such acquisition; (iv) Liens to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business; (v)
Liens existing on the Issue Date; (vi) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently concluded, provided that any reserve or other appropriate provision
as shall be required in conformity with GAAP shall have been made therefor;
(vii) Liens imposed by law, such as mechanics', carriers', warehousemen's,
materialmen's, and vendors' Liens, incurred in good faith in the ordinary course
of business with respect to amounts not yet delinquent or being contested in
good faith by appropriate proceedings if a reserve or other appropriate
provisions, if any, as shall be required by GAAP shall have been made therefor;
(viii) zoning restrictions, easements, licenses, covenants, reservations,
restrictions on the use of real property or minor irregularities of title
incident thereto that do not, in the aggregate, materially detract from the
value of the property or the assets of the Company or impair the use of such
property in the operation of the Company's business; (ix) judgment Liens to the
extent that such judgments do not cause or constitute a Default or an Event of
Default; (x)
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Liens to secure the payment of all or a part of the purchase price of property
or assets acquired or the construction costs of property or assets constructed
in the ordinary course of business on or after the Issue Date, provided that (a)
such property or assets are used in the Principal Business of the Company, (b)
at the time of incurrence of any such Lien, the aggregate principal amount of
the obligations secured by such Lien shall not exceed the lesser of the cost or
fair market value of the assets or property (or portions thereof) so acquired or
constructed, (c) each such Lien shall encumber only the assets or property (or
portions thereof) so acquired or constructed and shall attach to such assets or
property within 180 days of the purchase or construction thereof and (d) any
Indebtedness secured by such Lien shall have been permitted to be incurred under
the covenant set forth in Section 9.12; (xi) Liens incurred in the ordinary
course of business of the Company with respect to obligations that do not exceed
5% of Consolidated Net Tangible Assets at any one time outstanding; (xii) Liens
incurred in connection with Interest Swap Obligations; (xiii) Liens on any
Securitization Program Assets in connection with any Qualified Securitization
Transaction; (xiv) Liens to secure obligations owing from time to time under the
Credit Agreement and Guaranties thereof; and (xv) Liens to secure Senior Debt.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, estate, limited liability company,
unincorporated organization or government or any agency or political subdivision
thereof.
"Place of Payment" has the meaning specified in the third paragraph of Exhibit
A attached hereto.
"Port Arthur Refinery" means the refinery in Port Arthur, Texas and certain
other assets acquired from Chevron U.S.A., Inc.
"Preferred Stock" means any share of Capital Stock of any Person in respect of
which the holder thereof is entitled to receive payment before any other payment
is made with respect to any other Capital Stock of such Person.
"Preferred Stock Dividends" means, with respect to any Person for any period,
the amount of regularly scheduled dividends accrued, accruable, paid or payable
during such period, whether in cash or otherwise, with respect to any Preferred
Stock of such Person.
"Principal Business" means, with respect to the Company and its Restricted
Subsidiaries, (i) the business of the acquisition, processing, marketing,
refining, storage and/or transportation of hydrocarbons and/or royalty or other
interests in crude oil or associated products related thereto, (ii) the
acquisition, operation, improvement, leasing and other use of convenience
stores, retail service stations, truck stops and other public accommodations in
connection therewith, (iii) any business currently engaged in by the Company or
its Restricted Subsidiaries on the Issue Date, and (iv) any activity or business
that is a reasonable extension, development or expansion of, or reasonably
related to, any of the foregoing.
"Principal Property" means (i) any refinery and related pipelines,
terminalling and processing equipment or (ii) any other real property or
marketing assets or related group of such assets of the Company having a fair
market value in excess of $20 million.
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"Principal Shareholders" means (i) Blackstone, (ii) Occidental Petroleum
Corporation, (iii) Gulf Resources Corporation and (iv) Affiliates of the Persons
described in the foregoing clauses (i) through (iii), other than the Company and
its Subsidiaries.
"Private Placement Legend" means the legend set forth in Section 2.06(g)(i)
to be placed on all Initial Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"Purchase Date" has the meaning as specified in Section 10.09.
"Qualified Securitization Transaction" means any transaction or series of
transactions that may be entered into by the Company or any Subsidiary pursuant
to which the Company or any Subsidiary may sell, convey, grant a security
interest in or otherwise transfer to a Securitization Special Purpose Entity,
and such Securitization Special Purpose Entity may sell, convey, grant a
security interest in, or otherwise transfer to any other Person, any
Securitization Program Assets (whether now existing or arising in the future).
"Quarter" means a fiscal quarterly period of the Company.
"Rating Agencies" means (i) S&P and Moody's or (ii) if S&P or Moody's or
both of them are not making ratings of the Notes publicly available, a
nationally recognized U.S. rating agency or agencies, as the case may be,
selected by the Company, which will be substituted for S&P or Moody's or both,
as the case may be.
"Rating Category" means (i) with respect to S&P, any of the following
categories (any of which may include a "+" or "-"); AAA, AA, A, BBB, BB, B, CCC,
CC, C and D (or equivalent successor categories); (ii) with respect to Moody's,
any of the following categories (any of which may include a "1," "2" or "3");
Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C and D (or equivalent successor categories),
and (iii) the equivalent of any such categories of S&P or Moody's used by
another Rating Agency, if applicable.
"Rating Decline" means that at any time within 90 days (which period shall
be extended so long as the rating of the Notes is under publicly announced
consideration for possible down grade by any Rating Agency) after the date of
public notice of a Change of Control, or of the intention of the Company or of
any Person to effect a Change of Control, the rating of the Notes is decreased
by both Rating Agencies by one or more categories and the ratings on the Notes
following such downgrade is below Investment Grade.
"Receivables" means all rights of the Company or any Subsidiary of the
Company to payments (whether constituting accounts, chattel paper, instruments,
general intangibles or otherwise, and including the right to payment of any
interest or finance charges), which rights are identified in the accounting
records of the Company or such Subsidiary as accounts receivable.
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"Redemption Date," when used with respect to any Note to be redeemed, means
the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price," when used with respect to any Note to be redeemed, means
the price at which it is to be redeemed pursuant to this Indenture.
"Registration Rights Agreement" means the Exchange and Registration Rights
Agreement, dated as of the Issue Date, by and among the Company 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 Permanent Global Note" means a permanent global Security 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 Depository or its nominee, and issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period and authenticated as provided in Section
2.02 hereof.
"Regulation S Temporary Global Note" means a temporary global Security in the
form of Exhibit A-1 hereto bearing the Private Placement Legend and deposited
with or on behalf of and registered in the name of the Depository or its
nominee, issued in a denomination equal to the outstanding principal amount of
the Notes initially sold in reliance on Rule 903 of Regulation S.
"Regular Record Date" for the interest payable on any Interest Payment Date
means the date specified (whether or not a Business Day) for that purpose as
contemplated by Section 2.01.
"Responsible Officer" shall mean when used with respect to the Trustee, any
officer within the Corporate Trust Office including any Vice President, Managing
Director, Assistant Vice President, Corporate Trust Officer, Assistant Corporate
Trust Officer, Secretary, Assistant Secretary or Assistant Treasurer or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer's knowledge and familiarity with the particular subject.
"Restricted Debt Prepayment" means any purchase, redemption, defeasance
(including, but not limited to, in-substance or legal defeasance) or other
acquisition or retirement for value (collectively a "prepayment") other than in
connection with a concurrent issuance of pari passu or Subordinated
Indebtedness, directly or indirectly, by the Company or a Restricted Subsidiary
of the Company, prior to the scheduled maturity on or prior to any scheduled
repayment of principal (and premium, if any) or sinking fund payment in respect
of Indebtedness of the Company (other than the Notes) which is subordinate in
right of payment to the Notes.
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"Restricted Definitive Security" means a Definitive Security bearing the
Private Placement Legend.
"Restricted Global Note" means a Global Security bearing the Private Placement
Legend.
"Restricted Investment" means any direct or indirect Investment by the Company
or any Restricted Subsidiary of the Company in (i) any Affiliate of the Company
which is not a Restricted Subsidiary of the Company and (ii) any Unrestricted
Subsidiary of the Company, other than direct or indirect investments in (a)
Polymer Asphalt L.L.C., a Missouri limited liability company (b) Bagel Street
Holdings, Inc. and (c) any pipeline company in which the Company or any of its
Restricted Subsidiaries now owns or hereafter acquires any interest; provided
that the aggregate amount of Investments made by the Company or any of its
Restricted Subsidiaries pursuant to clauses (a), (b) and (c) above shall not
exceed $25 million in the aggregate at any one time outstanding provided, that
no Investment in a Securitization Special Purpose Entity in connection with a
Qualified Securitization Transaction shall be a Restricted Investment.
"Restricted Payment" means (i) any Stock Payment, (ii) any Restricted
Investment, or (iii) any Restricted Debt Prepayment. Notwithstanding the
foregoing, Restricted Payments shall not include (a) payments by the Company to
any Restricted Subsidiary of the Company, (b) payments by any Restricted
Subsidiary of the Company to the Company or any other Restricted Subsidiary of
the Company, (c) the Chevron Payment, (d) the AOC Payment and (e) the Gulf
Payments.
"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not (i) an Unrestricted Subsidiary or (ii) a direct or indirect
Subsidiary of an Unrestricted Subsidiary.
"S&P" means Standard & Poor's Rating Services and its successors.
"Sale and Leaseback Transaction" of any Person means an arrangement with any
lender or investor or to which such lender or investor is a party providing for
the leasing by such Person of any property or asset of such Person which has
been or is being sold or transferred by such Person more than 365 days after the
acquisition thereof or the completion of construction or commencement of
operation thereof to such lender or investor or to any Person to whom funds have
been or are to be advanced by such lender or investor on the security of such
property or asset. The stated maturity of such arrangement shall be the date of
the last payment of rent or any other amount due under such arrangement prior to
the first date on which such arrangement may be terminated by the lessee without
payment of a penalty.
"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 Act of 1933, as amended.
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"Securitization Program Assets" means (a) all Receivables and inventory which
are described as being transferred by the Company or any Subsidiary of the
Company pursuant to documents relating to any Qualified Securitization
Transaction, (b) all Securitization Related Assets, and (c) all collections
(including recoveries) and other proceeds of the assets described in the
foregoing clauses.
"Securitization Related Assets" means (i) any rights arising under the
documentation governing or relating to Receivables (including rights in respect
of Liens securing such Receivables and other credit support in respect of such
Receivables) or to inventory, (ii) any proceeds of such Receivables or inventory
and any lockboxes or accounts in which such proceeds are deposited, (iii) spread
accounts and other similar accounts (and any amounts on deposit therein)
established in connection with a Qualified Securitization Transaction, (iv) any
warranty, indemnity, dilution and other intercompany claim arising out of the
documents relating to such Qualified Securitization Transaction and (v) other
assets which are customarily transferred or in respect of which security
interests are customarily granted in connection with asset securitization
transactions involving accounts receivable or inventory.
"Securitization Special Purpose Entity" means a Person (including, without
limitation, a Subsidiary of the Company) created in connection with the
transactions contemplated by a Qualified Securitization Transaction, which
Person engages in no activities other than those incidental to such Qualified
Securitization Transaction.
"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 2.03.
"Senior Debt" has the meaning specified in Section 11.02.
"Senior Notes" means the 8 3/8% Senior Notes of the Company due 2007.
"Shareholder/Affiliate Transaction" has the meaning as specified in Section
9.11.
"Special Interest" has the meaning as specified in the first paragraph of
Exhibit A attached hereto.
"Special Record Date" for the payment of any Defaulted Interest means a date
fixed by the Company with the consent of the Trustee pursuant to the third
paragraph of Exhibit A attached hereto.
"Stated Maturity" means the date specified in the first paragraph of the
Security as the fixed date on which the principal of such Security is due and
payable.
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"Stock Payment" means, with respect to the Company, any dividend, either in
cash or in property (except dividends payable in Capital Stock of the Company
which is not convertible into Indebtedness), on, or the making by the Company of
any other distribution in respect of, its Capital Stock, now or hereafter
outstanding, or the redemption, repurchase, retirement, defeasance or any
acquisition for value by the Company, directly or indirectly, of its Capital
Stock or any warrants, rights or options to purchase or acquire shares of any
class of its Capital Stock, now or hereafter outstanding (other than in exchange
for the Company's Capital Stock (other than Disqualified Capital Stock) or
options, warrants or other rights to purchase the Company's Capital Stock (other
than Disqualified Capital Stock)).
"Stock Purchase and Redemption Agreement" means that certain Stock Purchase
and Redemption Agreement dated as of December 30, 1992, by and among AOC Limited
Partnership, P. Anthony Novelly, Samuel R. Goldstein, G&N Investments, Inc., The
Horsham Corporation, the Company and Clark USA.
"Subordinated Indebtedness" means, with respect to the Notes, any Indebtedness
of the Company which is subordinated in right of payment to the Notes and with
respect to which no payments of principal (by way of sinking fund, mandatory
redemption, maturity or otherwise), including, without limitation, at the option
of the holder thereof (other than pursuant to an offer to repurchase such
Subordinated Indebtedness following a change of control, which offer may not be
completed until 45 days after completion of the Offer described in Section
12.01) are required to be made by the Company at any time prior to the Stated
Maturity of such Notes.
"Subsidiary" of any Person means (i) a corporation more than 50% of the total
voting power of all classes of the outstanding voting stock of which is owned,
directly or indirectly, by such Person or by one or more other Subsidiaries of
such Person or by such Person and one or more Subsidiaries thereof or (ii) any
other Person (other than a corporation) in which such Person, or one or more
other Subsidiaries of such Person or such Person and one or more other
Subsidiaries thereof, directly or indirectly, has at least a majority ownership
and the power to direct the policies, management and affairs thereof.
"Surviving Person" means, with respect to any Person involved in or that makes
any Disposition, the Person formed by or surviving such Disposition or the
Person to which such Disposition is made.
"Transaction Date" means the date on which the Indebtedness giving rise to the
need to calculate the Consolidated Operating Cash Flow Ratio was incurred or the
date on which, pursuant to the terms of this Indenture, the transaction giving
rise to the need to calculate the Consolidated Operating Cash Flow Ratio
occurred.
"Transfer Restricted Securities" means Securities that bear or are required to
bear the legend set forth in Section 2.06(g)(i) hereof.
"TrizecHahn" means the Trizec Hahn Corporation.
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"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the
Issue Date; provided, however, that in the event the Trust Indenture Act of 1939
is amended after such date, "Trust Indenture Act" means, to the extent required
by any such amendment, the Trust Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument 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 Security" means one or more Definitive Securities
that do not bear and are not required to bear the Private Placement Legend.
"Unrestricted Global Note" means a permanent Global Security 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 Security" attached thereto,
and that is deposited with or on behalf of and registered in the name of the
Depository, representing a series of Securities that do not bear and are not
required to bear the Private Placement Legend.
"Unrestricted Subsidiary" means any Subsidiary that is designated by the board
of directors of the Company as an Unrestricted Subsidiary pursuant to a Board
Resolution; but only to the extent that such Subsidiary: (a) has no Indebtedness
other than Non-Recourse Debt; (b) is not party to any agreement, contract,
arrangement or understanding with the Company or any Restricted Subsidiary of
the Company unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or such Restricted Subsidiary
than those that might be obtained at the time from Persons who are not
Affiliates of the Company; (c) is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation (x) to subscribe for additional Capital Stock (including options,
warrants or other rights to acquire Capital Stock) or (y) to maintain or
preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results; and (d) has not guaranteed or
otherwise directly or indirectly provided credit support for any Indebtedness of
the Company or any of its Restricted Subsidiaries. The board of directors of the
Company may at any time designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that such designation shall be deemed to be an incurrence
of Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted under Section 9.12 hereof, and
(ii) no Default or Event of Default would be in existence following such
designation.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"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".
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"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person or by such Person and one or more Wholly Owned
Restricted Subsidiaries of such Person.
"Wholly Owned U.S. Restricted Subsidiary" of any Person means a Wholly Owned
Restricted Subsidiary of such Person which is organized under the laws of any
state in the United States or of the District of Columbia.
Section 1.02. Compliance Certificates and Opinions
------------------------------------
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee such certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of
an Officers' Certificate, if to be given by an officer of the Company, or an
Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirements set forth in
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.
Section 1.03. 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.
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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 that the certificate or
opinion or representations with respect to the matters upon which such
certificate or opinion is based are erroneous. Any such certificate or Opinion
of Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, 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 that the certificate or
opinion or representations with respect to such matters are 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 1.04. Acts of Holders; Record Dates.
(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 an agent 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 shall be 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 his 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 Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as the record date for the purpose of determining the
Holders entitled to give or take any request, demand, authorization, direction,
notice, consent, waiver or other action, or to vote on any action, authorized or
permitted to be given or taken by Holders. If not set by the Company prior to
the first solicitation of a Holder made by any Person in respect of any such
action, or, in the case of any such vote, prior to such vote, the record date
for any such action or vote shall be the 30th day (or, if later, the date of the
most recent list of Holders required to be provided pursuant to Section 6.01)
prior to such first solicitation or vote, as the case may be. With regard to
any record date, only the Holders on such date (or their duly designated
proxies) shall be entitled to give or take, or vote on, the relevant action.
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(d) The ownership of Securities shall be proved by the Security
Register.
(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 1.05. Notices, Etc., to Trustee and Company.
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 shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, Attention: Corporate
Trust Services-Clark, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the
first paragraph of this instrument or at any other address previously
furnished in writing to the Trustee by the Company.
All such notices and communications 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 with first-class postage prepaid, if
mailed; when receipt acknowledged, if sent by facsimile; and the next business
day after timely delivery to the courier, if sent by recognized overnight
courier guaranteeing next-day delivery; provided that notice to the Trustee
shall be deemed given only when received by the Trustee.
Section 1.06. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, 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 (if any), and not earlier than the earliest date (if any),
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. 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 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.
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In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
All such notices and communications 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 with first-class postage prepaid, if
mailed; when receipt acknowledged, if sent by facsimile; and the next business
day after timely delivery to the courier, if sent by recognized overnight
courier guaranteeing next-day delivery; provided that notice to the Trustee
shall be deemed given only when received by the Trustee.
Section 1.07. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act, the latter 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 to be excluded, as the case
may be.
Section 1.08. 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 1.09. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
Section 1.10. Separability Clause.
In case any provision in this Indenture or in the Securities 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 1.11. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and the Holders, any benefit or any legal or equitable right, remedy
or claim under this Indenture.
Section 1.12. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
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YORK (WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW PRINCIPLES THEREOF).
Section 1.13. Legal Holidays.
In any case where any Redemption Date, Purchase Date or Stated
Maturity of any Security shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or of the Securities) payment of 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
Redemption Date, Purchase Date or at the Stated Maturity.
Section 1.14. No Recourse Against Others.
A director, officer, employee, stockholder or incorporator, as such,
of the Company shall not have any liability for any obligations of the Company
under the Securities or this Indenture for any claim based on, in respect of or
by reason of such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. Such waiver and release are
part of the consideration for the issuance of the Securities.
ARTICLE 2
---------
THE SECURITIES
--------------
Section 2.01. Form and Dating; Issuable in Series.
(a) The Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A hereto. The
Securities may have notations, legends or endorsements required by law,
stock exchange rule or usage. Each Security shall be dated the date of its
authentication. The Securities will be issued in registered form, without
coupons and only in denominations of $1,000 and integral multiples of
$1,000.
(b) The terms and provisions contained in the Securities 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.
(c) Global Securities. Notes issued in global form shall be
substantially in the form of Exhibits A and A-1 attached hereto (including
the Global Note Legend thereon and the "Schedule of Exchanges of Interests
in the Global Securities" attached thereto). Notes issued in definitive
form shall be substantially in the form of Exhibit A or A-1 attached hereto
(but without the Global Note Legend thereon and without the "Schedule of
Exchanges of Interests in the Global Securities" attached thereto). Each
Global Security 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
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reduced or increased, as appropriate, to reflect exchanges and redemptions.
Any endorsement of a Global Security 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 or the Security Custodian,
at the direction of the Trustee, in accordance with instructions given by
the Holder thereof as required by Section 2.06 hereof.
(d) Temporary Global Securities. Notes offered and sold in
reliance on Regulation S shall be issued initially in the form of the
Regulation S Temporary Global Note, which shall be deposited on behalf of
the purchasers of the Notes represented thereby with the Trustee, at its
New York office, as custodian for the Depository, and registered in the
name of the Depository or the nominee of the Depository for the accounts of
designated agents holding on behalf of Euroclear or Cedel Bank, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The Restricted Period shall terminate upon the last to occur of
(i) the 40th day of the Restricted Period and (ii) the receipt by the
Trustee of (a) copies of certificates from Euroclear and Cedel Bank
certifying that they have received certification of non-United States
beneficial ownership of 100% of the aggregate principal amount of the
Regulation S Temporary Global Note (except to the extent of any beneficial
owners thereof who acquired an interest therein during the Restricted
Period pursuant to another exemption from registration under the Securities
Act and who will take delivery of a beneficial ownership interest in a 144A
Global Note or an IAI Global Note bearing a Private Placement Legend, all
as contemplated by Section 2.06(a)(ii) hereof), and (b) an Officers'
Certificate from the Company stating that all conditions precedent to the
issuance of the Regulation S Permanent Global Note have been satisfied.
Following the termination of the Restricted Period, beneficial interests in
the Regulation S Temporary Global Note shall be exchanged for beneficial
interests in Regulation S Permanent Global Notes pursuant to the Applicable
Procedures. Simultaneously with the authentication of Regulation S
Permanent Global Notes, the Trustee shall cancel the Regulation S Temporary
Global Note. The aggregate principal amount of the Regulation S Temporary
Global Note and the Regulation S Permanent Global Notes may from time to
time be increased or decreased by adjustments made on the records of the
Trustee and the Depository or its nominee, as the case may be, in
connection with transfers of interest as hereinafter provided.
(e) Euroclear and Cedel Procedures Applicable. 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 Bank shall be
applicable to transfers of beneficial interests in the Regulation S
Temporary Global Note and the Regulation S Permanent Global Notes that are
held by Participants through Euroclear or Cedel Bank.
(f) The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.
(g) The Securities may be issued from time to time in one or
more series. There shall be established in or pursuant to a Board
Resolution, and set forth in an
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Officers' Certificate, or established in one or more indentures
supplemental hereto, prior to the issuance of Securities of any series:
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from all other Securities);
(2) any limit upon the aggregate principal amount of the
Securities of the series which may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon registration
of transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to this Indenture);
(3) the date or dates on which the principal of the Securities
of the series is payable;
(4) the rate or rates at which the securities of the Series
shall bear interest, if any, the date or dates from which such interest shall
accrue, the interest Payment Dates on which such interest shall be payable and
the Regular Record Date for the interest payable on any Interest Payment Date;
(5) the place or places where the principal of (and premium, if
any) and interest on Securities of the series shall be payable;
(6) the period or periods within which, the price or prices at
which and the terms and conditions upon which Securities of the series may be
redeemed, in whole or in part, at the option of the Company, pursuant to any
sinking fund or otherwise;
(7) the obligation, if any, of the Company to redeem or purchase
Securities of the series pursuant to any sinking fund or analogous provisions or
at the option of a Holder thereof and the period or periods within which, the
price or prices at which and the terms and conditions upon which Securities of
the series shall be redeemed or purchased, in whole or in part, pursuant to such
obligation, and, where applicable, the obligation of the Company to select the
Securities to be redeemed;
(8) if other than as set forth herein, the denominations in
which Securities of the series shall be issuable;
(9) if other than the principal amount thereof, the portion of
the principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the maturity thereof pursuant to Section 4.02;
(10) additional Events of Default with respect to Securities of
the series, if any, other than those set forth herein;
(11) the application, if any, of either or both of section 13.02
and section 13.03 to the Securities of the series;
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(12) if other than the Trustee, the identity of the Registrar
and any Paying Agent;
(13) any additions or changes to or deletions from the
provisions of Articles 1, 7, 9 and 10 hereof;
(14) the exchangeability, if any, of any series of Securities
issued without registration under the Securities Act for new Securities of the
same series to be registered under the Securities Act pursuant to an exchange
offer, if other than as set forth herein; and
(15) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).
Section 2.02. Execution and Authentication.
An Officer shall sign the Securities for the Company by manual or
facsimile signature.
If an Officer whose signature is on a Security no longer holds that
office at the time a Security is authenticated, the Security shall nevertheless
be valid.
A Security shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Security has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers, authenticate Securities for original issue up to the aggregate
principal amount stated in paragraph 1 of the Securities. The aggregate
principal amount of Securities outstanding at any time may not exceed such
amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. An authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate of the Company.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where Securities may be
presented for registration of transfer or for exchange ("Security Registrar")
and an office or agency where Securities may be presented for payment ("Paying
Agent"). The Security Registrar shall keep a register of the Securities and of
their transfer and exchange (the "Security Register"). The Company may appoint
one or more co-registrars and one or more additional paying agents. The term
"Security Registrar" includes any co-registrar and the term "Paying Agent"
includes any additional paying agent. The Company may change any Paying Agent
or Security Registrar without notice to any Holder. The Company shall 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
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another entity as Security Registrar or Paying Agent, the Trustee shall act as
such. The Company or any of its Subsidiaries may act as Paying Agent or Security
Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depository with respect to the Global Securities.
The Company initially appoints the Trustee to act as the Security
Registrar and Paying Agent and to act as Security Custodian with respect to the
Global Securities.
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, premium, if any, or interest on the Securities, and will notify the
Trustee in writing 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 Securities.
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 Security Registrar, the Company shall furnish to 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
Securities and the Company shall otherwise comply with TIA (S) 312(a).
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Global Securities. A Global Security may
not be transferred as a whole except by the Depository to a nominee of the
Depository, by a nominee of the Depository to the Depository or to another
nominee of the Depository, the Depository or any such nominee to a successor
Depository or a nominee of such successor Depository. All Global Securities
(except the Regulation S Temporary Global Note) will be exchanged by the Company
for Definitive Securities if (i) the Company delivers to the Trustee written
notice from the Depository that it is unwilling or unable to continue to act as
Depository or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depository is not appointed by the
Company within 120 days after the date of such notice from the Depository or
(ii) the Company in its sole discretion determines that the Global Securities
(in whole but not in part) should be exchanged for Definitive Securities and
delivers a written notice to such effect
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to the Trustee. Upon the occurrence of either of the preceding events in (i) or
(ii) above, Definitive Securities shall be issued in such names as the
Depository shall instruct the Trustee. Global Securities also may be exchanged
or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof.
Every Note authenticated and delivered in exchange for, or in lieu of, a Global
Security or any portion thereof, pursuant to this Section 2.06 or Section 2.07
or 2.10 hereof, shall be authenticated and delivered in the form of, and shall
be, a Global Security. A Global Security may not be exchanged for another Note
other than as provided in this Section 2.06(a), however, beneficial interests in
a Global Security 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
Securities. The transfer and exchange of beneficial interests in the Global
Securities shall be effected through the Depository, 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 Securities 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
Security. 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 transfers of beneficial interests in the Regulation
S Temporary Global Security 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 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
required to be delivered to the Security Registrar to effect the transfers
described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests
in Global Securities. In connection with all transfers and exchanges of
beneficial interests that are not subject to Section 2.06(b)(i) above, the
transferor of such beneficial interest must deliver to the Security
Registrar either (A) (1) a written order from a Participant or an Indirect
Participant given to the Depository in accordance with the Applicable
Procedures directing the Depository to credit or cause to be credited a
beneficial interest in another Global Security 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 Depository in accordance with the Applicable Procedures directing the
Depository to cause to be issued a Definitive Security in an amount equal
to the beneficial interest to be transferred or exchanged and (2)
instructions given by the Depository to the Security Registrar containing
information regarding the Person in whose name such Definitive Security
shall be registered to effect the transfer or exchange referred to in (1)
above. Upon consummation of an Exchange Offer by the Company in accordance
with Section
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2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall be
deemed to have been satisfied upon receipt by the Security 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 Securities contained in this Indenture and
the Notes or otherwise applicable under the Securities Act, the Trustee
shall adjust the principal amount of the relevant Global Securities
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 Section 2.06(b)(ii) above and the
Security Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the certifications in
item (1) thereof;
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Temporary Global Note or the Regulation
S Permanent Global Note, 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 transferee will take delivery in the form of a
beneficial interest in the IAI Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the certifications and
certificates and Opinion of Counsel required by item (3) thereof, if applicable.
(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 Section 2.06(b)(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, certifies in the applicable Letter
of Transmittal that it 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) such transfer is effected pursuant to the Shelf
Registration Statement as defined in and in accordance with the Registration
Rights Agreement;
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(C) 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 Security 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; or
(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, in each such case set forth in this subparagraph (D),
if the Security Registrar so requests or if the Applicable
Procedures so require, an Opinion of Counsel in form
reasonably acceptable to the Security Registrar and 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 no longer 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 more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate 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
Securities.
(v) Beneficial Interests in Restricted Global Notes to
Restricted Definitive Securities. If any holder of a beneficial interest in
a Restricted Global Note proposes to exchange such beneficial interest for
a Restricted Definitive Security or to transfer such beneficial interest to
a Person who takes delivery thereof in the form of a Restricted Definitive
Security, then, upon receipt by the Security Registrar of the following
documentation:
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(A) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Security, 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 to
an Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those listed in
subparagraphs (B) through (D) above, a certificate to the effect set forth in
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
(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 Security to be reduced accordingly pursuant to
Section 2.06(h) hereof, and the Company shall execute and the Trustee
shall authenticate and deliver to the Person designated in the
instructions a Definitive Security in the appropriate principal
amount. Any Definitive Security 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 Security Registrar through instructions
from the Depository and the Participant or Indirect Participant. The
Trustee shall deliver such Definitive Securities to the Persons in
whose names such Notes are so registered. Any Definitive Security
issued in exchange for a beneficial interest in a Restricted Global
Note pursuant to this
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Section 2.06(c)(i) shall bear the Private Placement Legend and shall
be subject to all restrictions on transfer contained therein.
Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a beneficial
interest in the Regulation S Temporary Global Note may not be
exchanged for a Definitive Security or transferred to a Person who
takes delivery thereof in the form of a Definitive Security.
(vi) Beneficial Interests in Restricted Global Notes to
Unrestricted Definitive Securities. A holder of a beneficial interest in a
Restricted Global Note may exchange such beneficial interest for an
Unrestricted Definitive Security or may transfer such beneficial interest
to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Security 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, certifies in the applicable Letter of
Transmittal that it 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) such transfer is effected pursuant to the Shelf
Registration Statement as defined in and in accordance with the Registration
Rights Agreement;
(C) such transfer is effected by a Participating Broker-
Dealer pursuant to the Exchange Offer Registration Statement as defined in and
in accordance with the Registration Rights Agreement; or
(D) the Security 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 Security 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; or
(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 Security 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, in each such case set forth in this subparagraph (D), if the Security
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Security Registrar
to the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained
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herein and in the Private Placement Legend are no longer required in order
to maintain compliance with the Securities Act.
(vii) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Securities. If any holder of a beneficial interest
in an Unrestricted Global Note proposes to exchange such beneficial
interest for a Definitive Security or to transfer such beneficial interest
to a Person who takes delivery thereof in the form of a Definitive
Security, 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 Security to be reduced accordingly pursuant to
Section 2.06(h) hereof, and the Company shall execute and the Trustee shall
authenticate and deliver to the Person designated in the instructions a
Definitive Security in the appropriate principal amount. Any Definitive
Security issued in exchange for a beneficial interest pursuant to this
Section 2.06(c)(iii) 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 Security Registrar through instructions from
the Depository and the Participant or Indirect Participant. The Trustee
shall deliver such Definitive Securities to the Persons in whose names such
Notes are so registered. Any Definitive Security issued in exchange for a
beneficial interest pursuant to this Section 2.06(c)(iii) shall not bear
the Private Placement Legend.
(d) Transfer and Exchange of Definitive Securities for Beneficial
Interests.
(viii) Restricted Definitive Securities to Beneficial Interests
in Restricted Global Notes. If any Holder of a Restricted Definitive
Securities proposes to exchange such Note for a beneficial interest in a
Restricted Global Note or to transfer such Restricted Definitive Securities
to a Person who takes delivery thereof in the form of a beneficial interest
in a Restricted Global Note, then, upon receipt by the Security Registrar
of the following documentation:
(A) if the Holder of such Restricted Definitive Security
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 Restricted Definitive Security 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 Restricted Definitive Security 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 Restricted Definitive Security is being
transferred pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities
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Act, a certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Security is being
transferred to an Institutional Accredited Investor in reliance on an exemption
from the registration requirements of the Securities Act other than those listed
in subparagraphs (B) through (D) above, a certificate to the effect set forth in
Exhibit B hereto, including the certifications, certificates and Opinion of
Counsel required by item (3) thereof, if applicable;
(F) if such Restricted Definitive Security 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
(G) if such Restricted Definitive Security 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 Restricted Definitive Security,
increase or cause to be increased the aggregate principal amount
of, in the case of clause (A) above, the appropriate Restricted
Global Note, in the case of clause (B) above, the 144A Global
Note, in the case of clause (C) above, the Regulation S Permanent
Global Note, and in all other cases, the IAI Global Note.
(ix) Restricted Definitive Securities to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Securities
may exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Restricted Definitive Securities 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, certifies in the applicable Letter of Transmittal that it 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) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights Agreement;
(C) 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 Security Registrar receives the following:
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(1) if the Holder of such Definitive Securities 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; or
(2) if the Holder of such Definitive Securities 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, in each such case set forth in this subparagraph (D),
if the Security Registrar so requests or if the Applicable
Procedures so require, an Opinion of Counsel in form
reasonably acceptable to the Security Registrar and 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 no longer required in order to
maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the
subparagraphs in this Section 2.06(d)(ii), the Trustee
shall cancel the Definitive Securities and increase or
cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(x) Unrestricted Definitive Securities to Beneficial Interests
in Unrestricted Global Notes. A Holder of an Unrestricted Definitive
Security may exchange such Note for a beneficial interest in an
Unrestricted Global Note or transfer such Definitive Securities 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 Security and increase or cause to be increased the aggregate
principal amount of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Security to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) 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 more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of Definitive Securities so transferred.
(a) Transfer and Exchange of Definitive Securities for Definitive
Securities. Upon request by a Holder of Definitive Securities and such Holder's
compliance with the provisions of this Section 2.06(e), the Security Registrar
shall register the transfer or exchange of Definitive Securities. Prior to such
registration of transfer or exchange, the requesting Holder shall present or
surrender to the Security Registrar the Definitive Securities duly endorsed or
accompanied by a written instruction of transfer in form satisfactory to the
Security Registrar duly executed by such Holder or by his attorney, duly
authorized in writing. In addition, the
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requesting Holder shall provide any additional certifications, documents and
information, as applicable, required pursuant to the following provisions of
this Section 2.06(e).
(i) Restricted Definitive Securities to Restricted Definitive
Securities. Any Restricted Definitive Security may be transferred to and
registered in the name of Persons who take delivery thereof in the form of
a Restricted Definitive Security if the Security 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, 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) Restricted Definitive Security to Unrestricted Definitive
Securities. Any Restricted Definitive Security may be exchanged by the
Holder thereof for an Unrestricted Definitive Security or transferred to a
Person or Persons who take delivery thereof in the form of an Unrestricted
Definitive Security 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, certifies in the applicable Letter of Transmittal that it 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 Security Registrar receives the following:
(1) if the Holder of such Restricted Definitive Securities
proposes to exchange such Notes for an Unrestricted Definitive Security, a
certificate from such Holder in the form of Exhibit C hereto, including the
certifications in item (1)(d) thereof; or
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(2) if the Holder of such Restricted Definitive Securities
proposes to transfer such Notes to a Person who shall take delivery thereof in
the form of an Unrestricted Definitive Security, a certificate from such Holder
in the form of Exhibit B hereto, including the certifications in item (4)
thereof;
and, in each such case set forth in this subparagraph (D),
if the Security Registrar so requests, 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 no longer required in order to maintain
compliance with the Securities Act.
(iii) Unrestricted Definitive Securities to Unrestricted
Definitive Securities. A Holder of Unrestricted Definitive Securities may
transfer such Notes to a Person who takes delivery thereof in the form of
an Unrestricted Definitive Security. Upon receipt of a request to register
such a transfer, the Security Registrar shall register the Unrestricted
Definitive Securities pursuant to the instructions from the Holder thereof.
(b) Exchange Offer. Upon the consummation of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an authentication order in accordance with Section 2.02, 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
certify in the applicable Letters of Transmittal that (x) they are not broker-
dealers, (y) they are not participating in a distribution of the Exchange Notes
and (z) they are not affiliates (as defined in Rule 144) of the Company, and
accepted for exchange in the Exchange Offer and (ii) Definitive Securities in an
aggregate principal amount equal to the principal amount of the Restricted
Definitive Securities accepted for exchange in the Exchange Offer. Concurrently
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
the Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Securities so accepted
Definitive Securities in the appropriate principal amount.
(c) Legends. The following legends shall appear on the face of all
Global Securities and Definitive Securities 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
Security and each Definitive Security (and all Notes issued in exchange therefor
or substitution thereof) shall bear the legend in substantially the following
form:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT") AND, ACCORDINGLY, MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN
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THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS,
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR
OF A BENEFICIAL INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) (A "QIB"), (B) IT IS NOT A U.S. PERSON, IS NOT ACQUIRING
THIS NOTE FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON AND IS ACQUIRING THIS
NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT) (AN "IAI"), (2) AGREES THAT IT WILL NOT, WITHIN THE TIME
PERIOD REFERRED TO UNDER RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF
RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE) UNDER THE SECURITIES
ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR
OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY
THEREOF, (B) TO A PERSON WHOM THE HOLDER REASONABLY BELIEVES IS A QIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN COMPLIANCE
WITH RULE 144A UNDER THE SECURITIES ACT, (C) OUTSIDE THE UNITED STATES IN
AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES
ACT, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE), (E) TO AN IAI THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE REGISTRATION OF TRANSFER OF
THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) OR
(F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND, IN EACH CASE, IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS,
AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN
INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE OR ANY INTEREST HEREIN
WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF
SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. EACH IAI THAT IS
NOT A QIB WILL BE REQUIRED TO EFFECT ANY TRANSFER OF NOTES OR INTERESTS
THEREIN (OTHER THAN PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT)
THROUGH ONE OF THE INITIAL PURCHASERS. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE
CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS."
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(B) Notwithstanding the foregoing, any Global Security or
Definitive Security issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii),
(d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to 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 Security shall bear a
legend in substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITORY (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 SECTION 2.06 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 DEPOSITORY WITH THE PRIOR
WRITTEN CONSENT OF THE COMPANY."
(iii) Regulation S Temporary Global Note Legend. The Regulation
S Temporary Global Note shall bear a legend in substantially the following
form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR BENEFICIAL INTERESTS
IN THE REGULATION S PERMANENT GLOBAL NOTE, ARE AS SPECIFIED IN THE
INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL
OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO
RECEIVE PAYMENT OF INTEREST HEREON."
(d) Cancellation and/or Adjustment of Global Securities. At such time
as all beneficial interests in a particular Global Security have been exchanged
for Definitive Securities or a particular Global Security has been redeemed,
repurchased or canceled in whole and not in part, each such Global Security
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 Security is exchanged for or transferred to a Person who
will take delivery thereof in the form of a beneficial interest in another
Global Security or for Definitive Securities, the principal amount of Notes
represented by such Global Security shall be reduced accordingly and an
endorsement shall be made on such Global Security by the Trustee or by the
Depository 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
Security, such other Global Security shall be increased accordingly and an
endorsement shall be made on such Global Security by the Trustee or by the
Depository at the direction of the Trustee to reflect such increase.
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(e) 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 Securities
and Definitive Securities upon the Company's order or at the Security
Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Security or to a Holder of a Definitive Security 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, 8.06, 9.16, 10.08 and 10.09 hereof).
(iii) The Security Registrar shall not be required to register
the transfer of or exchange any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Securities and Definitive Securities issued upon
any registration of transfer or exchange of Global Securities or Definitive
Securities shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the
Global Securities or Definitive Securities 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 any Notes during a period beginning at the
opening of business 15 days before the day of any selection of Notes for
redemption under Section 10.04 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, the Security Registrar, any Paying Agent, any
Authenticating 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, the Security Registrar,
any Paying Agent, any Authenticating Agent or the Company shall be affected
by notice to the contrary.
(vii) The Trustee shall authenticate Global Securities and
Definitive Securities in accordance with the provisions of Section 2.02
hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Security Registrar pursuant to this Section
2.06 to effect a registration of transfer or exchange may be submitted by
facsimile.
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Section 2.07. Replacement Securities.
If any mutilated Security is surrendered to the Trustee, or the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, 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 Security 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 Paying Agent, the Security
Registrar and any Authenticating Agent from any loss that any of them may suffer
if a Security is replaced. The Company may charge for its expenses in replacing
a Security.
Every replacement Security 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 Securities duly issued hereunder.
Section 2.08. Outstanding Securities.
The Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation, those reductions in the interest in a Global Security
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 Security does not cease to be outstanding because the Company or
an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.07 hereof, it ceases
to be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the principal amount of any Security is considered paid under
Section 9.01 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 Securities payable on that date, then on and after that date
such Securities shall be deemed to be no longer outstanding and shall cease to
accrue interest.
Section 2.09. Treasury Securities.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company, or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company, shall
be 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 Securities that a Trustee knows are so owned
shall be so disregarded.
Section 2.10. Temporary Securities.
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Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities upon a written
order of the Company signed by two Officers of the Company. Temporary Securities
shall be substantially in the form of definitive Securities but may have
variations that the Company considers appropriate for temporary Securities and
as shall be reasonably acceptable to the Trustee. Without unreasonable delay,
the Company shall prepare and the Trustee shall authenticate definitive
Securities in exchange for temporary Securities.
Holders of temporary Securities shall be entitled to all of the
benefits of this Indenture.
Section 2.11. Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Securities surrendered to them for registration of transfer, exchange or
payment. The Trustee and no one else shall cancel all Securities surrendered for
registration of transfer, exchange, payment, replacement or cancellation and
shall destroy canceled Securities (subject to the record retention requirement
of the Exchange Act). Certification of the destruction of all canceled
Securities shall be delivered to the Company. The Company may not issue new
Securities to replace Securities 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 Securities, 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 Securities and in Section 9.01 hereof. 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. 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.
ARTICLE 3.
SATISFACTION AND DISCHARGE
Section 3.01. Satisfaction and Discharge of Indenture.
This Indenture shall, upon the request of the Company, cease to be of
further effect (except as to any surviving rights of registration of transfer or
exchange of Securities
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herein expressly provided for), and the Trustee, at the expense of the Company,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other
than (i) Securities which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 2.07 and (ii) Securities
for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust, as provided in Section 9.03) have
been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within
one year, or
(iii) 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 (i), (ii) or (iii) above, has irrevocably
deposited or caused to be irrevocably deposited with the Trustee as trust funds
in trust for such 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 any premium 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;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company;
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with; and
(4) the Trustee shall have received such other documents and
assurances as the Trustee shall have reasonably requested.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 5.07, the obligations of
the Trustee to any Authenticating Agent under Section 5.15 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 3.02 and the last
paragraph of Section 9.03 shall survive.
Section 3.02. Application of Trust Money.
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Subject to provisions of the last paragraph of Section 9.03, all money
deposited with the Trustee pursuant to Section 3.01 shall be 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 any premium and
interest for whose payment such money has been deposited with the Trustee.
ARTICLE 4.
REMEDIES
Section 4.01. Events of Default.
"Event 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):
(1) default in the payment of any interest upon any Security when it
becomes due and payable, and continuance of such default for a period of 30
days; or
(2) default in the payment of the principal of (or premium, if any,
on) any Security at its Maturity; or
(3) failure by the Company to observe or perform any covenant,
condition on the part of the Company to be performed or observed pursuant
to Section 7.01 hereof; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in
this Section specifically dealt with), and continuance of such default or
breach for a period of 30 days after there has been given, by registered or
certified mail, to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in aggregate principal amount of the
Outstanding Securities a written notice specifying such default or breach
and requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
(5) a default occurs under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any
Restricted Subsidiary of the Company (or the payment of which is guaranteed
by the Company or a Restricted Subsidiary of the Company) , whether such
Indebtedness or guarantee now exists or shall be created hereafter, if (a)
either (i) such default results from the failure to pay principal (and
premium, if any) upon the expressed maturity of such Indebtedness (after
the expiration of any applicable grace period) or (ii) as a result of such
default the maturity of such Indebtedness has been accelerated prior to its
expressed maturity and (b) the principal amount of such Indebtedness,
together with the principal amount of any other such Indebtedness with
respect to which the principal (and premium, if any) amount unpaid
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upon its expressed maturity (after the expiration of any applicable grace
period) , or the maturity of which has been so accelerated, exceeds $25
million; or
(6) a final judgment or final judgments (not subject to appeal) for
the payment of money are entered by a court or courts of competent
jurisdiction against the Company or any Subsidiary of the Company and such
judgment or judgments remain unstayed, in effect and unpaid for a period of
60 consecutive days, provided that the aggregate of all such judgments (to
the extent not paid or to be paid by insurance) exceeds $50 million; or
(7) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company or any Subsidiary of
the Company in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other similar
law or (B) a decree or order adjudging the Company or any Subsidiary of the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company or any Subsidiary of the Company under any
applicable Federal or State law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of
the Company or any Subsidiary of the Company or of any substantial part of
the property of the Company or any Subsidiary of the Company, or ordering
the winding up or liquidation of the affairs of the Company or any
Subsidiary of the Company, 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
(8) the commencement by the Company or any Subsidiary of the Company
of a voluntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by the Company or any Subsidiary of the Company to the entry of a
decree or order for relief in respect of the Company or any Subsidiary of
the Company 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 the Company or any Subsidiary of the Company, or the
filing by the Company or any Subsidiary of the Company of a petition or
answer or consent seeking reorganization or relief under any applicable
Federal or State law, or the consent by the Company or any Subsidiary of
the Company to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or any Subsidiary of
the Company or of any substantial part of their respective property, or the
making by the Company or any Subsidiary of the Company of an assignment for
the benefit of creditors, or the admission by either the Company or any
Subsidiary of the Company in writing of an inability to pay debts generally
as they become due, or the taking of corporate action by the Company or any
Subsidiary of the Company in furtherance of any such action.
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Section 4.02. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
clause 4.01(7) or (8)) with respect to the Securities at the time Outstanding
occurs and is continuing, then in every such case the Trustee or the Holders of
not less than 25% in principal amount of the Outstanding Securities may declare
all of the Securities to be due and payable immediately, by a notice in writing
to the Company (and to the Trustee if given by Holders), and upon any such
declaration the Notes shall become immediately due and payable.
In the event of a declaration of acceleration because an Event of
Default specified in Section 4.01(5) has occurred and is continuing, such
declaration of acceleration shall be automatically annulled if the holders of
the Indebtedness which is the subject of such Event of Default have rescinded
their declaration of acceleration in respect of such Indebtedness within 90-days
thereof and the Trustee has received written notice of such cure, waiver or
rescission and no other Event of Default has occurred during such 90-day period
which has not been cured or waived. If an Event of Default specified in clauses
(7) or (8) of Section 4.01 occurs, the Securities then outstanding shall ipso
facto become and be immediately due and payable without any declaration or other
act on the part of the Trustee or any Holder.
At any time after such a declaration of acceleration with respect to
Securities has been made and before a judgment or decree for payment of the
money due has been obtained by the Trustee as hereinafter in this Article
provided, the Holders of a majority in principal amount of the Outstanding
Securities, by written notice to the Company and the Trustee, may rescind and
annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest, including Special Interest, on all
Securities,
(B) the principal of (and premium, if any, on) any Securities
which have become due otherwise than by such declaration of acceleration
(including any Securities required to have been purchased on the Purchase
Date pursuant to an Offer to purchase made by the Company) and any interest
thereon at the rate or rates prescribed therefor in such Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest, including Special Interest, and principal
(and premium, if any) at a rate of 8 7/8% per annum, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
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(2) all Events of Default with respect to the Securities, other than
the non-payment of the principal of Securities which have become due solely
by such declaration of acceleration, have been cured or waived as provided
in Section 4.13.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 4.03. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for a
period of 30 days, or
(2) 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 pursuant to an Offer to purchase
made by the Company, at the Purchase Date thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and any premium and interest and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal (and premium, if any) and on any overdue interest, at the rate or
rates prescribed therefor in such 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 and 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 and collect the moneys adjudged or decreed to be payable in
the manner provided by law out of the property of the Company, wherever
situated.
If an Event of Default with respect to the Securities 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 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 4.04. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company (or any
other obligor upon the Securities), its property or its creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same in accordance
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with Section 4.06 hereof; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other 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 to the Trustee any amount due 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 5.07. The Trustee is allowed to participate as a Member, voting or
otherwise, of any official committee of creditor approved in such matter.
No provision of this Indenture 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 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 4.05. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities
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
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
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 4.06. Application of Money Collected.
Any money or other property 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 case of the distribution of such money or other property 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
5.07; and
SECOND: Subject to Article Eleven, to the payment of the amounts then
due and unpaid for principal of and any premium 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.
Section 4.07. Limitation on Suits.
No Holder of any Security of any series 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
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(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Securities;
(2) 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;
(3) 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;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in aggregate principal amount of the Outstanding Securities;
it being understood and intended that not one or more of such 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 of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders 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.
Section 4.08. 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 of the principal of (and premium, if any) and (subject to
Section 2.12) interest on such Security on the respective Stated Maturity or
Maturities expressed in such Security (or, in the case of redemption, on the
Redemption Date or in the case of an Offer to Purchase made by the Company and
required to be accepted as to such Security, on the Purchase 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 4.09. 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 Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
Section 4.10. 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 2.07, no right or
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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 4.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Securities
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. Subject to Section 4.07, 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 4.12. Control by Holders.
The Holders of 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, with respect to the Securities,
provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture, and
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
Section 4.13. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities, upon written notice to the Trustee and the Company, may
on behalf of the Holders of all the Securities waive any past default hereunder
with respect to such series and its consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest on any Security (including any Security which is required to have
been purchased pursuant to an Offer to purchase which has been made by the
Company), or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no
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such waiver shall extend to any subsequent or other default or impair any right
consequent thereon.
Section 4.14. 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, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided that neither this Section nor the Trust Indenture Act
shall be deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Trustee or Holders.
Section 4.15. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede pursuant to any such law
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 5.
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THE TRUSTEE
-----------
Section 5.01. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but in the case
of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not they conform to
the requirements of this Indenture, but not to verify the contents thereof.
(b) In case an Event of Default has occurred and is continuing of
which a Responsible Officer of the Trustee has actual acknowledge, the Trustee
shall exercise such of the rights and powers vested in by this Indenture, and
use the same degree of care and skill in their
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exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that
(1) this paragraph (c) shall not be construed to limit the effect of
paragraph (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction of
the Holders of a majority in aggregate principal amount of the Outstanding
Securities relating to the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Indenture; and
(4) no provision of this Indenture shall require the Trustee to 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.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
Section 5.02. Notice of Defaults.
If a default occurs hereunder with respect to the Securities of which
the Trustee has notice, the Trustee shall give the Holders notice of such
default as and to the extent provided by the Trust Indenture Act; provided,
however, that in the case of any default of the character specified in Section
4.01(4), no such notice to Holders shall be given until at least 30 days after
the occurrence thereof. For the purpose of this Section, the term "default"
means any event which is, or after notice or lapse of time or both would become,
an Event of Default with respect to Securities of such series.
Section 5.03. Certain Rights of Trustee.
Subject to the provisions of Section 5.01:
(a) the Trustee may conclusively rely and shall be fully 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
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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;
(b) 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;
(c) 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, conclusively rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the 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;
(e) 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 security or indemnity reasonably satisfactory
to it against the costs, expenses and liabilities which might be incurred
by it in compliance with such request or direction;
(f) 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 sole 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;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents,
attorneys, custodians and nominees and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent, attorney,
custodian or nominee appointed with due care by it hereunder; and
(h) the rights and protections afforded to the Trustee under this
Section 5.03 shall be afforded to the Paying Agent, Security Registrar and
Authenticating Agent if the Trustee is acting in such capacity.
Section 5.04. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee
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assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities. The Trustee shall not be accountable for the use or application by
the Company, of Securities or the proceeds thereof.
Section 5.05. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
5.08 and 5.13, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Security
Registrar or such other agent, as the case may be.
Section 5.06. 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.
Section 5.07. Compensation and Reimbursement.
The Company agrees
(1) 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);
(2) 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
its gross negligence or bad faith; and
(3) to indemnify the Trustee, its officers, directors, employees and
agents for, and to hold it harmless against, any and all loss, liability,
damage or expense including taxes (excluding income taxes of the Trustee)
incurred without gross negligence or bad faith on its part, arising out of
or in connection with the acceptance or administration of the trust or
trusts hereunder, including the costs and expenses of enforcing this
Indenture against the Company (including Section 5.07) and of any
litigation, threatened or otherwise, in connection with the exercise or
performance of any of its powers or duties hereunder.
As security for the performance of the obligations of the Company
under this Section 5.07, the Trustee shall have a lien prior to the Securities
upon all property and funds held or collected by the Trustee as such. The
Trustee's right to receive payments of any amounts under this Section 5.07 shall
not be subordinate to any other obligation or indebtedness of the Company (even
though the Notes may be so subordinated).
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Section 5.08. Administrative Expense.
The obligations of the Company under this Section 5.08 to compensate
and indemnify the Trustee and each predecessor Trustee and to pay or reimburse
the Trustee and each predecessor Trustee for expenses, disbursements and
advances shall constitute additional indebtedness hereunder and shall survive
the satisfaction and discharge of this Indenture or the rejection or termination
of this Indenture under bankruptcy law. Such additional indebtedness shall be a
senior claim to that of the Securities upon all property and funds held or
collected by the Trustee as such, except funds held in trust for the benefit of
the Holders of particular Securities or coupons, and the Securities are hereby
subordinated to such senior claim. If the Trustee renders services and incurs
expenses following an Event of Default under Section 4.01(7) or Section 4.01(8)
hereof, the parties hereto and the Holders by their acceptance of the Securities
hereby agree that such expenses are intended to constitute expenses of
administration under any bankruptcy law.
Section 5.09. Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture. Further, it is
understood that the Trustee shall be entitled to any and all rights that the
Trustee may have in its individual capacity or any other capacity with respect
to any Indebtedness of the Company, and no provision of this Indenture shall be
construed as to limit or diminish any such right.
Section 5.10. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such and
has a combined capital and surplus of at least $50,000,000. If such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus of such Person 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 5.11. 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 5.11.
(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 5.11 shall not have been delivered to the Trustee within 30
days after the giving of such notice of
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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 a
majority in principal amount of the Outstanding Securities, delivered to the
Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 5.09 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
(2) the Trustee shall cease to be eligible under Section 5.10 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(3) 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 with respect to all Securities, or (ii) subject to Section 4.14, 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 or Trustees.
(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 or
Trustees. 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 in accordance
with the applicable requirements of Section 5.12, become the successor Trustee
and supersede the successor Trustee appointed by the Company. If no successor
Trustee shall have been so appointed by the Company or the Holders and accepted
appointment in the manner required by Section 5.12, 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.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 1.06. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
Section 5.12. Acceptance of Appointment by Successor.
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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 its charges,
including, without limitation, all monies due and owing to the retiring Trustee,
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 5.13. 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 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.
Section 5.14. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon 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).
Section 5.15. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect
to the Securities which shall be authorized to act on behalf of the Trustee to
authenticate Securities issued upon original issue and upon exchange,
registration of transfer or partial redemption thereof or pursuant to Section
2.07, and Securities so authenticated shall be entitled to the benefits of this
Indenture and shall be valid and obligatory for all purposes as if authenticated
by the Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall
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at all times be a corporation organized and doing business under the laws of the
United States of America, any State thereof or the District of Columbia,
authorized under such laws to act as Authenticating Agent, having a combined
capital and surplus of not less than $50,000,000 and subject to supervision or
examination by Federal or State authority. If such Authenticating Agent
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus of such Authenticating Agent
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 an Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section,
such Authenticating Agent shall resign immediately in the manner and with the
effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders of
Securities of the series with respect to which such Authenticating Agent will
serve, as their names and addresses appear in the Security Register. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Company agrees to pay to each Authenticating Agent reasonable
compensation for its services rendered. If an appointment is made pursuant to
this Section, the Securities may have endorsed thereon, in addition to or in
lieu of the Trustee's certificate of authentication, an alternative certificate
of authentication in the following form:
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This is one of the Securities described in the within-mentioned
Indenture.
Marine Midland Bank,
As Trustee
By:
----------------------------------------
As Authenticating Agent
By:
----------------------------------------
Authorized Officer
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ARTICLE 6.
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HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
-------------------------------------------------
Section 6.01. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee at
any time, and from time to time as the Trustee may request in writing, within 30
days after the receipt by the Company of any such request, a list of the names
and addresses of the Holders as of a date not more than 15 days prior to the
time such list is furnished.
Section 6.02. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 6.01. The Trustee may
destroy any list furnished to it as provided in Section 6.01 upon receipt of a
new list so furnished.
(b) The rights of the Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
Section 6.03. Reports by Trustee.
(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant thereto.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which any Securities are listed, with the Commission and with the Company. The
Company will notify the Trustee in writing when any Securities are listed on any
stock exchange.
Section 6.04. Reports by Company.
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant to the Trust Indenture Act; provided
that any such information, documents or reports required to be filed with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be filed
with the Trustee within 15 days after the same is so required to be filed with
the Commission.
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ARTICLE 7.
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CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
----------------------------------------------------
Section 7.01. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate or merge with or into (whether or
not the Company is the Surviving Person), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions to another Person unless:
(a) the Surviving Person is a corporation organized and existing
under the laws of the United States, any state thereof or the District of
Columbia;
(b) the Surviving Person (if other than the Company) assumes by
supplemental indenture in a form reasonably satisfactory to the Trustee all
the obligations of the Company under the Securities and this Indenture;
(c) at the time of and immediately after such Disposition no Default
or Event of Default shall have occurred and be continuing;
(d) except with respect to a merger of the Company with or into Clark
USA that does not result in a Rating Decline, after giving pro forma effect
to the transaction either (1) the Surviving Person would be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Operating Cash Flow Ratio test set forth in Section 9.12
hereof or (2) the Consolidated Operating Cash Flow Ratio of the Surviving
Person would be no less than such ratio for the Company immediately prior
to the transaction; and
(e) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required
in connection with such transaction, such supplemental indenture comply
with this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with.
Section 7.02. Successor Substituted.
Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer, lease or other disposition
of the properties and assets of the Company substantially as an entirety in
accordance with Section 7.01, the successor Person formed by such consolidation
or into which the Company is merged or to which such conveyance, transfer, lease
or other disposition 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 thereafter, except in the case of a lease, the predecessor Person shall be
relieved of all obligations and covenants under this Indenture and the
Securities; provided, however, that the predecessor Company shall not be
relieved from the obligation to pay principal of and interest on the Securities,
except in the
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case of a transfer, conveyance, sale or other disposition (excluding by lease)
of all of the Company's assets that meets the requirements of Section 7.01
hereof.
ARTICLE 8.
----------
SUPPLEMENTAL INDENTURES
-----------------------
Section 8.01. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, 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:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company herein
and in the Securities; or
(2) 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
(3) to add any additional Events of Default; or
(4) to secure the Securities; or
(5) to establish the form or terms of Securities as permitted by
Section 2.01; or
(6) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee; or
(7) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising
under this Indenture, provided that such action pursuant to this clause (7)
shall not adversely affect the interests of the Holders in any material
respect; or
(8) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act; or
(9) to add to or change any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the issuance of
securities in bearer form, registrable or not registrable as to principal,
and with our without interest coupons; or
(10) to delete all or any portion of Section 9.21 hereof with respect
to any series of Securities; or
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(11) to make any change that does not materially adversely affect the
interests of the Holders of Securities of any series.
Section 8.02. Supplemental Indentures 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, 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,
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or
(2) reduce the principal amount of (or the premium), or interest,
including Special Interest, on, any Securities, or
(3) change the place or currency of payment of principal of (or
premium), or interest on, any Securities, or
(4) impair the right to institute suit for the enforcement of any
payment on or with respect to any Securities, or
(5) reduce the above-stated percentage of Outstanding Securities
necessary to modify or amend the Indenture, or
(6) reduce the percentage of aggregate principal amount of
Outstanding Securities necessary for waiver of compliance of certain
covenants, as set forth in Article 4.13 or 9.20 hereof, or
(7) modify any provisions of this Indenture relating to the
modification and amendment of this Indenture or the waiver of past defaults
or covenants, except as otherwise specified herein.
It shall not be necessary for any Act of 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 8.03. 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
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supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Section 8.04. 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 8.05. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
Section 8.06. 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 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 and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
Section 8.07. Notice of Supplemental Indentures.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 8.02, the Company
shall give notice to all Holders of such fact, setting forth in general terms
the substance of such supplemental indenture, in the manner provided in Section
1.06. Any failure of the Company to give such notice, or any defect therein,
shall not in any way impair or affect the validity of any such supplemental
indenture.
Section 8.08. Effect on Senior Indebtedness.
No amendments, supplement or waiver of this Indenture shall adversely
affect the rights of any holder of Senior Debt (including their rights under
Article Eleven) without the consent of such holder.
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ARTICLE 9.
----------
COVENANTS
---------
Section 9.01. Payment of Principal, Premium and Interest.
The Company covenants and agrees that it shall duly and punctually pay
the principal of (and premium, if any) and interest, including Special Interest,
on the Securities in accordance with the terms of the Securities and this
Indenture.
Section 9.02. Maintenance of Office or Agency.
The Company shall maintain an office or agency in the Borough of
Manhattan, City of New York 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 and this Indenture may be served. The Company initially appoints
Marine Midland Bank as Paying Agent and Security Registrar. The Company shall
give prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company terminates the
appointment of a Paying Agent or Security Registrar or otherwise shall fail to
maintain any such required office or agency, the Company shall use its
reasonable best efforts to appoint a successor Paying Agent or Security
Registrar reasonably acceptable to the Trustee. If the Company fails to
maintain a Paying Agent or Security Registrar, the Trustee shall act as such,
and the Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands. The Company shall forward
copies of all presentations, surrenders, notices and demands to the Trustee
promptly upon their receipt.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
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, City of New York, for such purposes. The Company shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
Section 9.03. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it
shall, on or prior to 11:00 a.m. New York City time on each due date of the
principal of or any premium 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 any premium and interest so becoming due until such
sums shall be paid to such Persons or otherwise disposed of as herein provided
and shall promptly notify the Trustee of its action or failure so to act.
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Whenever the Company shall have one or more Paying Agents, it will,
prior to each due date of the principal of or any premium or interest on any
Securities, deposit with a Paying Agent a sum sufficient to pay such amount,
such sum to be held as provided by the Trust Indenture Act, and (unless such
Paying Agent is the Trustee) the Company will promptly notify the Trustee of its
action or 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 (i) comply with the provisions of the Trust Indenture Act
applicable to it as a Paying Agent and (ii) during the continuance of any
default by the Company (or any other obligor upon the Securities) in the making
of any payment in respect of the Securities, and upon the written request of the
Trustee, forthwith pay to the Trustee all sums held in trust by such Paying
Agent for payment in respect of the Securities.
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 money.
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 or any premium or
interest, including Special Interest, on any Security and remaining unclaimed
for two years after such principal, premium or interest, including Special
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 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, 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 9.04. Statement by Officers as to Default.
(a) The Company shall deliver to the Trustee, within 120 days after
the end of each fiscal year of the Company, an Officers' Certificate stating
that a review of the activities of the Company and its Subsidiaries during the
preceding fiscal year 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
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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) and that to the best of such officers'
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of (and premium, if any) or interest,
including Special Interest, if any, on the Securities are prohibited or if such
event has occurred, a description of the event and what action the Company is
taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the financial statements
delivered pursuant to Section 9.08 shall be accompanied by a written statement
of the Company's independent public accountants (who shall be a firm of
established national reputation reasonably satisfactory to the Trustee) that in
making the examination necessary for certification of such financial statements
nothing has come to their attention which would lead them to believe that the
Company has violated any provisions of Articles Eight or Ten of this Indenture
or, if any such violation has occurred, specifying the nature and period of
existence thereof, it being understood that such accountants shall not be liable
directly or indirectly to any Person for any failure to obtain knowledge of any
such violation.
(c) The Company shall, so long as any of the Securities are
outstanding, deliver to the Trustee, forthwith upon any officer becoming aware
of (i) any default or Event of Default or (ii) any event of default under any
other mortgage, indenture or instrument as described in Section 4.01(5), an
Officers' Certificate specifying such default, Event of Default or event of
default and what action the Company is taking or proposes to take with respect
thereto.
Section 9.05. Existence.
Subject to Article Eight, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided, however, that the
Company shall not be required to preserve any such right or franchise 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 that the loss
thereof is not disadvantageous in any material respect to the Holders.
Section 9.06. Maintenance of Properties.
The Company shall cause all properties used or useful in the conduct
of its business or the business of any Subsidiary of the Company to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and shall cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this Section shall prevent the Company from
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, in the judgment of the
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Company, desirable in the conduct of its business or the business of any
Subsidiary of the Company and not disadvantageous in any material respect to the
Holders.
Section 9.07. Payment of Taxes and Other Claims.
The Company shall, or shall cause its Subsidiaries to, pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (1) all taxes, assessments and governmental charges levied or
imposed upon the Company or any Subsidiary of the Company or upon the income,
profits or property of the Company or any Subsidiary of the Company, and (2) 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 Subsidiary of the Company;
provided, however, that the Company and its Subsidiaries 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.
Section 9.08. Provision of Financial Information.
So long as the Notes are outstanding, whether or not the Company is
required to be subject to Section 13(a) or 15(d) of the Exchange Act, or any
successor provision thereto, the Company shall file with the Commission the
annual reports, quarterly reports and other documents (including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and,
with respect to the annual information only, a report thereon by the Company's
certified independent accountants) which the Company would have been required to
file with the Commission pursuant to such Section 13(a) or 15(d) or any
successor provision thereto if the Company were so required, such documents to
be filed with the Commission on or prior to the respective dates (the "Required
Filing Dates") by which the Company would have been required so to file such
documents if the Company were so required. The Company shall also in any event
(a) within 15 days of each Required Filing Date (i) transmit by mail to all
Holders, as their names and addresses appear in the Security Register, without
cost to such Holders, and (ii) file with the Trustee, in each case, copies of
the annual reports, quarterly reports and other documents which the Company
would have been required to file with the Commission pursuant to Section 13(a)
or 15(d) of the Exchange Act or any successor provisions thereto if the Company
were required to be subject to such Sections and (b) if filing such documents by
the Company with the Commission is not permitted under the Exchange Act,
promptly upon written request supply copies of such documents to any prospective
Holder. In addition, the Company shall, for so long as any Securities remain
outstanding, furnish to all Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144(d)(4) under the Securities Act.
Section 9.09. Limitation on Restricted Payments.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, make any Restricted Payment, unless (i)
at the time of and immediately after giving effect to the proposed Restricted
Payment, no Default or Event of Default shall have occurred and be continuing,
or would occur as a consequence thereof, (ii) either the Company would (a) at
the time of such Restricted Payment and after giving pro forma effect thereto,
have a Consolidated Adjusted Net Worth exceeding $200 million or (b) be
permitted to incur at least
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$1.00 of additional Indebtedness pursuant to the Consolidated Operating Cash
Flow Ratio test set forth in Section 9.12, and (iii) at the time of and
immediately after giving effect to the proposed Restricted Payment (the value of
any such payment if other than cash, as determined in good faith by the board of
directors of the Company and evidenced by a Board Resolution), the aggregate
amount of all Restricted Payments (including Restricted Payments permitted by
clauses (b), (j), (l) and (m) of the next succeeding paragraph and excluding the
other Restricted Payments permitted by such paragraph) declared or made
subsequent to the Issue Date shall not exceed the sum of (a) 50% of the
aggregate Consolidated Net Operating Income (or, if such aggregate Consolidated
Net Operating Income is a deficit, minus 100% of such deficit) of the Company
for the period (taken as one accounting period) from the first day of the fiscal
quarter that begins after the Issue Date to the end of the Company's most
recently ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment plus (b) 100% of the aggregate
net proceeds, including cash and the fair market value of property other than
cash (as determined in good faith by the board of directors of the Company and
evidenced by a Board Resolution), received by the Company since the Issue Date,
from any Person other than a Subsidiary of the Company as a result of the
issuance of Capital Stock (other than any Disqualified Capital Stock) of the
Company including such Capital Stock issued upon conversion of Indebtedness or
upon exercise of warrants and any contributions to the capital of the Company
(other than Excluded Contributions) received by the Company from any such Person
plus (c) to the extent that any Restricted Investment that was made after the
Issue Date, is sold for cash or otherwise liquidated or repaid for cash, the
cash return of capital with respect to such Restricted Investment (less the cost
of disposition, if any). For purposes of any calculation pursuant to the
preceding sentence which is required to be made within 60 days after the
declaration of a dividend by the Company, such dividend shall be deemed to be
paid at the date of declaration.
The foregoing provisions of this covenant shall not be violated by
reason of (a) the payment of any dividends or distributions payable solely in
shares of the Company's Capital Stock (other than Disqualified Capital Stock) or
in options, warrants or other rights to acquire the Company's Capital Stock
(other than Disqualified Capital Stock), (b) the payment of any dividend within
60 days after the date of declaration thereof if, at such date of declaration,
such payment complied with the provisions described above, (c) the payment of
cash dividends or the making of loans or advances to Clark USA after October 1,
2002, in an amount sufficient to enable Clark USA to make cash payments of
interest or dividends required to be made in respect of the Exchangeable
Preferred Stock or the Exchange Debentures in accordance with the terms thereof
in effect on the date of this Indenture, (d) the payment of cash dividends or
the making of loans or advances in an amount sufficient to enable Clark USA to
make payments required to be made in respect of the 10/7//8% Notes in accordance
with the terms thereof in effect on the date of this Indenture, (e) the
retirement of any shares of the Company's Capital Stock in exchange for, or out
of the proceeds of, the substantially concurrent sale (other than to a
Subsidiary of the Company) of, other shares of its Capital Stock (other than
Disqualified Capital Stock) or options, warrants or other rights to purchase the
Company's Capital Stock (other than Disqualified Capital Stock) and the
declaration and payment of dividends on such new Capital Stock in an aggregate
amount no greater than the amount of dividends declarable and payable on such
retired Capital Stock immediately prior to such retirement, (f) the Chevron
Payment, (g) the AOC Payment, (h) the Gulf Payments, (i) other Restricted
Payments in an aggregate amount not to
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exceed $50 million, (j) the making of any payment in redemption of Capital Stock
of the Company or Clark USA or options to purchase such Capital Stock granted to
officers or employees of the Company or Clark USA pursuant to any stock option,
stock purchase or other stock plan approved by the board of directors of the
Company or Clark USA in connection with the severance or termination of officers
or employees not to exceed $8 million per annum or the payment of cash dividends
or the making of loans or advances to Clark USA to permit it to make such
payments, (k) the declaration and payment of dividends to holders of any class
or series of preferred stock of the Company and its Restricted Subsidiaries
issued in accordance with Section 9.12, (l) the payment of dividends on the
Company's Common Stock, following the first public offering of the Company's or
Clark USA's Common Stock after the Issue Date, of up to 6% per annum of the net
proceeds received by the Company in such public offering or the payment of funds
to Clark USA in amounts necessary to permit Clark USA to make such payments to
the extent the proceeds of such offering were contributed to the equity capital
of the Company; (m) so long as no Default or Event of Default shall have
occurred and be continuing (or would result therefrom), the payment to Clark USA
(in the form of dividends, loans, advances or otherwise) of 100% of the proceeds
of Indebtedness incurred pursuant to clause (xv) of the definition of "Permitted
Indebtedness" to redeem, repurchase, defease or otherwise acquire or retire for
value the 10/7//8% Notes; provided, however, that at the time of such
redemption, repurchase, defeasance or other acquisition or retirement for value,
the Consolidated Operating Cash Flow Ratio of the Company, after giving effect
to the incurrence of Indebtedness in connection therewith, would be greater than
1.75 to 1.0; (n) the payment of dividends or the making of loans or advances by
the Company to Clark USA in an amount not to exceed $2 million in any fiscal
year for costs and expenses incurred by Clark USA in its capacity as a holding
company or for services rendered to the Company; (o) Restricted Investments not
to exceed at any one time an aggregate of $75 million; and (p) Restricted
Investments made with Excluded Contributions.
The board of directors of the Company may designate any Restricted
Subsidiary to be an Unrestricted Subsidiary if such designation would not cause
a Default or Event of Default; provided that, in no event shall the business
currently operated by the Company or Clark USA be transferred to or held by an
Unrestricted Subsidiary, unless after giving pro forma effect to such transfer
the Company could have incurred an additional $1.00 of Indebtedness pursuant to
the Consolidated Operating Cash Flow Ratio test set forth in Section 9.12. For
purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash) in
the Subsidiary so designated shall be deemed to be Restricted Payments at the
time of such designation and shall reduce the amount available for Restricted
Payments under the first paragraph of this Section 9.09. All such outstanding
Investments shall be deemed to constitute Investments in an amount equal to the
greatest of (x) the net book value of such Investments at the time of such
designation, (y) the fair market value of such Investments at the time of such
designation, and (z) the original fair market value of such Investments at the
time they were made. Such designation shall only be permitted if such Restricted
Payment would be permitted at such time and if such Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary.
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Section 9.10. Limitation on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries.
The Company shall not, and shall not permit any Restricted Subsidiary
of the Company (other than a Securitization Special Purpose Entity) to, create
or otherwise cause or suffer to exist or become effective, any consensual
encumbrance or restriction which, by its terms, restricts the ability of any
Restricted Subsidiary of the Company (other than a Securitization Special
Purpose Entity) to (i) pay dividends or make any other distributions on any such
Restricted Subsidiary's Capital Stock or pay any Indebtedness owed to the
Company or any Restricted Subsidiary of the Company, (ii) make any loans or
advances to the Company or any Restricted Subsidiary of the Company, or (iii)
transfer any of its property or assets to the Company or any Restricted
Subsidiary of the Company, except for, in the case of clauses (i), (ii) and
(iii) above, any restrictions (a) existing under this Indenture and any
restrictions existing or created on the Issue Date pursuant to any agreement
relating to Existing Indebtedness of the Company or any Restricted Subsidiary,
(b) pursuant to an agreement relating to Indebtedness incurred by such
Restricted Subsidiary prior to the date on which such Restricted Subsidiary was
acquired by the Company and outstanding on such date and not incurred in
anticipation of becoming a Restricted Subsidiary, (c) imposed by virtue of
applicable corporate law or regulation and relating solely to the payment of
dividends or distributions to stockholders, (d) with respect to restrictions of
the nature described in clause (iii) above, included in a contract entered into
in the ordinary course of business and consistent with past practices that
contains provisions restricting the assignment of such contract, (e) pursuant to
an agreement effecting a renewal, extension, refinancing, refunding or
replacement of Indebtedness referred to in (a) or (b) above; provided, however,
that the provisions contained in such renewal, extension, refinancing, refunding
or replacement agreement relating to such encumbrance or restriction, taken as a
whole, are not materially more restrictive than the provisions contained in the
agreement the subject thereof, as determined in good faith by the board of
directors, or (f) which shall not in the aggregate cause the Company not to have
the funds necessary to pay the principal of, premium, if any, or interest,
including Special Interest, on the Notes at their Stated Maturity.
Section 9.11. Limitation on Transactions with Shareholders and Affiliates.
The Company shall not, and shall not permit any Restricted Subsidiary
of the Company to, directly or indirectly, conduct any business or enter into
any transaction or series of similar transactions (including, without
limitation, the purchase, sale, transfer, lease or exchange of any property or
the rendering of any service) with (i) any direct or indirect holder of more
than 5% of any class of Capital Stock of the Company or of any Restricted
Subsidiary of the Company (other than transactions between or among the Company
and/or its Restricted Subsidiaries except for Restricted Subsidiaries owned in
any part by the Principal Shareholders) or (ii) any Affiliate of the Company
(other than transactions between or among the Company and/or its Restricted
Subsidiaries except for Restricted Subsidiaries owned in any part by the
Principal Shareholders) (each of the foregoing, a "Shareholder/Affiliate
Transaction") unless the terms of such business, transaction or series of
transactions (a) are set forth in writing and (b) are as favorable to the
Company or such Restricted Subsidiary in all material respects as terms that
would be obtainable at the time for a comparable transaction or series of
similar transactions in arm's-length dealings with a Person which is not such a
stockholder or Affiliate and, if such transaction or series of transactions
involves payment for services of such a stockholder or Affiliate, (x) for
amounts
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greater than $10 million and less than $25 million per annum, the Company shall
deliver an Officers' Certificate to the Trustee certifying that such
Shareholder/Affiliate Transaction complies with clause (b) above or (y) for
amounts equal to or greater than $25 million per annum, then (A) a majority of
the disinterested members of the board of directors shall in good faith
determine that such payments are fair consideration for the services performed
or to be performed (evidenced by a Board Resolution) or (B) the Company must
receive a favorable opinion from a nationally recognized investment banking firm
chosen by the Company or, if no such investment banking firm is in a position to
provide such opinion, a similar firm chosen by the Company (having expertise in
the specific area which is the subject of the opinion), that such payments are
fair consideration for the services performed or to be performed (a copy of
which shall be delivered to the Trustee); provided that the foregoing
requirements shall not apply to (i) Shareholder/Affiliate Transactions involving
the purchase or sale of crude oil in the ordinary course of the Company's
business, so long as such transactions are priced in line with the market price
of a crude benchmark and the pricing of such transactions are equivalent to the
pricing of comparable transactions with unrelated third parties; and provided
further that the Gulf Payments shall not be deemed a Shareholder/Affiliate
Transaction, (ii) Restricted Payments permitted by the provisions of this
Indenture described in Section 9.09, (iii) payments made in connection with the
Blackstone Transaction, including fees to Blackstone, (iv) payment of annual
management, consulting, monitoring and advisory fees and related expenses to
Blackstone and its Affiliates, (v) payment of reasonable and customary fees paid
to, and indemnity provided on behalf of, officers, directors, employees or
consultants of the Company or any Restricted Subsidiary, (vi) payments by the
Company or any of its Restricted Subsidiaries to Blackstone and its Affiliates
made for any financial advisory, financing, underwriting or placement services
or in respect of other investment banking activities, including, without
limitation, in connection with acquisitions or divestitures which payments are
approved by a majority of the board of directors of the Company in good faith,
(vii) payments or loans to employees or consultants which are approved by a
majority of the board of directors of the Company in good faith, (viii) any
agreement in effect on the Issue Date and any amendment thereto (so long as any
such amendment is not disadvantageous to the holders of the Notes in any
material respect) or any transaction contemplated thereby, or (ix) any
stockholder agreement or registration rights agreement to which the Company is a
party on the Issue Date and any similar agreements which it may enter into
thereafter; provided that the performance by the Company or any of its
Restricted Subsidiaries of obligations under any future amendment or under such
a similar agreement entered into after the Issue Date shall only be permitted by
this clause (ix) to the extent that the terms of any such amendment or new
agreement are not disadvantageous to the holders of the Notes in any material
respect.
Section 9.12. Limitation on Indebtedness.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, incur any Indebtedness (including Acquired Debt)
other than (i) the Notes, the Senior Notes, and obligations outstanding under
the Loan Agreement and (ii) Permitted Indebtedness, unless after giving effect
to the incurrence of such Indebtedness and the receipt and application of the
proceeds therefrom, the Company's Consolidated Operating Cash Flow Ratio is
greater than 2 to 1. Notwithstanding the foregoing, the Company's Unrestricted
Subsidiaries may incur Non-Recourse Debt; provided, however, that if any such
Indebtedness ceases to be Non-Recourse
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Debt of an Unrestricted Subsidiary, such event shall be deemed to constitute an
incurrence of Indebtedness by a Restricted Subsidiary of the Company.
Section 9.13. Limitation on Issuance of Guarantees of Indebtedness.
The Company shall not permit any Restricted Subsidiary, directly or
indirectly, to guarantee or secure the payment of any Indebtedness of the
Company unless such Restricted Subsidiary simultaneously executes and delivers
supplemental indentures to this Indenture providing for the guarantee or
security of the payment of the Notes by such Restricted Subsidiary (other than
the grant of security interests in cash and cash equivalents, receivables and
product inventories to secure obligations under the Credit Agreement). If the
Indebtedness to be guaranteed is subordinated to the Notes, the guarantee or
security of such Indebtedness shall be subordinated to the guarantee or security
of the Notes to the same extent as the Indebtedness to be guaranteed is
subordinated to the Notes under this Indenture. Notwithstanding the foregoing,
any such guarantee or security by a Restricted Subsidiary of the Notes shall
provide by its terms that it shall be automatically and unconditionally released
and discharged upon either (i) the release or discharge of such guarantee or
security of payment of such other Indebtedness, except a discharge by or as a
result of payment under such guarantee or security, or (ii) any sale, exchange
or transfer, to any Person not an Affiliate of the Company, of all of the
Company's Capital Stock in, or all or substantially all the assets of, such
Restricted Subsidiary, which sale, exchange or transfer is made in compliance
with the applicable provision of this Indenture.
Section 9.14. Other Agreements.
The Company shall not, and shall not permit any Subsidiary of the
Company to, enter into or become a party (including, without limitation, as an
assignee or successor) to any agreement (including, without limitation, a
refinancing or refunding of the Credit Agreement) that would conflict with this
Indenture.
Section 9.15. Limitation on Liens.
The Company shall not, directly or indirectly, create, incur, assume
or suffer to exist any Lien (other than Permitted Liens) on any asset now owned
or hereafter acquired, or on any income or profits therefrom, or assign or
convey any right to receive income therefrom to secure any Indebtedness which is
pari passu with or subordinate in right of payment to the Notes, unless the
Notes are secured equally and ratably simultaneously with or prior to the
creation, incurrence or assumption of such Lien for so long as such Lien exists;
provided, that in any case involving a Lien securing Indebtedness which is
subordinated in right of payment to the Notes, such Lien is subordinated to the
Lien securing the Notes to the same extent that such subordinated debt is
subordinated to the Notes.
Section 9.16. Limitation on Certain Asset Dispositions.
The Company shall not, and shall not permit any Restricted Subsidiary
of the Company to, make any Asset Disposition unless (i) the Company or such
Restricted Subsidiary receives consideration at the time of such disposition (or
in the case of a lease, over the term of such lease) at least equal to the fair
market value of the shares or assets disposed of (which shall
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be as determined in good faith by the Company), and (ii) at least 75% of the
consideration for such disposition consists of cash or Cash Equivalents;
provided that the following shall be deemed to be cash for purposes of this
covenant: (1) the amount of any liabilities (as shown on the Company's or such
Restricted Subsidiary's most recent balance sheet or in the notes thereto) of
the Company or such Restricted Subsidiary (other than liabilities that are by
their terms subordinated to the Notes) that are assumed by the transferee of any
such assets, and (2) any notes or other obligations received by the Company or
such Restricted Subsidiary from a transferee that are converted by the Company
or such Restricted Subsidiary into cash within 180 days after such Asset
Disposition; provided, further, that the 75% limitation referred to above in
clause (ii) shall not apply to (x) any disposition of assets in which the cash
portion of such consideration received therefor on an after-tax basis,
determined in accordance with the foregoing proviso, is equal to or greater than
what the after-tax net proceeds would have been had such transaction complied
with the aforementioned 75% limitation, (y) any disposition of assets (other
than the Port Arthur Refinery) in exchange for assets of comparable fair market
value related to the Principal Business of the Company, provided that in any
such exchange of assets of the Company or a Restricted Subsidiary with a fair
market value in excess of $20 million occurring when Blackstone fails to hold,
directly or indirectly, 30% or more of the total voting power of all classes of
stock of the Company, the Company shall obtain an opinion or report from a
nationally recognized investment banking firm, valuation expert or accounting
firm confirming that the assets received by the Company and such Restricted
Subsidiary in such exchange have a fair market value at least equal to the
assets so exchanged or (z) any disposition of Securitization Program Assets to
any Securitization Special Purpose Entity in exchange for Indebtedness of,
procurement of letters of credit and similar instruments by, or equity or other
interests in, such Securitization Special Purpose Entity.
Within 360 days of the later of (a) the receipt of the Net Available
Proceeds and (b) the date of such Asset Disposition, the Company may elect to
(i) apply the Net Available Proceeds from such Asset Disposition to permanently
redeem or repay Indebtedness of the Company or any Restricted Subsidiary, other
than Indebtedness of the Company which is subordinated to the Notes, or (ii)
apply the Net Available Proceeds from such Asset Disposition to invest in assets
related to the Principal Business of the Company or Capital Stock of any Person
primarily engaged in the Principal Business if, as a result of such acquisition,
such Person becomes a Restricted Subsidiary. Pending the final application of
any such Net Available Proceeds, the Company may temporarily invest such Net
Available Proceeds in any manner permitted by this Indenture. Any Net Available
Proceeds from an Asset Disposition not applied or invested as provided in the
first sentence of this paragraph shall be deemed to constitute "Excess
Proceeds."
As soon as practical, but in no event later than 10 Business Days
after any date (an "Asset Disposition Trigger Date") that the aggregate amount
of Excess Proceeds exceeds $25 million, the Company shall commence an Offer (as
described in Section 10.09) to purchase the maximum principal amount of Notes
that may be purchased out of the Excess Proceeds, and to purchase or prepay the
maximum amount of other Indebtedness of Clark USA or the Company having similar
rights to be so prepaid or purchased out of such Excess Proceeds, in each case
at an Offer price in cash in an amount equal to 100% of the principal amount
thereof, plus accrued and unpaid interest, including Special Interest, to the
date of purchase. To the extent that any
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Excess Proceeds remain after completion of an Offer, the Company may use the
remaining amount for general corporate purposes. Upon completion of such Offer,
the amount of Excess Proceeds shall be reset to zero.
Section 9.17. Restrictions on Senior Subordinated Indebtedness.
The Company shall not incur, create, issue, assume, guarantee or
otherwise become liable for any Indebtedness that is subordinate or junior in
right of payment to any Senior Debt and senior in any respect in right of
payment to the Notes.
Section 9.18. Restrictions on Secured Indebtedness.
The following provision shall apply only upon and after the occurrence
of an Investment Grade Rating Event. If the Company shall incur, issue, assume
or guarantee any Indebtedness secured by a Lien on any Principal Property of the
Company or on any share of stock or Indebtedness of any Restricted Subsidiary
(other than a Securitization Special Purpose Entity), the Company shall secure
the Notes equally and ratably with (or, at the Company's option, prior to) such
secured Indebtedness so long as such Indebtedness shall be so secured, unless
the aggregate amount of all such secured Indebtedness, together with all
Attributable Indebtedness of the Company with respect to any sale and leaseback
transactions involving Principal Properties (with the exception of such
transactions which are excluded as described in clauses (i) through (v) in
Section 9.19 below), would not exceed 10% of Consolidated Net Tangible Assets.
The above restriction does not apply to, and there shall be excluded from
secured Indebtedness in any computation under such restriction, Indebtedness
secured by: (i) Liens on property of, or on any share of stock or Indebtedness
of, any corporation existing at the time such corporation becomes a Restricted
Subsidiary and Liens on any property acquired from a corporation which is merged
with or into the Company or a Subsidiary, (ii) Liens in favor of the Company;
(iii) Liens in favor of governmental bodies to secure progress, advance or other
payments; (iv) Liens upon any property acquired after the date of this
Indenture, securing the purchase price thereof or created or incurred
simultaneously with (or within 270 days after) such acquisition to finance the
acquisition of such property or existing on such property at the time of such
acquisition, or Liens on improvements after such date, in each case subject to
certain conditions and provided that the principal amount of the obligation or
indebtedness secured by such Lien shall not exceed 100% of the cost or fair
value (as determined in good faith by the Company), whichever shall be lower, of
the property at the time of the acquisition, construction or improvement
thereof; (v) Liens securing industrial revenue or pollution control bonds; (vi)
Liens arising out of any final judgment for the payment of money aggregating not
in excess of $25 million which remains unstayed, in effect and unpaid for a
period of 60 consecutive days or Liens arising out of any judgments which are
being contested in good faith; (vii) Permitted Liens in existence on the date of
the Investment Grade Rating Event; (viii) Liens to secure obligations arising
from time to time under the Credit Agreement including Guaranties thereof; or
(ix) any extension, renewal, or replacement of any Lien referred to in the
foregoing clauses (i) through (viii) inclusive.
Section 9.19. Restrictions on Sales and Leasebacks.
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The following provision shall apply only upon and after the occurrence
of an Investment Grade Rating Event. The Company may not enter into any sale
and leaseback transaction involving any Principal Property, unless the aggregate
amount of all Attributable Indebtedness of the Company with respect to such
transaction plus all secured Indebtedness (with the exception of secured
Indebtedness which is excluded as described in clauses (i) through (ix) in
Section 9.18 above) would not exceed 10% of Consolidated Net Tangible Assets.
This restriction does not apply to, and there shall be excluded from
Attributable Indebtedness in any computation under such restriction, any sale
and leaseback transaction if: (i) the lease is for a period, including renewal
rights, not in excess of three years; (ii) the sale of the Principal Property is
made within 270 days after its acquisition, construction or improvements; (iii)
the lease secures or relates to industrial revenue or pollution control bonds;
(iv) the transaction is between the Company and a Restricted Subsidiary; or (v)
the Company, within 270 days after the sale is completed, applies to the
retirement of Indebtedness of the Company or a Restricted Subsidiary, or to the
purchase of other property which shall constitute a Principal Property, an
amount not less than the greater of (1) the net proceeds of the sale of the
Principal Property leased or (2) the fair market value (as determined by the
Company in good faith) of the Principal Property leased. The amount to be
applied to the retirement of Indebtedness shall be reduced by (x) the principal
amount of any debentures or notes (including the Notes) of the Company or a
Restricted Subsidiary surrendered within 270 days after such sale to the trustee
for retirement and cancellation, (y) the principal amount of Indebtedness, other
than the items referred to in the preceding clause (x), voluntarily retired by
the Company or a Restricted Subsidiary within 270 days after such sale and (z)
associated transaction expenses.
Section 9.20. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any
term, provision or condition set forth in Sections 9.06 to 9.19, inclusive, with
respect to the Securities if before the time for such compliance the Holders of
at least a majority in principal amount of the Outstanding Securities shall, by
Act of such Holders, either waive such compliance in such instance or generally
waive compliance 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; provided,
however, with respect to an Offer to purchase as to which an Offer has been
mailed, no such waiver may be made or shall be effective against any Holder
tendering Securities pursuant to such Offer, and the Company may not omit to
comply with the terms of such Offer as to such Holder.
Section 9.21. Effect of Investment Grade Rating.
Notwithstanding the foregoing, upon the occurrence of an Investment
Grade Rating Event, Sections 7.01(d), and 7.01(e), 9.09, 9.10, 9.11, 9.12, 9.15,
and 9.16 shall be of no further force or effect and shall cease to apply to the
Company and, in lieu thereof, Sections 9.18 and 9.19 shall take effect. The
Company shall promptly notify the Trustee of the occurrence of any Investment
Grade Rating Event.
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ARTICLE 10.
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REDEMPTION OF SECURITIES
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Section 10.01. Right of Redemption.
Securities of any series which are redeemable at the election of the
Company before their Stated Maturity shall be redeemable in accordance with the
terms set forth in the form of Security and in this Article and at the
Redemption Prices specified in the form of Security (except as otherwise
specified as contemplated by Section 2.01).
Section 10.02. Applicability of Article.
Redemption of the Securities at the election of the Company, as
permitted by any provision of this Indenture, shall be made in accordance with
such provision and this Article.
Section 10.03. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities pursuant to
Section 10.01 shall be evidenced by a Board Resolution, which Board Resolution
shall be delivered to the Trustee at least 60 days prior to the Redemption Date
fixed by the Company (unless a shorter notice shall be satisfactory to the
Trustee). In case of any redemption at the election of the Company of less than
all the Securities, the Company shall notify the Trustee in writing of such
Redemption Date and of the principal amount of Securities to be redeemed upon
delivery of the Board Resolution related to such redemption.
Section 10.04. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities not previously
called for redemption, by lot or by such method as the Trustee shall deem fair
and appropriate (and in a manner that complies with applicable legal and
securities exchange requirements, if any) and which may provide for the
selection for redemption of portions (equal to $1,000 or any integral multiple
thereof) of the principal amount of Securities of a denomination larger than
$1,000.
The Trustee shall promptly notify the Company and each Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.
In the event that the Company is required to make an Offer to purchase
pursuant to Sections 10.09 or 9.16 and the amount available for such Offer is
not an integral multiple of $1,000, the Trustee shall promptly refund to the
Company any remaining excess proceeds, which shall be less than $1,000.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities
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redeemed or to be redeemed only in part, to the portion of the principal amount
of such Securities which has been or is to be redeemed.
Section 10.05. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at his address appearing in
the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price, plus accrued interest,
(3) if less than all the Outstanding Securities are to be redeemed,
the identification (and, in the case of partial redemption of any
Securities, the principal amounts) of the particular Securities to be
redeemed,
(4) that Securities called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price,
(5) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security or portion thereof to be redeemed and
that, unless the Company defaults in making the redemption payment,
interest thereon will cease to accrue on and after said date,
(6) the place or places where such Securities are to be surrendered
for payment of the Redemption Price.
(7) if any of the Securities are being redeemed in part, that on or
after the redemption date a new Security in principal amount equal to the
unredeemed portion thereof will be issued,
(8) the provision of the Securities pursuant to which the Securities
called for redemption are being redeemed,
(9) the aggregate principal amount of Securities that are being
redeemed, and
(10) the CUSIP number of the Securities that are being redeemed.
Notice of redemption of Securities to be redeemed 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.
Section 10.06. Deposit of Redemption Price.
Prior to 11:00 a.m. New York City time on any Redemption Date, the
Company shall deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 9.03) an amount of money
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sufficient to pay the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued interest on, all the Securities which
are to be redeemed on that date.
Section 10.07. 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, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall not 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 interest 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 2.12.
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 prescribed
therefor in the Security.
Section 10.08. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered
at a Place of Payment therefor (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 his 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 the same series and of like tenor, 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 of
the Security so surrendered.
Section 10.09. Offer to Purchase.
Within 30 days following a Change of Control resulting in a Rating
Decline and on any Asset Disposition Trigger Date, the Company shall mail to
each holder of Securities, at such holder's registered address a notice stating:
(i) that an offer (an "Offer") is being made as a result of a Change of Control
or one or more Asset Dispositions, the length of time the Offer shall remain
open, and the maximum aggregate principal amount of Securities that shall be
accepted for payment pursuant to such Offer, (ii) the purchase price, the amount
of accrued and unpaid interest (including Special Interest) as of the purchase
date, and the purchase date (the "Purchase Date"), (iii) in the case of a Change
of Control, the circumstances and material facts regarding such Change of
Control, to the extent known to the Company (including, but not limited to,
information with respect to pro forma and historical financial information after
giving effect to such Change of Control, and information regarding the Person or
Persons acquiring control) and (iv) such other information required by this
Indenture and applicable laws and regulations.
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On the Purchase Date for any Offer, the Company shall (1) in the case
of an Offer resulting from a Change of Control, accept for payment all
Securities tendered pursuant to such Offer and, in the case of an Offer
resulting from one or more Asset Dispositions, accept for payment the maximum
principal amount of Securities tendered pursuant to such Offer that can be
purchased out of Excess Proceeds from such Asset Dispositions, which amount
shall equal the product of (a) the amount of such Excess Proceeds and (b) a
fraction whose numerator is the aggregate amount of all obligations owing under
Securities tendered pursuant to such offering and whose denominator is the sum
of the aggregate amount of all obligations owing under Securities tendered
pursuant to such offering and the aggregate amount of all obligations owing
under other Indebtedness of Clark USA or the Company tendered pursuant to
similar rights to prepayment or repurchase, (2) deposit with the Paying Agent
the aggregate purchase price of all Securities accepted for payment and any
accrued and unpaid interest, including Special Interest, on such Securities as
of the Purchase Date, and (3) deliver or cause to be delivered to the Trustee
all Securities tendered pursuant to the Offer. If less than all Securities
tendered pursuant to any Offer are accepted for payment by the Company for any
reason, selection of the Securities to be purchased shall be in compliance with
the requirements of the principal national securities exchange, if any, on which
the Securities are listed or, if the Securities are not so listed, by lot or by
such method as the Trustee shall deem fair and appropriate; provided that
Securities accepted for payment in part shall only be purchased in integral
multiples of $1,000. The Paying Agent shall promptly mail to each holder of
Securities accepted for payment an amount equal to the Purchase price for such
Securities plus any accrued and unpaid interest, including Special Interest
thereon, the Trustee shall promptly authenticate and mail to such holder of
Securities accepted for payment in part new Securities equal in principal amount
to any unpurchased portion of the Securities, and any Securities not accepted
for payment in whole or in part shall be promptly returned to the holder
thereof. On and after a Purchase Date, interest shall cease to accrue on the
Securities accepted for payment. The Company shall announce the results of the
Offer to holders of the Securities on or as soon as practicable after the
Purchase Date.
The Company shall comply with all applicable requirements of Rule
14e-1 under the Exchange Act and all other applicable securities laws and
regulations thereunder, to the extent applicable, in connection with any Offer.
Other than as specifically provided in this Section 10.09, any
purchase pursuant to this Section 10.09 shall be made pursuant to the provisions
of Sections 10.01 through 10.08 hereof.
ARTICLE 11. SUBORDINATION
Section 11.01. Agreement to Subordinate
The Company agrees, and each Securityholder by accepting a Security
agrees, that the indebtedness evidenced by the Securities is subordinated in
right of payment, to the extent and in the manner provided in this Article, to
the prior payment in full in cash of all Senior Debt (whether outstanding on the
date hereof or thereafter incurred), and that the subordination is for the
benefit of the holders of Senior Debt. The Trustee's fees, expenses and
indemnity payments, as provided for in Section 5.07 hereof, are not to be
subordinated under this Section 11.01.
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Section 11.02. Certain Definitions
"Debt" of any person means any indebtedness, contingent or otherwise,
in respect of 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), or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit, or representing the balance deferred and unpaid of the purchase price of
any property or interest therein, except any such balance that constitutes a
trade payable, if and to the extent such indebtedness would appear as a
liability upon a balance sheet of such person prepared on a consolidated basis
in accordance with generally accepted accounting principles.
"Representative" means the indenture trustee or other trustee, agent
or representative for an issue of Senior Debt.
"Senior Debt" means (i) all Indebtedness outstanding under the
Credit Agreement and the Loan Agreement, (ii) Indebtedness represented by the
Senior Notes, the 10 1/2% Notes and the 9 1/2% Notes, (iii) any other
Indebtedness permitted to be incurred by the Company under the terms of this
Indenture, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Securities and (iv) all Obligations with respect to the
foregoing. Notwithstanding anything to the contrary in the foregoing, Senior
Debt will not include (v) Indebtedness represented by preferred stock, (w) any
liability for federal, state, local or other taxes owed or owing by the Company,
(x) any Indebtedness of the Company to any of its Subsidiaries or other
Affiliates, (y) any trade payables or (z) any Indebtedness that is incurred in
violation of this Indenture; provided, however, that any Indebtedness incurred
under the Credit Agreement, in respect of which the lenders or the agent
thereunder receive from the Company a representation that such Indebtedness is
Senior Debt for all purposes under this Indenture, shall be Senior Debt for all
purposes under this Indenture notwithstanding this clause (z).
For purposes of this Article 11, a distribution may consist of cash,
securities or other property, by set-off or otherwise.
Section 11.03. Liquidation; Dissolution; Bankruptcy.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, in
an assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities:
(1) holders of Senior Debt shall be entitled to receive payment in
full in cash of all Obligations due in respect of such Senior Debt (including
interest accruing after the commencement of any such proceeding) before
Securityholders shall be entitled to receive any payment of principal of or
interest on Securities (except that Securityholders may receive (a) Permitted
Junior Securities and (b) payments and other distributions made from any
defeasance trust created pursuant to Section 13.01 hereof); and
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(2) until all Obligations with respect to the Senior Debt (including
interest accruing after the commencement of any such proceeding) are paid in
full in cash, any distribution to which Securityholders would be entitled but
for this Article shall be made to holders of Senior Debt as their interests may
appear (except that Securityholders may receive (a) Permitted Junior
Securities and (b) payments and other distributions made from any defeasance
trust created pursuant to Section 13.01 hereof.
Section 11.04. Default on Designated Senior Debt
---------------------------------
The Company may not make any payment or distribution in respect of
Obligations with respect to the Securities and may not acquire any Securities
for cash or property (other than capital stock of the Company and Permitted
Junior Securities and (b) payments and other distributions made from any
defeasance trust created pursuant to Section 13.01 hereof) until all principal
and other Obligations with respect to the Senior Debt have been paid in full if:
(1) a default in the payment of any principal or other
Obligations with respect to Designated Senior Debt occurs and is continuing
beyond any applicable grace period in the agreement, indenture or other
document governing such Designated Senior debt; or
(2) a default, other than a payment default, on Designated
Senior Debt occurs and is continuing that permits holders of the Designated
Senior Debt to accelerate its maturity and the Trustee receives a notice of
such default (a "Payment Blockage Notice") from a Person who may give it
pursuant to Section 11.12 hereof. If the Trustee receives any such Payment
Blockage Notice, no subsequent Payment Blockage Notice shall be effective
for purposes of this Section unless and until at least 360 days shall have
elapsed since the effectiveness of the immediately prior Payment Blockage
Notice. No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the Trustee shall be, or be
made, the basis for a subsequent Payment Blockage Notice unless such
default shall have been waived for a period of not less than 180 days.
The Company shall resume payments on and distributions in respect of
the Securities and may acquire them upon the earlier of:
(a) the date the default is cured or waived, or
(b) in the case of a default referred to in Section
11.04(2) hereof, 179 days pass after the notice is received if the maturity
of such Designated Senior Debt has not been accelerated,
if this Article otherwise permits the payment, distribution or acquisition at
that time.
Section 11.05. Acceleration of Securities.
---------------------------
If payment of the Securities is accelerated because of an Event of
Default, the Company shall promptly notify holders of Senior Debt of the
acceleration.
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Section 11.06. When Distribution Must Be Paid Over
-----------------------------------
In the event that the Company shall make any payment to the Trustee or
any Securityholder of any Obligations with respect to the Securities at a time
when the Trustee or such Securityholder has actual knowledge that such payment
is prohibited by Section 11.04, such payment shall be held by the Trustee or
such Securityholder, in trust for the benefit of, and shall be paid forthwith
over and delivered to, the holders of Senior Debt (pro rata as to each of such
holders on the basis of the respective amounts of Senior Debt held by them) or
their Representative or the trustee under this indenture or other agreement (if
any) pursuant to which Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of all Obligations with
respect to Senior Debt remaining unpaid to the extent necessary to pay such
Obligations in full in accordance with its terms, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Debt.
Section 11.07. Notice by Company
-----------------
The Company shall promptly notify the Trustee and the Paying Agent of
any facts known to the Company that would cause a payment of any Obligations
with respect to the Securities to violate this Article, but failure to give such
notice shall not affect the subordination of the Securities to the Senior Debt
provided in this Article. Nothing in this Article shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 5.07.
Section 11.08. Subrogation
-----------
After all Senior Debt is paid in full and until the Securities are
paid in full, Securityholders shall be subrogated to the rights of holders of
Senior Debt to receive distributions applicable to Senior Debt to the extent
that distributions otherwise payable to the Securityholders have been applied to
the payment of Senior Debt. A distribution made under this Article to holders
of Senior Debt which otherwise would have been made to Securityholders is not,
as between the Company and Securityholders, a payment by the Company on
Securities.
Section 11.09. Relative Rights.
---------------
This Article defines the relative rights of Securityholders and
holders of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Company and Securityholders, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Securities in accordance with their terms;
(2) affect the relative rights of Securityholders and creditors
of the Company other than their rights in relation to holders of Senior
Debt; or
(3) prevent the Trustee or any Securityholder from exercising
its available remedies upon a Default or Event of Default, subject to the
rights of holders of Senior Debt to receive distributions otherwise payable
to Securityholders.
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If the Company fails because of this Article to pay principal of or
interest on a Security on the due date, the failure is still a Default or Event
of Default.
Section 11.10. Subordination May Not Be Impaired by Company
--------------------------------------------
No right of any holder of Senior Debt to enforce the subordination of
the indebtedness evidenced by the Securities shall be impaired by any act or
failure to act by the Company or by its failure to comply with this Indenture.
Section 11.11. Distribution or Notice to Representative
----------------------------------------
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Section 11.12. Rights of Trustee and Paying Agent.
----------------------------------
The Trustee or Paying Agent may continue to make payments on the
Securities until it receives written notice of facts that would cause a payment
of any Obligations with respect to the Securities to violate this Article. Only
the Company, a Representative or a holder of an issue of Senior Debt that has no
Representative may give the notice.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may
do the same with like rights.
Section 11.13. Trustee Not Charged with Knowledge of Prohibition.
-------------------------------------------------
Notwithstanding the provisions of this Article or any other provision
of this Indenture, but subject to the provisions of Section 5.01 as between the
Holders of Securities and the Trustee, neither the Trustee nor any Paying Agent
shall be charged with knowledge of any facts which would prohibit the making of
any payment of moneys to or by the Trustee or any such Paying Agent, unless and
until the Trustee or such Paying Agent shall have received written notice
thereof at its Corporate Trust Office from the Company or any holder of Senior
Debt or the trustee or representative of any holder of such Senior Debt on his
behalf; and, prior to the receipt of any such written notice, the Trustee and
such Paying Agent shall be entitled to assume that no such facts exist. If the
Trustee or Paying Agent, as the case may be, shall not have received, at least
two Business Days prior to the date upon which by the terms hereof any such
moneys may become payable for any purpose (including, without limitation, the
payment of the principal of, premium, if any, or the interest on any Security)
with respect to such moneys, the notice provided for in this Section, then,
anything herein contained to the contrary notwithstanding, the Trustee and such
Paying Agent, as the case may be, shall have full power and authority to receive
such moneys and to apply the same to the purpose for which they were 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.
Section 11.14. Trustee Not Fiduciary for Holders of Senior Debt.
------------------------------------------------
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt and shall not be liable to any such holders if it shall
in good faith mistakenly pay
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over or distribute to Holders of Securities or to the Company or to any other
Person cash, property or securities to which any holders of Senior Debt shall be
entitled by virtue of this Article or otherwise.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform or to observe only such of its covenants or obligations as are
specifically set forth in this Article and no implied covenants or obligations
with respect to holders of Senior Debt shall be read into this Indenture against
the Trustee.
ARTICLE 12.
-----------
CHANGE OF CONTROL TRIGGERING EVENT
----------------------------------
Section 12.01. Change of Control Triggering Event.
----------------------------------
In the event that there shall occur a Change of Control Triggering
Event, then the Company shall make an Offer in accordance with Section 10.09
hereof to purchase all or any part (equal to $1,000 or an integral multiple
thereof) of each Holder's Securities at a purchase price equal to 101% of the
aggregate principal amount thereof, plus accrued and unpaid interest, including
Special Interest to the date of purchase.
ARTICLE 13.
-----------
DEFEASANCE AND COVENANT DEFEASANCE
----------------------------------
Section 13.01. Company's Option to Effect Defeasance or Covenant Defeasance.
------------------------------------------------------------
The Company may at its option by Board Resolution, at any time, elect
to have either Section 13.02 or Section 13.03 applied to the Outstanding
Securities upon compliance with the conditions set forth below in this Article
Thirteen.
Section 13.02. Defeasance and Discharge.
------------------------
Upon the Company's exercise of the option provided in Section 13.01
applicable to this Section, the Company shall be deemed to have been discharged
from its obligations with respect to the Outstanding Securities, on and after
the date the conditions set forth below are satisfied (hereinafter,
"defeasance"). For this purpose, such defeasance means that the Company shall
be deemed to have paid and discharged the entire indebtedness represented by the
Outstanding Securities, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 13.05 hereof and the other Sections of this
Indenture referred to in (A) and (B) below, and to have satisfied all its 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 such Securities to receive, solely from the trust fund described in
Section 13.04 and as more fully set
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forth in such Section, payments in respect of the principal of (and premium, if
any) and interest, including Special Interest, on such Securities when such
payments are due, (B) the Company's obligations with respect to such Securities
under Article 2 and Section 9.02 hereof, (C) the rights, powers, trusts, duties
and immunities of the Trustee hereunder and (D) this Article Thirteen. Subject
to compliance with this Article Thirteen, the Company may exercise its option
under this Section 13.02 notwithstanding the prior exercise of its option under
Section 13.03.
Section 13.03. Covenant Defeasance.
Upon the Company's exercise of the option provided in Section 13.01
applicable to this Section, (i) the Company shall be released from its
obligations under Sections 9.06 through 9.19, inclusive and Section 9.21,
Section 10.09, Article 12, and Article 7 hereof and (ii) the occurrence of an
event specified in Sections 4.01(3), 4.01(4) (with respect to any of Sections
9.06 through 9.19, inclusive) and 9.21, Section 10.09 and Article 12, 4.01(5)
and 4.01(6) shall not be deemed to be an Event of Default (hereinafter,
"covenant defeasance"), and the Securities shall thereafter be deemed not
"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, 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) and holders of the Securities and the amounts deposited
under Section 13.05 shall cease to be subjected to any obligations to, or the
rights of any holder of Senior Debt. For this purpose, such covenant defeasance
means that the Company may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such Section,
Clause or Article, whether directly or indirectly by reason of any reference
elsewhere herein to any such Section, Clause or Article or by reason of any
reference in any such Section, Clause or Article to any other provision herein
or in any other document shall not constitute a Default or an Event of Default
under Section 4.01 hereof, but, except as specified above, the remainder of this
Indenture and such Securities shall be unaffected thereby.
Section 13.04. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either Section
13.02 or Section 13.03 to the then Outstanding Securities:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the
requirements of Section 5.10 who shall agree to comply with the
provisions of this Article Thirteen 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) money 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
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(premium, if any) and each installment of interest, including Special
Interest, on the Securities on the Stated Maturity of such principal
in accordance with the terms of this Indenture and of such Securities.
For this purpose, "U.S. Government Obligations" means securities that
are (x) direct obligations of the United States of America for the
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 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 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.
(2) In the case of an election under Section 13.02, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(x) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (y) since the date of this
Indenture there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such opinion
shall confirm that, the Holders of the Outstanding Securities will not
recognize gain or loss for Federal income tax purposes as a result of
such deposit, defeasance and discharge and will be subject to Federal
income tax on the same amount, in the same manner and at the same
times as would have been the case if such deposit, defeasance and
discharge had not occurred.
(3) In the case of an election under Section 13.03, 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 gain or loss for Federal income tax purposes as a result of
such deposit and covenant defeasance and will be subject to Federal
income tax on the same amount, in the same manner and at the same
times as would have been the case if such deposit and covenant
defeasance had not occurred.
(4) The Company shall have delivered to the Trustee an Officers'
Certificate to the effect that the Securities, if then listed on any
securities exchange, will not be delisted as a result of such deposit.
(5) No Event of Default or event which with notice or lapse of
time or both would become an Event of Default shall have occurred and
be continuing on the date of such deposit or, insofar as subsections
4.01(7) and (8) are concerned, at any time during the period ending on
the 90th day after the date of such deposit (it
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being understood that this condition shall not be deemed satisfied
until the expiration of such period).
(6) Such defeasance or covenant defeasance shall not cause the
Trustee to have a conflicting interest within the meaning of the Trust
Indenture Act (assuming all Securities are in default within the
meaning of the Trust Indenture Act).
(7) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, any other
agreement or instrument to which the Company is a party or by which it
is bound.
(8) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to either the defeasance
under Section 13.02 or the covenant defeasance under Section 13.03 (as
the case may be) have been complied with.
(9) Such defeasance or covenant defeasance shall not result in
the trust arising from such deposit constituting an investment company
as defined in the Investment Company Act of 1940, as amended, or such
trust shall be qualified under such act or exempt from regulation
thereunder.
(10) The Company shall have delivered to the Trustee an Opinion
of Counsel to the effect that after the passing of 90 days following
such deposit, the trust funds will not be subject to the effect of any
proceeding or any bankruptcy, insolvency, reorganization, or similar
laws regarding creditors' rights generally.
Section 13.05. 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 9.03, 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 13.05, the "Trustee") pursuant to Section 13.04 in respect of the
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, including Special 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 its officers,
directors, employees and agents against any tax, fee or other charge imposed on
or assessed against the U.S. Government Obligations deposited pursuant to
Section 13.04 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. The indemnity of this Section 13.05 shall
survive the termination of this Indenture or the earlier resignation or removal
of the Trustee.
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Anything in this Article Thirteen 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 Obligations held by it as provided in
Section 13.04 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 defeasance or covenant
defeasance.
Section 13.06. Reinstatement.
If the Trustee or the Paying Agent is unable to apply any money in
accordance with Section 13.02 or 13.03 by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Company's obligations under this indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to this Article Thirteen until such time as the Trustee or Paying Agent
is permitted to apply all such money in accordance with Section 13.02 or 13.03;
provided, however, that if the Company makes any payment of principal of (and
premium, if any) or any applicable interest on any Security following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Securities to receive such payment from the money held by
the Trustee or the Paying Agent.
94
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
CLARK REFINING & MARKETING, INC.
By
-------------------------------------
Attest:
- -----------------------------------
MARINE MIDLAND BANK
as Trustee
By
-------------------------------------
Authorized Signatory
S-1
<PAGE>
TABLE OF CONTENTS
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture
<TABLE>
<CAPTION>
Page
----
<S> <C>
PARTIES................................................................... 1
RECITALS OF THE COMPANY................................................... 1
ARTICLE 1. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION....... 1
Section 1.01. Definitions................................................ 1
Section 1.02. Compliance Certificates and Opinions....................... 24
Section 1.03. Form of Documents Delivered to Trustee..................... 24
Section 1.04. Acts of Holders; Record Dates.............................. 25
Section 1.05. Notices, Etc., to Trustee and Company...................... 26
Section 1.06. Notice to Holders; Waiver.................................. 26
Section 1.07. Conflict with Trust Indenture Act.......................... 27
Section 1.08. Effect of Headings and Table of Contents................... 27
Section 1.09. Successors and Assigns..................................... 27
Section 1.10. Separability Clause........................................ 27
Section 1.11. Benefits of Indenture...................................... 27
Section 1.12. Governing Law.............................................. 27
Section 1.13. Legal Holidays............................................. 28
Section 1.14. No Recourse Against Others................................. 28
ARTICLE 2 THE SECURITIES................................................. 28
Section 2.01. Form and Dating; Issuable in Series........................ 28
Section 2.02. Execution and Authentication............................... 31
Section 2.03. Registrar and Paying Agent................................. 31
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 2.04. Paying Agent to Hold Money in Trust...................................................... 32
Section 2.05. Holder Lists............................................................................. 32
Section 2.06. Transfer and Exchange.................................................................... 32
Section 2.07. Replacement Securities................................................................... 46
Section 2.08. Outstanding Securities................................................................... 46
Section 2.09. Treasury Securities...................................................................... 47
Section 2.10. Temporary Securities..................................................................... 47
Section 2.11. Cancellation............................................................................. 47
Section 2.12. Defaulted Interest....................................................................... 48
ARTICLE 3. SATISFACTION AND DISCHARGE.................................................................. 48
Section 3.01. Satisfaction and Discharge of Indenture.................................................. 48
Section 3.02. Application of Trust Money............................................................... 49
ARTICLE 4. REMEDIES.................................................................................... 49
Section 4.01. Events of Default........................................................................ 49
Section 4.02. Acceleration of Maturity; Rescission and Annulment....................................... 51
Section 4.03. Collection of Indebtedness and Suits for Enforcement by Trustee.......................... 52
Section 4.04. Trustee May File Proofs of Claim......................................................... 53
Section 4.05. Trustee May Enforce Claims Without Possession of Securities.............................. 53
Section 4.06. Application of Money Collected........................................................... 54
Section 4.07. Limitation on Suits...................................................................... 54
Section 4.08. Unconditional Right of Holders to Receive Principal, Premium and Interest............... 55
Section 4.09. Restoration of Rights and Remedies....................................................... 55
Section 4.10. Rights and Remedies Cumulative........................................................... 55
Section 4.11. Delay or Omission Not Waiver............................................................. 55
Section 4.12. Control by Holders....................................................................... 56
Section 4.13. Waiver of Past Defaults.................................................................. 56
Section 4.14. Undertaking for Costs.................................................................... 56
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Section 4.15. Waiver of Stay, Extension or Usury Laws..........................................56
ARTICLE 5. THE TRUSTEE.........................................................................57
Section 5.01. Certain Duties and Responsibilities..............................................57
Section 5.02. Notice of Defaults...............................................................58
Section 5.03. Certain Rights of Trustee........................................................58
Section 5.04. Not Responsible for Recitals or Issuance of Securities...........................59
Section 5.05. May Hold Securities..............................................................59
Section 5.06. Money Held in Trust..............................................................60
Section 5.07. Compensation and Reimbursement...................................................60
Section 5.08. Administrative Expense...........................................................60
Section 5.09. Disqualification; Conflicting Interests..........................................61
Section 5.10. Corporate Trustee Required; Eligibility..........................................61
Section 5.11. Resignation and Removal; Appointment of Successor................................61
Section 5.12. Acceptance of Appointment by Successor...........................................62
Section 5.13. Merger, Conversion, Consolidation or Succession to Business......................63
Section 5.14. Preferential Collection of Claims Against Company................................63
Section 5.15. Appointment of Authenticating Agent..............................................63
ARTICLE 6. HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY...................................66
Section 6.01. Company to Furnish Trustee Names and Addresses of Holders........................66
Section 6.02. Preservation of Information; Communications to Holders...........................66
Section 6.03. Reports by Trustee...............................................................66
Section 6.04. Reports by Company...............................................................66
ARTICLE 7. CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE................................67
Section 7.01. Company May Consolidate, Etc., Only on Certain Terms.............................67
Section 7.02. Successor Substituted............................................................67
ARTICLE 8. SUPPLEMENTAL INDENTURES.............................................................68
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Section 8.01. Supplemental Indentures Without Consent of Holders...................................68
Section 8.02. Supplemental Indentures with Consent of Holders......................................69
Section 8.03. Execution of Supplemental Indentures.................................................69
Section 8.04. Effect of Supplemental Indentures....................................................70
Section 8.05. Conformity with Trust Indenture Act..................................................70
Section 8.06. Reference in Securities to Supplemental Indentures...................................70
Section 8.07. Notice of Supplemental Indentures....................................................70
Section 8.08. Effect on Senior Indebtedness........................................................70
ARTICLE 9. COVENANTS...............................................................................71
Section 9.01. Payment of Principal, Premium and Interest...........................................71
Section 9.02. Maintenance of Office or Agency......................................................71
Section 9.03. Money for Securities Payments to Be Held in Trust....................................71
Section 9.04. Statement by Officers as to Default..................................................72
Section 9.05. Existence............................................................................73
Section 9.06. Maintenance of Properties............................................................73
Section 9.07. Payment of Taxes and Other Claims....................................................74
Section 9.08. Provision of Financial Information...................................................74
Section 9.09. Limitation on Restricted Payments....................................................74
Section 9.10. Limitation on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries...........................................................................77
Section 9.11. Limitation on Transactions with Shareholders and Affiliates..........................77
Section 9.12. Limitation on Indebtedness...........................................................78
Section 9.13. Limitation on Issuance of Guarantees of Indebtedness.................................79
Section 9.14. Other Agreements.....................................................................79
Section 9.15. Limitation on Liens..................................................................79
Section 9.16. Limitation on Certain Asset Dispositions.............................................79
Section 9.17. Restrictions on Senior Subordinated Indebtedness.....................................81
Section 9.18. Restrictions on Secured Indebtedness.................................................81
</TABLE>
iv
<PAGE>
Section 9.19. Restrictions on Sales and Leasebacks..........................82
Section 9.20. Waiver of Certain Covenants...................................82
Section 9.21. Effect of Investment Grade Rating.............................82
ARTICLE 10. REDEMPTION OF SECURITIES.........................................83
Section 10.01. Right of Redemption..........................................83
Section 10.02. Applicability of Article.....................................83
Section 10.03. Election to Redeem; Notice to Trustee........................83
Section 10.04. Selection by Trustee of Securities to Be Redeemed............83
Section 10.05. Notice of Redemption.........................................84
Section 10.06. Deposit of Redemption Price..................................85
Section 10.07. Securities Payable on Redemption Date........................85
Section 10.08. Securities Redeemed in Part..................................85
Section 10.09. Offer to Purchase............................................85
ARTICLE 11. SUBORDINATION....................................................86
Section 11.01. Agreement to Subordinate.....................................87
Section 11.02. Certain Definitions..........................................87
Section 11.03. Liquidation; Dissolution; Bankruptcy.........................87
Section 11.04. Default on Designated Senior Debt............................88
Section 11.05. Acceleration of Securities...................................89
Section 11.06. When Distribution Must Be Paid Over..........................89
Section 11.07. Notice by Company............................................89
Section 11.08. Subrogation..................................................89
Section 11.09. Relative Rights..............................................89
Section 11.10. Subordination May Not Be Impaired by Company.................90
Section 11.11. Distribution or Notice to Representative.....................90
Section 11.12. Rights of Trustee and Paying Agent...........................90
Section 11.13. Trustee Not Charged with Knowledge of Prohibition............90
v
<PAGE>
ARTICLE 12. CHANGE OF CONTROL TRIGGERING EVENT...............................91
Section 12.01. Change of Control Triggering Event...........................91
ARTICLE 13. DEFEASANCE AND COVENANT DEFEASANCE...............................91
Section 13.01. Company's Option to Effect Defeasance or
Covenant Defeasance..........................................91
Section 13.02. Defeasance and Discharge.....................................92
Section 13.03. Covenant Defeasance..........................................92
Section 13.04. Conditions to Defeasance or Covenant Defeasance..............93
Section 13.06. Reinstatement................................................95
EXHIBITS
--------
Exhibit A FORM OF SECURITY
Exhibit B CERTIFICATE OF TRANSFER
Exhibit C CERTIFICATE OF EXCHANGE
Exhibit D CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
vi
<PAGE>
________________________________________________________________________________
Clark Refining & Marketing, Inc.
TO
Marine Midland Bank
Trustee
_______________________
INDENTURE
Dated as of November 21, 1997
SENIOR SUBORDINATED DEBT SECURITIES
________________________________________________________________________________
<PAGE>
EXHIBIT A
(Face of Security)
CLARK REFINING & MARKETING, INC.
___% ______ SUBORDINATED NOTES DUE ______
No. __________ $________
Clark Refining & Marketing, Inc., a corporation duly organized and
existing under the laws of Delaware (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 up to $__________ in United States Dollars on
_____________________, and to pay interest at the rate of ____% per annum from
the Issue Date or from the most recent Interest Payment Date to which interest
has been paid or duly provided for in cash in arrears on each _________ and
___________ to the person whose name the Security is registered at the close of
business on the _________ or _____________ next preceding such Interest Payment
Date, until the principal hereof is paid or made available for payment;
provided, however, in the event that (i) the Company has not filed the
registration statement relating to the Exchange Offer within 90 days following
the Issue Date, or (ii) such registration statement (or, if applicable, the
resale registration statement) has not become effective within 180 days
following the Issue Date, (iii) the resale registration statement has not become
effective within 105 days of the date on which the obligation to file such
resale registration statement arose, or (iv) the Exchange Offer has not been
consummated within 30 business days after the effectiveness deadline of the
Exchange Offer Registration Statement, (v) the Company has not filed the resale
registration statement within 45 days after the obligation to file such resale
registration statement arose, or (vi) any registration statement required by the
Registration Rights Agreement is filed and declared effective but shall
thereafter cease to be effective (except as specifically permitted therein)
without being succeeded within 30 days by an additional registration statement
filed and declared effective (any such event referred to in Clauses (i) through
(vi), the "Registration Default"), then, as liquidated damages for such
Registration Default, subject to the Registration Rights Agreement, the per
annum interest rate on the Notes will increase by 0.25% ("Special Interest") for
the period from the occurrence of the Registration Default until such time as no
Registration Default is in effect (at which time the interest rate will be
reduced to its initial rate). If the Company has not consummated the Exchange
Offer (or, if applicable, the resale registration has not become effective),
within 270 days following the Issue Date, then the per annum dividend rate on
the Securities will increase by an additional 0.25% for so long as the Company
has not consummated the Exchange Offer (or until such resale registration
becomes effective).
Any accrued and unpaid interest on this Security upon the issuance of
an Exchange Note in exchange for this Security shall cease to be payable to the
Holder hereof but
A-1
<PAGE>
such accrued and unpaid interest shall be payable on the next Interest Payment
Date for such Exchange Note to the Holder thereof on the related Regular Record
Date.
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 __________ or ____________ (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date at
the office or agency of the Company at [ ] maintained for such purpose and
at any other office or agency maintained by the Company for such purchase (any
such location being called a "Place of Payment"); provided, however, that at the
option of the Company payment of interest may be made by check to the address of
the Person entitled thereto as such address shall appear on the Security
Register. Interest shall be payable in cash. Any such interest not so
punctually paid or duly provided, and interest on such defaulted interest at the
interest rate borne by the Securities, to the extent lawful, shall forthwith
cease to be payable to the Holder on such Regular Record Date and shall 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
("Special Record Date") for the payment of such defaulted interest to be fixed
by the Company with the consent of 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 (if applicable) of any securities exchange on which the Securities
may be listed, and upon such notice as may be required by such securities
exchange, all as more fully provided in said Indenture.
If this Security is a Global Security, all payments in respect of this
Security will be payable to the Global Security Holder in its capacity as the
registered Holder under the Indenture. If this Security is not a Global
Security, payment of the principal of, premium, if any, and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in the City and State of New York, 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, or at the option of the Company, payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register; provided,
however, that payment by wire transfer of immediately available funds will be
required with respect to principal of, premium, if any, and interest on, all
Global Notes and all other Securities the Holders of which shall have provided
wire transfer instructions to the Company or the Paying Agent.
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 executed by
the Trustee by manual signature, this Security shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose.
A-2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated:
CLARK REFINING & MARKETING, INC.
Attest:
_______________________ By __________________________
Name: Name:
Title: Title:
[Form of Trustee's Certificate of Authentication]
Certificate of Authentication
Dated: November 21, 1997
This is one of the Securities referred to in the within-mentioned
Indenture.
MARINE MIDLAND BANK,
as Trustee
By:_________________________
Authorized Signatory
A-3
<PAGE>
(Back of Security)
THIS GLOBAL NOTE IS HELD BY THE DEPOSITORY (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 SECTION 2.06 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 DEPOSITORY WITH THE PRIOR WRITTEN CONSENT OF
THE COMPANY.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") AND, ACCORDINGLY, MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS NOT A U.S.
PERSON, IS NOT ACQUIRING THIS NOTE FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON
AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER
THE SECURITIES ACT) (AN "IAI"), (2) AGREES THAT IT WILL NOT, WITHIN THE TIME
PERIOD REFERRED TO UNDER RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF RULE
144(d) UNDER THE SECURITIES ACT, IF APPLICABLE) UNDER THE SECURITIES ACT AS IN
EFFECT ON THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR OTHERWISE TRANSFER
THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A PERSON
WHOM THE HOLDER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QIB IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE
904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (E) TO AN IAI
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE REGISTRATION
OF TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN
INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
A-4
<PAGE>
LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE OR ANY INTEREST HEREIN
WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE
BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND
SUBMIT THIS CERTIFICATE TO THE TRUSTEE. EACH IAI THAT IS NOT A QIB WILL BE
REQUIRED TO EFFECT ANY TRANSFER OF NOTES OR INTERESTS THEREIN (OTHER THAN
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT) THROUGH ONE OF THE INITIAL
PURCHASERS. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES"
AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S
UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE
FOREGOING RESTRICTIONS.
This Security is one of a duly authorized issue of securities of the
Company designated as its _____% _________ Subordinated Notes due _______
(herein called the "Securities"), issued and to be issued in one or more series
under an Indenture, dated as of _______________ (as it may from time to time be
supplemented or amended by one or more supplemental indentures, herein called
the "Indenture"), between the Company and Marine Midland Bank, as Trustee
(herein called the "Trustee," which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company and the Trustee of
the Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This issue of Securities is limited in aggregate
principal amount to $_________________.
[The Securities are subject to redemption at the option of the
Company, in whole or in part at any time on or after _______________, upon not
less than __ nor more than __ days' notice mailed to each holder of Securities
to be redeemed at such holder's address appearing on the Company' Securities
Registrar, in principal amounts of $1,000 or an integral multiple of $1,000, at
the following redemption prices (expressed as percentages of the principal
amount) if redeemed during the 12-month period commencing on ____________ of
each of the years set forth below, plus, in each case, accrued thereon to, but
excluding, the date of redemption.
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
_______
_______
_______
_______ and thereafter 100.000%
</TABLE>
[In addition, the Company may, at its option, use the Net Available
Proceeds of one or more Equity Offerings to the extent the net cash proceeds
thereof are contributed to the equity capital of the Company to redeem for cash
up to __% in aggregate principal amount of the Securities originally issued
under the Indenture at any time prior to _______________, at a redemption price
equal to ________% of the aggregate principal amount so redeemed, plus accrued
interest, including Special Interest, to the Redemption Date; provided that at
least ___% of the principal amount of Securities originally issued remain
outstanding immediately after such
A-5
<PAGE>
redemption. Any such redemption shall be required to occur on or prior to ___
days after the receipt by the Company of the Net Available Proceeds of such
Equity Offering and upon not less than ___ nor more than ___ days' notice mailed
to each holder of Securities to be redeemed at such holder's address appearing
in the Company's Security Register, in principal amounts of $1,000 or an
integral multiple of $1,000. The Company may not use the Net Available Proceeds
of any Equity Offerings which alone or combined with a related series of
transactions result in a Change of Control to redeem Securities pursuant to this
paragraph.
If less than all of the Securities are to be redeemed at any time, the
Trustee shall select, in such manner as it shall deem fair and appropriate, the
particular Securities to be redeemed; provided that Securities redeemed in part
will only be redeemed in integral multiples of $1,000.
The Indenture provides that, subject to certain conditions, if (i)
certain Net Available Proceeds are available to the Company as a result of Asset
Dispositions or (ii) a Change of Control Triggering Event occurs, the Company
shall be required to make an Offer to purchase for some or all of the Securities
in accordance with the terms of the Indenture.
The Indenture contains provisions for defeasance at any time of (i)
the entire indebtedness of this Security or (ii) certain restrictive covenants
and Events of Default with respect to this Security, in each case upon
compliance with certain conditions set forth therein.
In the event of redemption or purchase pursuant to a mandatory offer
to purchase of this Security in part only, a new Security or Securities for the
unredeemed or unpurchased portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof.
If an Event of Default shall occur and be continuing, the principal of
the Securities may be declared due and payable in the manner and with the effect
provided in the Indenture.
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 rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of a
majority in principal amount of the Securities at the time Outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities at the time Outstanding, on
behalf of the Holders of all Securities, to waive compliance by the Company with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. The Indenture also provides that, without
notice to or consent of any Holder, the Company and the Trustee may enter into
one or more supplemental indentures to, among other things, cure any ambiguity,
defect or inconsistency, provide for uncertificated securities in addition to or
in place of certificated Securities, or make any other change, in each case,
that does not adversely affect the rights of any Holder of a Security in any
material respect. Any such consent or waiver by the Holder of this Security
shall be conclusive and binding upon such Holder and upon all 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.
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<PAGE>
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) and
interest, including Special Interest, if any, on this Security at the times,
place and rate, and in the coin or currency, herein prescribed.
The Securities are subordinated in right of payment, to the extent and
in the manner provided in Article 11 of the Indenture, to the prior payment in
full of all Senior Debt, which includes (i) all Indebtedness outstanding under
the Credit Agreement and the Loan Agreement, (ii) Indebtedness represented by
the Senior Notes, the 10/1//2% Notes and the 9/1//2% Notes, (iii) any other
Indebtedness permitted to be incurred by the Company under the terms of this
Indenture, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Securities and (iv) all Obligations with respect to the
foregoing. Notwithstanding anything to the contrary in the foregoing, Senior
Debt will not include (v) Indebtedness represented by preferred stock, (w) any
liability for federal, state, local or other taxes owed or owing by the Company,
(x) any Indebtedness of the Company to any of its Subsidiaries or other
Affiliates, (y) any trade payables or (z) any Indebtedness that is incurred in
violation of this Indenture; provided, however, that any Indebtedness incurred
under the Credit Agreement, in respect of which the lenders or the agent
thereunder receive from the Company a representation that such Indebtedness is
Senior Debt for all purposes under this Indenture, shall be Senior Debt for all
purposes under this Indenture notwithstanding this clause (z). To the extent
provided in the Indenture, Senior Debt must be paid before the Securities may be
paid. The Company agrees and each Holder of Securities by accepting a Security
consents and agrees to the subordination provided in the Indenture and
authorizes the Trustee to give it effect.
As provided in the Indenture, the transfer of this Security is
registrable in the Security Register, upon surrender of this Security for
registration of transfer at the office or agency of the Company in any place
where the principal of (and premium, if any) and interest, including Special
Interest, if any, on this Security are payable, 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 $100,000 and any integral multiples of $1,000. As provided in
the Indenture and subject to certain limitations therein set forth, 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 to the Holder for any such
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
A-7
<PAGE>
Prior to due presentment of this Security for registration of
transfer, the Company, 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 be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
No director, officer, employee, stockholder or incorporator, as such,
of the Company shall have any liability for any obligations of the Company under
the Securities or the Indenture for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. Such waiver and release are
part of the consideration for the issuance of the Securities.
Interest on this Security shall be computed on the basis of a 360-day
year comprised of twelve 30-day months.
All terms used in this Security that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
The Indenture and this Security shall be governed by and construed in
accordance with the laws of the State of New York (without giving effect to
conflicts of law principles thereof).
A-8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased in its entirety
by the Company pursuant to Sections 10.09 and 9.16 of the Indenture, check the
box: [_]
If you want to elect to have only a part of this Security purchased by
the Company pursuant to Sections 10.09 and 9.16 of the Indenture, state the
amount (which must be $1,000 or integral multiples thereof):
$____________________.
Dated: Your Signature:
------------------- -------------------------------------------
(Sign exactly as name appears on the other side of this Security)
Signature Guarantee:
-----------------------------------
(Signature must be guaranteed by a member firm
of a national securities exchange or a commercial
bank or trust company)
A-9
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign and transfer
this Security 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 Security on the books of the Company. The agent may substitute
another to act for him.
Dated: Your Signature:
--------------- ----------------------------------
(Sign exactly as name appears on the other side of this Security)
Signature Guarantee:
A-10
<PAGE>
SCHEDULE OF EXCHANGES OF SECURITIES
The following exchanges of a part of this Global Note for another Global
Note or for Definitive Securities have been made:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Principal Amount Signature of
Amount of decrease Amount of increase of this Global authorized
in in Security officer of
Date of Exchange Principal Amount of Principal Amount of following such Trustee or
- ---------------- this Global this Global decrease Security
Security Security (or increase) Custodian
------------------- ------------------- ------------------- ------------------
</TABLE>
A-11
<PAGE>
EXHIBIT A-1
(Face of Temporary Global Note)
CLARK REFINING & MARKETING, INC.
__%________ SUBORDINATED NOTES DUE ______
No. ____________ $________
Clark Refining & Marketing, Inc., a corporation duly organized and
existing under the laws of Delaware (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 up to $___________ in United States Dollars on
________________, and to pay interest at the rate of ___% per annum from the
Issue Date or from the most recent Interest Payment Date to which interest has
been paid or duly provided for in cash in arrears on each __________ and
____________ to the person whose name the Security is registered at the close of
business on the __________ or _________ next preceding such Interest Payment
Date, until the principal hereof is paid or made available for payment;
provided, however, in the event that (i) the Company has not filed the
registration statement relating to the Exchange Offer within 90 days following
the Issue Date, or (ii) such registration statement (or, if applicable, the
resale registration statement) has not become effective within 180 days
following the Issue Date, (iii) the resale registration statement has not become
effective within 105 days of the date on which the obligation to file such
resale registration statement arose, or (iv) the Exchange Offer has not been
consummated within 30 business days after the effectiveness deadline of the
Exchange Offer Registration Statement, (v) the Company has not filed the resale
registration statement within 45 days after the obligation to file such resale
registration statement arose, or (vi) any registration statement required by the
Registration Rights Agreement is filed and declared effective but shall
thereafter cease to be effective (except as specifically permitted therein)
without being succeeded within 30 days by an additional registration statement
filed and declared effective (any such event referred to in Clauses (i) through
(vi), the "Registration Default"), then, as liquidated damages for such
Registration Default, subject to the Registration Rights Agreement, the per
annum interest rate on the Notes will increase by 0.25% ("Special Interest") for
the period from the occurrence of the Registration Default until such time as no
Registration Default is in effect (at which time the interest rate will be
reduced to its initial rate). If the Company has not consummated the Exchange
Offer (or, if applicable, the resale registration has not become effective),
within 270 days following the Issue Date, then the per annum dividend rate on
the Securities will increase by an additional 0.25% for so long as the Company
has not consummated the Exchange Offer (or until such resale registration
becomes effective).
Any accrued and unpaid interest on this Security upon the issuance of
an Exchange Note in exchange for this Security shall cease to be payable to the
Holder hereof but
A1-1
<PAGE>
such accrued and unpaid interest shall be payable on the next Interest Payment
Date for such Exchange Note to the Holder thereof on the related Regular Record
Date.
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 ____________ or ___________ (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date at
the office or agency of the Company at [ ] maintained for such purpose and
at any other office or agency maintained by the Company for such purchase (any
such location being called a "Place of Payment"); provided, however, that at the
option of the Company payment of interest may be made by check to the address of
the Person entitled thereto as such address shall appear on the Security
Register. Interest shall be payable in cash. Any such interest not so
punctually paid or duly provided, and interest on such defaulted interest at the
interest rate borne by the Securities, to the extent lawful, shall forthwith
cease to be payable to the Holder on such Regular Record Date and shall 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
("Special Record Date") for the payment of such defaulted interest to be fixed
by the Company with the consent of 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 (if applicable) of any securities exchange on which the Securities
may be listed, and upon such notice as may be required by such securities
exchange, all as more fully provided in said Indenture.
If this Security is a Global Security, all payments in respect of this
Security will be payable to the Global Security Holder in its capacity as the
registered Holder under the Indenture. If this Security is not a Global
Security, payment of the principal of, premium, if any, and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in the City and State of New York, 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, or at the option of the Company, payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register; provided,
however, that payment by wire transfer of immediately available funds will be
required with respect to principal of, premium, if any, and interest on, all
Global Notes and all other Securities the Holders of which shall have provided
wire transfer instructions to the Company or the Paying Agent.
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 executed by
the Trustee by manual signature, this Security shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose.
A1-2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated:
CLARK REFINING & MARKETING, INC.
Attest:
By
- ----------------------------- -----------------------------
Name: Name:
Title: Title:
[Form of Trustee's Certificate of Authentication]
Certificate of Authentication
Dated: November 21, 1997
This is one of the Securities referred to in the within-mentioned
Indenture.
MARINE MIDLAND BANK,
as Trustee
By:
-----------------------------
Authorized Signatory
A1-3
<PAGE>
(Back of Temporary Global Note)
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR BENEFICIAL INTERESTS IN THE
REGULATION S PERMANENT GLOBAL NOTE, ARE AS SPECIFIED IN THE INDENTURE (AS
DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS
REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF
INTEREST HEREON.
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITORY (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 SECTION 2.06 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 DEPOSITORY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY."
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS NOT A U.S.
PERSON, IS NOT ACQUIRING THIS NOTE FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON
AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER
THE SECURITIES ACT) (AN "IAI"), (2) AGREES THAT IT WILL NOT, WITHIN THE TIME
PERIOD REFERRED TO UNDER RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF RULE
144(d) UNDER THE SECURITIES ACT, IF APPLICABLE) UNDER THE SECURITIES ACT AS IN
EFFECT ON THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR OTHERWISE TRANSFER
THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A PERSON
WHOM THE HOLDER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QIB IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE
904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (E) TO AN IAI
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING
A1-4
<PAGE>
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE REGISTRATION OF TRANSFER
OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) OR (F)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN
EACH CASE, IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, AND (3) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION
WITH ANY TRANSFER OF THIS NOTE OR ANY INTEREST HEREIN WITHIN THE TIME PERIOD
REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE
REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS
CERTIFICATE TO THE TRUSTEE. EACH IAI THAT IS NOT A QIB WILL BE REQUIRED TO
EFFECT ANY TRANSFER OF NOTES OR INTERESTS THEREIN (OTHER THAN PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT) THROUGH ONE OF THE INITIAL PURCHASERS. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON"
HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES
ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS."
This Security is one of a duly authorized issue of securities of the
Company designated as its ____% _____________________ Subordinated Notes due
_____ (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of ______________________ (as it may from
time to time be supplemented or amended by one or more supplemental indentures,
herein called the "Indenture"), between the Company and
___________________________, as Trustee (herein called the "Trustee," which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company and the Trustee of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This issue of
Securities is limited in aggregate principal amount to $______________.
[The Securities are subject to redemption at the option of the
Company, in whole or in part at any time on or after _____________, upon not
less than __ nor more than ___ days' notice mailed to each holder of Securities
to be redeemed at such holder's address appearing on the Company' Securities
Registrar, in principal amounts of $1,000 or an integral multiple of $1,000, at
the following redemption prices (expressed as percentages of the principal
amount) if redeemed during the 12-month period commencing on _______________ of
each of the years set forth below, plus, in each case, accrued thereon to, but
excluding, the date of redemption.
A1-5
<PAGE>
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
---------
---------
---------
--------- and thereafter 100.000%
</TABLE>
[In addition, the Company may, at its option, use the Net Available
Proceeds of one or more Equity Offerings to the extent the net cash proceeds
thereof are contributed to the equity capital of the Company to redeem for cash
up to __% in aggregate principal amount of the Securities originally issued
under the Indenture at any time prior to ______________, at a redemption price
equal to _________% of the aggregate principal amount so redeemed, plus accrued
interest, including Special Interest, to the Redemption Date; provided that at
least __% of the principal amount of Securities originally issued remain
outstanding immediately after such redemption. Any such redemption shall be
required to occur on or prior to ___ days after the receipt by the Company of
the Net Available Proceeds of such Equity Offering and upon not less than __ nor
more than __ days' notice mailed to each holder of Securities to be redeemed at
such holder's address appearing in the Company's Security Register, in principal
amounts of $1,000 or an integral multiple of $1,000. The Company may not use
the Net Available Proceeds of any Equity Offerings which alone or combined with
a related series of transactions result in a Change of Control to redeem
Securities pursuant to this paragraph.]
If less than all of the Securities are to be redeemed at any time, the
Trustee shall select, in such manner as it shall deem fair and appropriate, the
particular Securities to be redeemed; provided that Securities redeemed in part
will only be redeemed in integral multiples of $1,000.
The Indenture provides that, subject to certain conditions, if (i)
certain Net Available Proceeds are available to the Company as a result of Asset
Dispositions or (ii) a Change of Control Triggering Event occurs, the Company
shall be required to make an Offer to purchase for some or all of the Securities
in accordance with the terms of the Indenture.
The Indenture contains provisions for defeasance at any time of (i)
the entire indebtedness of this Security or (ii) certain restrictive covenants
and Events of Default with respect to this Security, in each case upon
compliance with certain conditions set forth therein.
In the event of redemption or purchase pursuant to a mandatory offer
to purchase of this Security in part only, a new Security or Securities for the
unredeemed or unpurchased portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof.
If an Event of Default shall occur and be continuing, the principal of
the Securities may be declared due and payable in the manner and with the effect
provided in the Indenture.
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 rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of a
majority in principal amount of the Securities at the
A1-6
<PAGE>
time Outstanding. The Indenture also contains provisions permitting the Holders
of specified percentages in principal amount of the Securities at the time
Outstanding, on behalf of the Holders of all Securities, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. The Indenture also provides that,
without notice to or consent of any Holder, the Company and the Trustee may
enter into one or more supplemental indentures to, among other things, cure any
ambiguity, defect or inconsistency, provide for uncertificated securities in
addition to or in place of certificated Securities, or make any other change, in
each case, that does not adversely affect the rights of any Holder of a Security
in any material respect. Any such consent or waiver by the Holder of this
Security shall be conclusive and binding upon such Holder and upon all 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.
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) and
interest, including Special Interest, if any, on this Security at the times,
place and rate, and in the coin or currency, herein prescribed.
The Securities are subordinated in right of payment, to the extent and
in the manner provided in Article 11 of the Indenture, to the prior payment in
full of all Senior Debt, which includes (i) all Indebtedness outstanding under
the Credit Agreement and the Loan Agreement, (ii) Indebtedness represented by
the Senior Notes, the 10/1//2% Notes and the 9/1//2% Notes, (iii) any other
Indebtedness permitted to be incurred by the Company under the terms of this
Indenture, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Securities and (iv) all Obligations with respect to the
foregoing. Notwithstanding anything to the contrary in the foregoing, Senior
Debt will not include (v) Indebtedness represented by preferred stock, (w) any
liability for federal, state, local or other taxes owed or owing by the Company,
(x) any Indebtedness of the Company to any of its Subsidiaries or other
Affiliates, (y) any trade payables or (z) any Indebtedness that is incurred in
violation of this Indenture; provided, however, that any Indebtedness incurred
under the Credit Agreement, in respect of which the lenders or the agent
thereunder receive from the Company a representation that such Indebtedness is
Senior Debt for all purposes under this Indenture, shall be Senior Debt for all
purposes under this Indenture notwithstanding this clause (z). To the extent
provided in the Indenture, Senior Debt must be paid before the Securities may be
paid. The Company agrees and each Holder of Securities by accepting a Security
consents and agrees to the subordination provided in the Indenture and
authorizes the Trustee to give it effect.
Until this Regulation S Temporary Global Note is exchanged for one or
more Regulation S Permanent Global Notes, the Holder hereof shall not be
entitled to receive payments of interest hereon; until so exchanged in full,
this Regulation S Temporary Global Note shall in all other respects be entitled
to the same benefits as other Notes under the Indenture.
A1-7
<PAGE>
As provided in the Indenture, the transfer of this Security is
registrable in the Security Register, upon surrender of this Security for
registration of transfer at the office or agency of the Company in any place
where the principal of (and premium, if any) and interest, including Special
Interest, if any, on this Security are payable, 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 $100,000 and any integral multiples of $1,000. As provided in
the Indenture and subject to certain limitations therein set forth, Securities
are exchangeable for a like aggregate principal amount of Securities of a
different authorized denomination, as requested by the Holder surrendering the
same.
This Regulation S Temporary Global Note is exchangeable in whole or in
part for one or more Global Notes only (i) on or after the termination of the
40-day restricted period (as defined in Regulation S) and (ii) upon presentation
of certificates (accompanied by an Opinion of Counsel, if applicable) required
by Article 2 of the Indenture. Upon exchange of this Regulation S Temporary
Global Note for one or more Global Notes, the Trustee shall cancel this
Regulation S Temporary Global Note.
No service charge shall be made to the Holder for any such
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, 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 be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
No director, officer, employee, stockholder or incorporator, as such,
of the Company shall have any liability for any obligations of the Company under
the Securities or the Indenture for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. Such waiver and release are
part of the consideration for the issuance of the Securities.
Interest on this Security shall be computed on the basis of a 360-day
year comprised of twelve 30-day months.
All terms used in this Security that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
The Indenture and this Security shall be governed by and construed in
accordance with the laws of the State of New York (without giving effect to
conflicts of law principles thereof).
A1-8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased in its entirety
by the Company pursuant to Sections 10.09 and 9.16 of the Indenture, check the
box: [_]
If you want to elect to have only a part of this Security purchased by
the Company pursuant to Sections 10.09 and 9.16 of the Indenture, state the
amount (which must be $1,000 or integral multiples thereof): $_________________.
Dated: _____________ Your Signature: _________________________________
(Sign exactly as name appears on the other side of this Security)
Signature Guarantee:
-------------------------------------------------
(Signature must be guaranteed by a member firm
of a national securities exchange or a commercial
bank or trust company)
A1-9
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign and transfer
this Security 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 Security on the books of the Company. The agent may substitute
another to act for him.
Dated: _________ Your Signature: _______________________________________
(Sign exactly as name appears on the other side of this Security)
Signature Guarantee:
A1-10
<PAGE>
SCHEDULE OF EXCHANGES OF SECURITIES
The following exchanges of a part of this Regulation S Temporary Global
Note for an interest in another Global Note or for Definitive Securities, or of
other Restricted global Notes or Definitive Securities for an interest in this
Regulation S Temporary global Note, have been made:
<TABLE>
<CAPTION>
Principal Amount of Signature of
Amount of decrease in Amount of increase in this Global Security authorized officer of
Principal Amount of Principal Amount of following such decrease Trustee or Security
Date of Exchange this Global Security this Global Security (or increase) Custodian
- ---------------- --------------------- --------------------- ----------------------- ---------------------
<S> <C> <C> <C> <C>
</TABLE>
A1-11
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Clark Refining & Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 631105
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Re: Clark Refining & Marketing, Inc. ____________________ [notes]
Reference is hereby made to the Indenture with respect to the above-
referenced securities, dated as of November 21, 1997 (the "Indenture"), between
Clark Refining & Marketing, Inc., as issuer (the "Company"), and Marine Midland
Bank, 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 Note[s] specified in Annex A hereto, in the
principal amount of U.S. $_________ 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 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
Temporary 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
B-1
<PAGE>
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, (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 Permanent Global Note,
the Regulation S Temporary 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 beneficial
interest in the IAI Global Note or 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;
or
(d) [_] such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor
hereby further certifies that it has not engaged in any general solicitation
within the meaning of Regulation D under the Securities Act and the Transfer
complies with the transfer restrictions applicable to beneficial
B-2
<PAGE>
interests in a Restricted Global Note or Restricted Definitive Notes and the
requirements of the exemption claimed, which certification is supported by (1) a
certificate executed by the Transferee in the form of Exhibit D to the Indenture
and (2) if such Transfer is in respect of a principal amount of Notes at the
time of transfer of less than U.S. $250,000, an Opinion of Counsel provided by
the Transferor or the Transferee (a copy of which the Transferor has attached to
this certification), to the effect that such Transfer is in 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 be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the IAI Global Note and/or the Definitive Notes and
in the Indenture and the Securities Act.
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 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, 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.
B-3
<PAGE>
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-4
<PAGE>
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
(iii) [_] IAI 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) [_] IAI Global Note (CUSIP ________); or
(iv) [_] Unrestricted Global Note (CUSIP ________); or
(b) [_] a Restricted Definitive Note; or
(c) [_] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-5
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Clark Refining & Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 631105
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York
Re: Clark Refining & Marketing, Inc. ____________________ [notes]
(CUSIP ______________)
Reference is hereby made to the Indenture with respect to the above-
referenced securities, dated as of November 21, 1997 (the "Indenture"), between
Clark Refining & Marketing, Inc., as issuer (the "Company"), and Marine Midland
Bank, 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 U.S.
$____________ 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 Unrestricted Global Note is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
C-1
<PAGE>
(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 beneficial 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 restrictions on transfer enumerated in
the Private Placement Legend printed on the Restricted Definitive Note and in
the Indenture and the Securities Act.
C-2
<PAGE>
(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, ___ IAI 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
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Clark Refining & Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 631105
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Re: Clark Refining & Marketing, Inc. ________________________ [notes]
Reference is hereby made to the Indenture with respect to the above-
referenced securities, dated as of November 21, 1997 (the "Indenture"), between
Clark Refining & Marketing, Inc., as issuer (the "Company"), and Marine Midland
Bank, as trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.
In connection with our proposed purchase of U.S. $____________ aggregate
principal amount of:
(a) [_] a beneficial interest in a Global Note, or
(b) [_] a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Notes or any interest therein,
we will do so only (A) to the Company or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (c) to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished on its
behalf by a U.S. broker-dealer) to you and to the Company a signed letter
substantially in the form of this letter and, if such transfer is in respect of
a principal amount of Notes, at the time of transfer of less than U.S. $250,000,
an Opinion of
D-1
<PAGE>
Counsel in form reasonably acceptable to the Company to the effect that such
transfer is in compliance with the Securities Act, (D) outside the United States
in accordance with Rule 904 of Regulation S under the Securities Act, (E)
pursuant to the provisions of Rule 144(k) under the Securities Act or (F)
pursuant to an effective registration statement under the Securities Act, and we
further agree to provide to any person purchasing the Definitive Note or
beneficial interest in a Global Note from us in a transaction meeting the
requirements of clauses (A) through (E) of this paragraph a notice advising such
purchaser that resales thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or beneficial
interest therein, we will be required to furnish to you and the Company such
certifications, legal opinions and other information as you and the Company may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Notes purchased by us will bear a
legend to the foregoing effect. We further understand that any subsequent
transfer by us of the Notes or beneficial interest therein acquired by us must
be effected through one of the Placement Agents.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes or beneficial interest therein purchased by
us for our own account or for one or more accounts (each of which is an
institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this letter and 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.
______________________________________________
[Insert Name of Accredited Investor]
By: __________________________________________
Name:
Title:
Dated: __________________, ____
D-2
<PAGE>
EXHIBIT 4.61
- --------------------------------------------------------------------------------
Clark Refining & Marketing, Inc.
TO
Marine Midland Bank
Trustee
-----------------------
SUPPLEMENTAL INDENTURE
Dated as of November 21, 1997
8 7/8% Senior Subordinated Notes due 2007
- --------------------------------------------------------------------------------
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of November 21, 1997 (this
"Supplemental Indenture") between Clark Refining & Marketing, Inc., a
corporation duly organized and existing under the laws of the State of Delaware
(herein called the "Company"), having its principal office at 8182 Maryland
Avenue, St. Louis, Missouri, 63105, and Marine Midland Bank, a New York banking
corporation and trust company, as Trustee (herein called the "Trustee").
RECITALS
The Company has entered into an Indenture dated November 21, 1997 with
the Trustee (the "Indenture") to provide for the issuance form time to time of
its unsecured senior subordinated debentures, notes or other evidences of
indebtedness (herein called the "Securities"), to be issued in one or more
series as in the Indenture provided.
The Company proposes to issue a series of Securities pursuant to the
Indenture to be titled the 8 7/8% Senior Subordinated Notes due 2007 (the
"Subordinated Notes").
Section 8.01(5) of the Indenture provides that the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental to the Indenture to
establish the form or terms of series of Securities as permitted by Section
2.01(g) thereof.
The entry into this Supplemental Indenture by the parties hereto is in
all respects authorized by the provisions of the Indenture.
All things necessary to make this Supplemental Indenture a valid
agreement of the Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Subordinated Notes by the Holders thereof, it is mutually agreed, for the equal
and proportionate benefit of all Holders of Subordinated Notes except as
otherwise provided in the Indenture or this Supplemental Indenture, as follows:
Section 1. This Supplemental Indenture establishes the form and terms
of a series of Securities pursuant to Section 2.01(g) of the Indenture to be
known as the 8 7/8% Senior Subordinated Notes Due 2007 as follows:
(1) the title of the Securities is the "8 - 7/8% Senior Subordinated
Notes Due 2007."
(2) the aggregate principal amount of the Subordinated Notes which may
be authenticated and delivered pursuant to the Indenture (except for
Subordinated Notes authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other Subordinated Notes pursuant to the
Indenture) is $175,000,000.
<PAGE>
(3) the principal amount of the Subordinated Notes will be payable on
November 15, 2007.
(4) the Subordinated Notes shall bear interest at a rate equal to
8.875% per annum; interest on the Subordinated Notes shall accrue from November
21, 1997 or from the most recent interest payment date to which interest has
been paid or provided for, as the case may be; interest on the Subordinated
Notes shall be payable semi-annually on May 15 and November 15 of each year
until maturity, commencing on May 15, 1998; and interest shall be payable to
holders of record on the May 1 and November 1 immediately preceding the
applicable interest payment date.
(5) the place or places where the principal of (and premium, if any)
and interest on the Subordinated Notes shall be payable shall be as set forth in
the Subordinated Notes, the form of which is attached hereto as Exhibit A.
(6) the Subordinated Notes shall be subject to redemption at the
option of the Company prior to maturity as follows:
The Subordinated Notes will be redeemable, at the Company's option, in
whole or in part, at any time on and after November 15, 2002, upon not less than
30 nor more than 60 days' notice mailed to each holder of Subordinated Notes to
be redeemed at such holder's address appearing in the Security Register, in
principal amounts of $1,000 or an integral multiple of $1,000 at the following
redemption prices (expressed as percentages of the principal amount) if redeemed
during the 12-month period commencing on November 15 of each of the years set
forth below, plus, in each case, accrued interest thereon to, but excluding, the
date of redemption:
Year Percentage
---- ----------
2002................................ 104.437%
2003................................ 102.958%
2004................................ 101.479%
2005 and thereafter................. 100.000%
In addition, the Company may, at its option, use the net cash proceeds
of one or more Equity Offerings to the extent the net cash proceeds thereof are
contributed to the equity capital of the Company to redeem for cash up to 35% in
aggregate principal amount of the Subordinated Notes originally issued under
this Supplemental Indenture at any time prior to November 15, 2001, at a
redemption price equal to 108.875% of the aggregate principal amount so
redeemed, plus accrued interest; provided that at least 50% of the principal
amount of Subordinated Notes originally issued remain outstanding immediately
after such redemption. Any such redemption will be required to occur on or prior
to 120 days after the receipt by the Company of the net cash proceeds of such
Equity Offering and upon not less than 30 nor more than 60 days' notice mailed
to each holder of Subordinated Notes to be redeemed at such holder's address
appearing in the Security Register, in principal amounts of $1,000 or an
integral multiple of $1,000. The Company may not use the net cash proceeds of
any Equity Offerings
3
<PAGE>
which alone or combined with a related series of transactions result in a Change
of Control to redeem Subordinated Notes pursuant to this paragraph.
If less than all of the Subordinated Notes are to be redeemed at any
time, the Trustee shall select, in such manner as it shall deem fair and
appropriate, the particular Notes to be redeemed or any portion thereof that is
an integral multiple of $1,000.
(7) the Company shall not be obligated to redeem or purchase the
Subordinated Notes pursuant to any sinking fund prior to maturity; the Company
shall be required to make an offer to repurchase Subordinated Notes as set forth
in Section 10.09 of the Indenture in connection with certain Asset Dispositions
pursuant to Section 9.16 and in connection with a Change of Control resulting in
a Rating Decline pursuant to Section 12.01.
(8) the Subordinated Notes shall be issued in minimum denominations of
$1,000 and integral multiples of $1,000 in excess thereof as set forth in the
Indenture.
(9) 100% of the principal amount of the Subordinated Notes shall be
payable upon declaration of acceleration of the maturity thereof pursuant to
Section 4.02 of the Indenture.
(10) the Subordinated Notes shall include all of the Events of Default
set forth in the Indenture.
(11) both Section 13.02 and Section 13.03 shall apply to the
Subordinated Notes.
(12) the Trustee, Securities Registrar and Paying Agent for the
Subordinated Notes shall be Marine Midland Bank.
(13) there shall be no additions or changes to or deletions from the
provisions of Articles 1, 7, 9 and 10 of the Indenture, except that the specific
payment and redemption terms of the Subordinated Notes are as set forth herein
and in the Form of Subordinated Note attached hereto as Exhibit A.
(14) the Subordinated Notes shall be exchangeable for a new series of
Subordinated Notes to be registered under the Securities Act pursuant to an
exchange offer as set forth in the Indenture.
(15) the Subordinated Notes shall not be secured by any collateral.
(16) the Subordinates Notes shall not be guaranteed by any Person.
(17) the Subordinated Notes shall be senior subordinated obligations
of the Company and shall be subordinated in right of payment to all existing and
future Senior Debt of the Company as provided in the Indenture.
4
<PAGE>
(18) the Subordinated Notes will be in substantially the form set
forth in Exhibit A hereto and may have such other terms as are provided in such
form, and such terms are incorporated herein by reference.
Section 2. The Subordinated Notes shall be substantially in the form
of Exhibit A hereto which form is hereby incorporated in and made a part of this
Supplemental Indenture. Subject to Section 2.07 of the Indenture, the
Subordinated Notes shall be in an aggregate principal amount of $175,000,000.
The Subordinated Notes may have notations, legends or endorsements required by
law. stock exchange rule, or agreements to which the Company is subject. Each
Subordinated Note shall be dated the date of its authentication.
The terms and provisions contained in the Subordinated Notes shall
constitute, and are hereby expressly made, a part of this Supplemental
Indenture, and the Company and the Trustee, by their execution and delivery of
this Supplemental Indenture, expressly agree to such terms and provisions and to
be bound thereby.
Section 3. Except as specifically supplemented and amended by this
Supplemental Indenture, the terms and provisions of the Indenture shall remain
in full force and effect. The Indenture, as supplemented and amended by this
Supplemental Indenture and all other indentures supplemental thereto, is in all
respects ratified and confirmed, and the Indenture, this Supplemental Indenture
and all indentures supplemental thereto shall be read, taken and construed as
one and the same instrument.
Section 4. If any provision hereof limits, qualifies or conflict with
another provision hereof which is required to be included in this Supplemental
Indenture by any of the provisions of the Trust Indenture Act, such required
provision shall control.
Section 5. All covenants and agreements in this Supplemental
Indenture by the Company shall bind its successors and assigns, whether so
expressed or not.
Section 6. In case any provision in this Supplemental Indenture or in
the Securities of any series shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions (or of the
other series of Securities) shall not in any way be affected or impaired
thereby.
Section 7. Nothing in this Supplemental Indenture, expressed or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, and the holders of the Subordinated Notes any benefit or
any legal or equitable right, remedy or claim under this Supplemental Indenture.
Section 8. This Supplemental Indenture and each Subordinated Note
shall be deemed to be a contract made under the laws of the State of New York
and this Supplemental Indenture and each Subordinated Note shall be governed by
and construed in accordance with the laws of the State of New York.
Section 9. All terms used in this Supplemental Indenture and not
otherwise defined herein that are defined in the Indenture shall have the
meanings set forth therein.
5
<PAGE>
Section 10. This Supplemental Indenture may be executed in any number
of counterparts, each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
Section 11. The recitals contained herein and in the Subordinated
Notes, except the certificate of authentication of the Trustee thereon, shall be
taken as statements of the Company, and the Trustee assumes no responsibility
for their accuracy or completeness. The Trustee make no representations as to
the validity or sufficiency of the Indenture, this Supplemental Indenture or of
the Subordinated Notes and shall not be accountable for the use or application
by the Company of the Subordinated Notes or the proceeds thereof.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
CLARK REFINING & MARKETING, INC.
By___________________________
Attest:
_______________________________
Marine Midland Bank
as Trustee
By___________________________________
Authorized Signatory
Attest:
_____________________________
<PAGE>
EXHIBIT A
(Face of Security)
CLARK REFINING & MARKETING, INC.
8 7/8% SENIOR SUBORDINATED NOTES DUE 2007
No. __________ $175,000,000
Clark Refining & Marketing, Inc., a corporation duly organized and
existing under the laws of Delaware (herein called the "Company," which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum set forth above or such other principal sum indicated on the
Schedule attached hereto (which shall not exceed $175,000,000) in United States
Dollars on November 15, 2007, and to pay interest at the rate of 8 7/8% per
annum from the Issue Date or from the most recent Interest Payment Date to which
interest has been paid or duly provided for in cash in arrears on each May 15
and November 15 to the person whose name the Security is registered at the close
of business on the May 1 or November 1 next preceding such Interest Payment
Date, until the principal hereof is paid or made available for payment;
provided, however, in the event that (i) the Company has not filed the
registration statement relating to the Exchange Offer within 90 days following
the Issue Date, or (ii) such registration statement has not become effective
within 180 days following the Issue Date, (iii) the resale registration
statement has not become effective within 105 days of the date on which the
obligation to file such resale registration statement arose, or (iv) the
Exchange Offer has not been consummated within 30 business days after the
effectiveness deadline of the Exchange Offer Registration Statement, (v) the
Company has not filed the resale registration statement within 45 days after the
obligation to file such resale registration statement arose, or (vi) any
registration statement required by the Registration Rights Agreement is filed
and declared effective but shall thereafter cease to be effective (except as
specifically permitted therein) without being succeeded within 30 days by an
additional registration statement filed and declared effective (any such event
referred to in Clauses (i) through (vi), the "Registration Default"), then, as
liquidated damages for such Registration Default, subject to the Registration
Rights Agreement, the per annum interest rate on the Notes will increase by
0.25% ("Special Interest") for the period from the occurrence of the
Registration Default until such time as no Registration Default is in effect (at
which time the interest rate will be reduced to its initial rate). If the
Company has not consummated the Exchange Offer (or, if applicable, the resale
registration has not become effective), within 270 days following the Issue
Date, then the per annum dividend rate on the Securities will increase by an
additional 0.25% for so long as the Company has not consummated the Exchange
Offer (or until such resale registration becomes effective).
Any accrued and unpaid interest on this Security upon the issuance of
an Exchange Note in exchange for this Security shall cease to be payable to the
Holder hereof but such accrued and unpaid interest shall be payable on the next
Interest Payment Date for such Exchange Note to the Holder thereof on the
related Regular Record Date.
A-1
<PAGE>
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 May 1 or November 1 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date at the
office or agency of the Company at New York, New York maintained for such
purpose and at any other office or agency maintained by the Company for such
purchase (any such location being called a "Place of Payment"); provided,
however, that at the option of the Company payment of interest may be made by
check to the address of the Person entitled thereto as such address shall appear
on the Security Register. Interest shall be payable in cash. Any such interest
not so punctually paid or duly provided, and interest on such defaulted interest
at the interest rate borne by the Securities, to the extent lawful, shall
forthwith cease to be payable to the Holder on such Regular Record Date and
shall 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 ("Special Record Date") for the payment of such defaulted interest
to be fixed by the Company with the consent of 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 (if applicable) of any securities exchange on
which the Securities may be listed, and upon such notice as may be required by
such securities exchange, all as more fully provided in said Indenture.
If this Security is a Global Security, all payments in respect of this
Security will be payable to the Global Security Holder in its capacity as the
registered Holder under the Indenture. If this Security is not a Global
Security, payment of the principal of, premium, if any, and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in the City and State of New York, 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, or at the option of the Company, payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register; provided,
however, that payment by wire transfer of immediately available funds will be
required with respect to principal of, premium, if any, and interest on, all
Global Notes and all other Securities the Holders of which shall have provided
wire transfer instructions to the Company or the Paying Agent.
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 executed by
the Trustee by manual signature, this Security shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose.
A-2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated: November 21, 1997
CLARK REFINING & MARKETING, INC.
Attest:
- ------------------------------- By __________________________
Name: Name:
Title: Title:
Certificate of Authentication
This is one of the Securities referred to in the within-mentioned
Indenture.
MARINE MIDLAND BANK,
as Trustee
By:_________________________________________
Authorized Signatory
A-3
<PAGE>
(Back of Security)
THIS GLOBAL NOTE IS HELD BY THE DEPOSITORY (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 SECTION 2.06 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 DEPOSITORY WITH THE PRIOR WRITTEN CONSENT OF
THE COMPANY.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS NOT A U.S.
PERSON, IS NOT ACQUIRING THIS NOTE FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON
AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER
THE SECURITIES ACT) (AN "IAI"), (2) AGREES THAT IT WILL NOT, WITHIN THE TIME
PERIOD REFERRED TO UNDER RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF RULE
144(d) UNDER THE SECURITIES ACT, IF APPLICABLE) UNDER THE SECURITIES ACT AS IN
EFFECT ON THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR OTHERWISE TRANSFER
THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A PERSON
WHOM THE HOLDER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QIB IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE
904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (E) TO AN IAI
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE REGISTRATION
OF TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN
INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE OR ANY INTEREST
A-4
<PAGE>
HEREIN WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. EACH IAI THAT IS NOT A QIB
WILL BE REQUIRED TO EFFECT ANY TRANSFER OF NOTES OR INTERESTS THEREIN (OTHER
THAN PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT) THROUGH ONE OF THE INITIAL
PURCHASERS. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES"
AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S
UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE
FOREGOING RESTRICTIONS.
This Security is one of a duly authorized issue of securities of the
Company designated as its 8 7/8% Senior Subordinated Notes due 2007 (herein
called the "Securities"), issued and to be issued in one or more series under an
Indenture, dated as of November 21, 1997 (as it may from time to time be
supplemented or amended by one or more supplemental indentures, herein called
the "Indenture"), between the Company and Marine Midland Bank, as Trustee
(herein called the "Trustee," which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company and the Trustee of
the Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This issue of Securities is limited in aggregate
principal amount to $175,000,000.
The Securities are subject to redemption at the option of the Company,
in whole or in part at any time on or after November 15, 2002, upon not less
than 30 nor more than 60 days' notice mailed to each holder of Securities to be
redeemed at such holder's address appearing on the Company' Securities
Registrar, in principal amounts of $1,000 or an integral multiple of $1,000, at
the following redemption prices (expressed as percentages of the principal
amount) if redeemed during the 12-month period commencing on November 15 of each
of the years set forth below, plus, in each case, interest accrued thereon to,
but excluding, the date of redemption.
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2002 104.437%
2003 102.958%
2004 101.479%
2005 and thereafter 100.000%
</TABLE>
In addition, the Company may, at its option, use the net cash proceeds
of one or more Equity Offerings to the extent the net cash proceeds thereof are
contributed to the equity capital of the Company to redeem for cash up to 35% in
aggregate principal amount of the Securities originally issued under the
Indenture at any time prior to November 15, 2001, at a redemption price equal to
108.875% of the aggregate principal amount so redeemed, plus accrued interest,
including Special Interest, to the Redemption Date; provided that at least 50%
of the principal amount of Securities originally issued remain outstanding
immediately after such redemption. Any such redemption shall be required to
occur on or prior to 120 days after the
A-5
<PAGE>
receipt by the Company of the Net Available Proceeds of such Equity Offering and
upon not less than 30 nor more than 60 days' notice mailed to each holder of
Securities to be redeemed at such holder's address appearing in the Company's
Security Register, in principal amounts of $1,000 or an integral multiple of
$1,000. The Company may not use the Net Available Proceeds of any Equity
Offerings which alone or combined with a related series of transactions result
in a Change of Control to redeem Securities pursuant to this paragraph.
If less than all of the Securities are to be redeemed at any time, the
Trustee shall select, in such manner as it shall deem fair and appropriate, the
particular Securities to be redeemed; provided that Securities redeemed in part
will only be redeemed in integral multiples of $1,000.
The Indenture provides that, subject to certain conditions, if (i)
certain Net Available Proceeds are available to the Company as a result of Asset
Dispositions or (ii) a Change of Control Triggering Event occurs, the Company
shall be required to make an Offer to purchase for some or all of the Securities
in accordance with the terms of the Indenture.
The Indenture contains provisions for defeasance at any time of (i)
the entire indebtedness of this Security or (ii) certain restrictive covenants
and Events of Default with respect to this Security, in each case upon
compliance with certain conditions set forth therein.
In the event of redemption or purchase pursuant to a mandatory offer
to purchase of this Security in part only, a new Security or Securities for the
unredeemed or unpurchased portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof.
If an Event of Default shall occur and be continuing, the principal of
the Securities may be declared due and payable in the manner and with the effect
provided in the Indenture.
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 rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of a
majority in principal amount of the Securities at the time Outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities at the time Outstanding, on
behalf of the Holders of all Securities, to waive compliance by the Company with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. The Indenture also provides that, without
notice to or consent of any Holder, the Company and the Trustee may enter into
one or more supplemental indentures to, among other things, cure any ambiguity,
defect or inconsistency, provide for uncertificated securities in addition to or
in place of certificated Securities, or make any other change, in each case,
that does not adversely affect the rights of any Holder of a Security in any
material respect. Any such consent or waiver by the Holder of this Security
shall be conclusive and binding upon such Holder and upon all 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.
A-6
<PAGE>
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) and
interest, including Special Interest, if any, on this Security at the times,
place and rate, and in the coin or currency, herein prescribed.
The Securities are subordinated in right of payment, to the extent and
in the manner provided in Article 11 of the Indenture, to the prior payment in
full of all Senior Debt, which includes (i) all Indebtedness outstanding under
the Credit Agreement and the Loan Agreement, (ii) Indebtedness represented by
the Senior Notes, the 10 1/2% Notes and the 9 1/2% Notes, (iii) any other
Indebtedness permitted to be incurred by the Company under the terms of this
Indenture, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Securities and (iv) all Obligations with respect to the
foregoing. Notwithstanding anything to the contrary in the foregoing, Senior
Debt will not include (v) Indebtedness represented by preferred stock, (w) any
liability for federal, state, local or other taxes owed or owing by the Company,
(x) any Indebtedness of the Company to any of its Subsidiaries or other
Affiliates, (y) any trade payables or (z) any Indebtedness that is incurred in
violation of this Indenture; provided, however, that any Indebtedness incurred
under the Credit Agreement, in respect of which the lenders or the agent
thereunder receive from the Company a representation that such Indebtedness is
Senior Debt for all purposes under this Indenture, shall be Senior Debt for all
purposes under this Indenture notwithstanding this clause (z). To the extent
provided in the Indenture, Senior Debt must be paid before the Securities may be
paid. The Company agrees and each Holder of Securities by accepting a Security
consents and agrees to the subordination provided in the Indenture and
authorizes the Trustee to give it effect.
As provided in the Indenture, the transfer of this Security is
registrable in the Security Register, upon surrender of this Security for
registration of transfer at the office or agency of the Company in any place
where the principal of (and premium, if any) and interest, including Special
Interest, if any, on this Security are payable, 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 multiples of $1,000. As provided in the
Indenture and subject to certain limitations therein set forth, 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 to the Holder for any such
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this
A-7
<PAGE>
Security is registered as the owner hereof for all purposes, whether or not this
Security be overdue, and neither the Company, the Trustee nor any such agent
shall be affected by notice to the contrary.
No director, officer, employee, stockholder or incorporator, as such,
of the Company shall have any liability for any obligations of the Company under
the Securities or the Indenture for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. Such waiver and release are
part of the consideration for the issuance of the Securities.
Interest on this Security shall be computed on the basis of a 360-day
year comprised of twelve 30-day months.
All terms used in this Security that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
The Indenture and this Security shall be governed by and construed in
accordance with the laws of the State of New York (without giving effect to
conflicts of law principles thereof).
A-8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased in its entirety
by the Company pursuant to Sections 10.09 and 9.16 of the Indenture, check the
box: [_]
If you want to elect to have only a part of this Security purchased by
the Company pursuant to Sections 10.09 and 9.16 of the Indenture, state the
amount (which must be $1,000 or integral multiples thereof):
$____________________.
Dated: ______ Your Signature: _________________________________
(Sign exactly as name appears on the other side of this Security)
Signature Guarantee: ___________________________________
(Signature must be guaranteed by a member firm
of a national securities exchange or a commercial
bank or trust company)
A-9
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign and transfer
this Security 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 Security on the books of the Company. The agent may substitute
another to act for him.
Dated: ______ Your Signature: _________________________________
(Sign exactly as name appears on the other side of this Security)
Signature Guarantee:
A-10
<PAGE>
SCHEDULE OF EXCHANGES OF SECURITIES
The following exchanges of a part of this Global Note for another Global
Note or for Definitive Securities have been made:
<TABLE>
<CAPTION>
Principal Amount Signature of
Amount of Amount of of this Global authorized
decrease in increase in Security officer of
Principal Amount Principal Amount following such Trustee or
Date of of this Global of this Global decrease Security
Exchange Security Security (or increase) Custodian
- -------- ---------------- ---------------- ---------------- ------------
<S> <C> <C> <C> <C>
</TABLE>
A-11
<PAGE>
EXHIBIT A-1
(Face of Temporary Global Note)
CLARK REFINING & MARKETING, INC.
8 7/8% SENIOR SUBORDINATED NOTES DUE 2007
No. __________ $0.00
Clark Refining & Marketing, Inc., a corporation duly organized and existing
under the laws of Delaware (herein called the "Company," which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of set forth above or such other principal sum indicated on the
Schedule attached hereto (which shall not exceed $175,000,000) in United States
Dollars on November 15, 2007, and to pay interest at the rate of 8 7/8% per
annum from the Issue Date or from the most recent Interest Payment Date to which
interest has been paid or duly provided for in cash in arrears on each May 15
and November 15 to the person whose name the Security is registered at the close
of business on the May 1 or November 1 next preceding such Interest Payment
Date, until the principal hereof is paid or made available for payment;
provided, however, in the event that (i) the Company has not filed the
registration statement relating to the Exchange Offer within 90 days following
the Issue Date, or (ii) such registration statement has not become effective
within 180 days following the Issue Date, (iii) the resale registration
statement has not become effective within 105 days of the date on which the
obligation to file such resale registration statement arose, or (iv) the
Exchange Offer has not been consummated within 30 business days after the
effectiveness deadline of the Exchange Offer Registration Statement, (v) the
Company has not filed the resale registration statement within 45 days after the
obligation to file such resale registration statement arose, or (vi) any
registration statement required by the Registration Rights Agreement is filed
and declared effective but shall thereafter cease to be effective (except as
specifically permitted therein) without being succeeded within 30 days by an
additional registration statement filed and declared effective (any such event
referred to in Clauses (i) through (vi), the ''Registration Default''), then, as
liquidated damages for such Registration Default, subject to the Registration
Rights Agreement, the per annum interest rate on the Notes will increase by
0.25% ("Special Interest") for the period from the occurrence of the
Registration Default until such time as no Registration Default is in effect (at
which time the interest rate will be reduced to its initial rate). If the
Company has not consummated the Exchange Offer (or, if applicable, the resale
registration has not become effective), within 270 days following the Issue
Date, then the per annum dividend rate on the Securities will increase by an
additional 0.25% for so long as the Company has not consummated the Exchange
Offer (or until such resale registration becomes effective).
Any accrued and unpaid interest on this Security upon the issuance of
an Exchange Note in exchange for this Security shall cease to be payable to the
Holder hereof but such accrued and unpaid interest shall be payable on the next
Interest Payment Date for such Exchange Note to the Holder thereof on the
related Regular Record Date.
A1-1
<PAGE>
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 May 1 or November 1 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date at the
office or agency of the Company at New York, New York maintained for such
purpose and at any other office or agency maintained by the Company for such
purchase (any such location being called a "Place of Payment"); provided,
however, that at the option of the Company payment of interest may be made by
check to the address of the Person entitled thereto as such address shall appear
on the Security Register. Interest shall be payable in cash. Any such interest
not so punctually paid or duly provided, and interest on such defaulted interest
at the interest rate borne by the Securities, to the extent lawful, shall
forthwith cease to be payable to the Holder on such Regular Record Date and
shall 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 ("Special Record Date") for the payment of such defaulted interest
to be fixed by the Company with the consent of 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 (if applicable) of any securities exchange on
which the Securities may be listed, and upon such notice as may be required by
such securities exchange, all as more fully provided in said Indenture.
If this Security is a Global Security, all payments in respect of this
Security will be payable to the Global Security Holder in its capacity as the
registered Holder under the Indenture. If this Security is not a Global
Security, payment of the principal of, premium, if any, and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in the City and State of New York, 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, or at the option of the Company, payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register; provided,
however, that payment by wire transfer of immediately available funds will be
required with respect to principal of, premium, if any, and interest on, all
Global Notes and all other Securities the Holders of which shall have provided
wire transfer instructions to the Company or the Paying Agent.
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 executed by
the Trustee by manual signature, this Security shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose.
A1-2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated: November 21, 1997
CLARK REFINING & MARKETING, INC.
Attest:
_____________________________ By __________________________
Name: Name:
Title: Title:
Certificate of Authentication
This is one of the Securities referred to in the within-mentioned
Indenture.
MARINE MIDLAND BANK,
as Trustee
By:________________________
Authorized Signatory
A1-3
<PAGE>
(Back of Temporary Global Note)
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND
THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE
AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITORY (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 SECTION 2.06 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 DEPOSITORY WITH THE PRIOR WRITTEN CONSENT OF
THE COMPANY."
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") AND, ACCORDINGLY, MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS NOT A U.S.
PERSON, IS NOT ACQUIRING THIS NOTE FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON
AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER
THE SECURITIES ACT) (AN "IAI"), (2) AGREES THAT IT WILL NOT, WITHIN THE TIME
PERIOD REFERRED TO UNDER RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF RULE
144(d) UNDER THE SECURITIES ACT, IF APPLICABLE) UNDER THE SECURITIES ACT AS IN
EFFECT ON THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR OTHERWISE TRANSFER
THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A PERSON
WHOM THE HOLDER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QIB IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE
904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (E) TO AN IAI
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND
A1-4
<PAGE>
AGREEMENTS RELATING TO THE REGISTRATION OF TRANSFER OF THIS NOTE (THE FORM OF
WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS, AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THIS NOTE OR ANY INTEREST HEREIN WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE
HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING
TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. EACH
IAI THAT IS NOT A QIB WILL BE REQUIRED TO EFFECT ANY TRANSFER OF NOTES OR
INTERESTS THEREIN (OTHER THAN PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT)
THROUGH ONE OF THE INITIAL PURCHASERS. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM
BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE
IN VIOLATION OF THE FOREGOING RESTRICTIONS."
This Security is one of a duly authorized issue of securities of the
Company designated as its 8 7/8% Senior Subordinated Notes due 2007 (herein
called the "Securities"), issued and to be issued in one or more series under an
Indenture, dated as of November 21, 1997 (as it may from time to time be
supplemented or amended by one or more supplemental indentures, herein called
the "Indenture"), between the Company and Marine Midland Bank, as Trustee
(herein called the "Trustee," which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company and the Trustee of
the Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This issue of Securities is limited in aggregate
principal amount to $175,000,000.
The Securities are subject to redemption at the option of the Company,
in whole or in part at any time on or after November 15, 2002, upon not less
than 30 nor more than 60 days' notice mailed to each holder of Securities to be
redeemed at such holder's address appearing on the Company' Securities
Registrar, in principal amounts of $1,000 or an integral multiple of $1,000, at
the following redemption prices (expressed as percentages of the principal
amount) if redeemed during the 12-month period commencing on November 15 of each
of the years set forth below, plus, in each case, interest accrued thereon to,
but excluding, the date of redemption.
A1-5
<PAGE>
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2002 104.437%
2003 102.958%
2004 101.479%
2005 and thereafter 100.000%
</TABLE>
In addition, the Company may, at its option, use the net available
proceeds of one or more Equity Offerings to the extent net cash proceeds thereof
are contributed to the equity capital of the Company to redeem for cash up to
35% in aggregate principal amount of the Securities originally issued under the
Indenture at any time prior to November 15, 2001, at a redemption price equal to
108.875% of the aggregate principal amount so redeemed, plus accrued interest,
including Special Interest, to the Redemption Date; provided that at least 50%
of the principal amount of Securities originally issued remain outstanding
immediately after such redemption. Any such redemption shall be required to
occur on or prior to 120 days after the receipt by the Company of the Net
Available Proceeds of such Equity Offering and upon not less than 30 nor more
than 60 days' notice mailed to each holder of Securities to be redeemed at such
holder's address appearing in the Company's Security Register, in principal
amounts of $1,000 or an integral multiple of $1,000. The Company may not use the
Net Available Proceeds of any Equity Offerings which alone or combined with a
related series of transactions result in a Change of Control to redeem
Securities pursuant to this paragraph.
If less than all of the Securities are to be redeemed at any time, the
Trustee shall select, in such manner as it shall deem fair and appropriate, the
particular Securities to be redeemed; provided that Securities redeemed in part
will only be redeemed in integral multiples of $1,000.
The Indenture provides that, subject to certain conditions, if (i)
certain Net Available Proceeds are available to the Company as a result of Asset
Dispositions or (ii) a Change of Control Triggering Event occurs, the Company
shall be required to make an Offer to purchase for some or all of the Securities
in accordance with the terms of the Indenture.
The Indenture contains provisions for defeasance at any time of (i)
the entire indebtedness of this Security or (ii) certain restrictive covenants
and Events of Default with respect to this Security, in each case upon
compliance with certain conditions set forth therein.
In the event of redemption or purchase pursuant to a mandatory offer
to purchase of this Security in part only, a new Security or Securities for the
unredeemed or unpurchased portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof.
If an Event of Default shall occur and be continuing, the principal of
the Securities may be declared due and payable in the manner and with the effect
provided in the Indenture.
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 rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of a
majority in principal amount of the Securities at the time Outstanding. The
Indenture also contains provisions permitting the Holders of specified
A1-6
<PAGE>
percentages in principal amount of the Securities at the time Outstanding, on
behalf of the Holders of all Securities, to waive compliance by the Company with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. The Indenture also provides that, without
notice to or consent of any Holder, the Company and the Trustee may enter into
one or more supplemental indentures to, among other things, cure any ambiguity,
defect or inconsistency, provide for uncertificated securities in addition to or
in place of certificated Securities, or make any other change, in each case,
that does not adversely affect the rights of any Holder of a Security in any
material respect. Any such consent or waiver by the Holder of this Security
shall be conclusive and binding upon such Holder and upon all 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.
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) and
interest, including Special Interest, if any, on this Security at the times,
place and rate, and in the coin or currency, herein prescribed.
The Securities are subordinated in right of payment, to the extent and
in the manner provided in Article 11 of the Indenture, to the prior payment in
full of all Senior Debt, which includes (i) all Indebtedness outstanding under
the Credit Agreement and the Loan Agreement, (ii) Indebtedness represented by
the Senior Notes, the 10 1/2% Notes and the 9 1/2% Notes, (iii) any other
Indebtedness permitted to be incurred by the Company under the terms of this
Indenture, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Securities and (iv) all Obligations with respect to the
foregoing. Notwithstanding anything to the contrary in the foregoing, Senior
Debt will not include (v) Indebtedness represented by preferred stock, (w) any
liability for federal, state, local or other taxes owed or owing by the Company,
(x) any Indebtedness of the Company to any of its Subsidiaries or other
Affiliates, (y) any trade payables or (z) any Indebtedness that is incurred in
violation of this Indenture; provided, however, that any Indebtedness incurred
under the Credit Agreement, in respect of which the lenders or the agent
thereunder receive from the Company a representation that such Indebtedness is
Senior Debt for all purposes under this Indenture, shall be Senior Debt for all
purposes under this Indenture notwithstanding this clause (z). To the extent
provided in the Indenture, Senior Debt must be paid before the Securities may be
paid. The Company agrees and each Holder of Securities by accepting a Security
consents and agrees to the subordination provided in the Indenture and
authorizes the Trustee to give it effect.
Until this Regulation S Temporary Global Note is exchanged for one or
more Regulation S Permanent Global Notes, the Holder hereof shall not be
entitled to receive payments of interest hereon; until so exchanged in full,
this Regulation S Temporary Global Note shall in all other respects be entitled
to the same benefits as other Notes under the Indenture.
As provided in the Indenture, the transfer of this Security is
registrable in the Security Register, upon surrender of this Security for
registration of transfer at the office or agency of the Company in any place
where the principal of (and premium, if any) and interest,
A1-7
<PAGE>
including Special Interest, if any, on this Security are payable, 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 multiples of $1,000. As provided in
the Indenture and subject to certain limitations therein set forth, Securities
are exchangeable for a like aggregate principal amount of Securities of a
different authorized denomination, as requested by the Holder surrendering the
same.
This Regulation S Temporary Global Note is exchangeable in whole or in
part for one or more Global Notes only (i) on or after the termination of the
40-day restricted period (as defined in Regulation S) and (ii) upon presentation
of certificates (accompanied by an Opinion of Counsel, if applicable) required
by Article 2 of the Indenture. Upon exchange of this Regulation S Temporary
Global Note for one or more Global Notes, the Trustee shall cancel this
Regulation S Temporary Global Note.
No service charge shall be made to the Holder for any such
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, 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 be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
No director, officer, employee, stockholder or incorporator, as such,
of the Company shall have any liability for any obligations of the Company under
the Securities or the Indenture for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. Such waiver and release are
part of the consideration for the issuance of the Securities.
Interest on this Security shall be computed on the basis of a 360-day
year comprised of twelve 30-day months.
All terms used in this Security that are defined in the Supplemental
Indenture shall have the meanings assigned to them in the Supplemental
Indenture.
The Indenture and this Security shall be governed by and construed in
accordance with the laws of the State of New York (without giving effect to
conflicts of law principles thereof).
OPTION OF HOLDER TO ELECT PURCHASE
A1-8
<PAGE>
If you want to elect to have this Security purchased in its entirety
by the Company pursuant to Sections 10.09 and 9.16 of the Indenture, check the
box: [_]
If you want to elect to have only a part of this Security purchased by
the Company pursuant to Sections 10.09 and 9.16 of the Indenture, state the
amount (which must be $1,000 or integral multiples thereof): $_________________.
Dated: ___________ Your Signature: _________________________________
(Sign exactly as name appears on
the other side of this Security)
Signature Guarantee: _____________________________________
(Signature must be guaranteed by a
member firm of a national securities
exchange or a commercial bank or trust
company)
A1-9
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign and transfer
this Security 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 Security on the books of the Company. The agent may substitute
another to act for him.
Dated: _________ Your Signature: _________________________________
(Sign exactly as name appears on
the other side of this Security)
Signature Guarantee:
A1-10
<PAGE>
SCHEDULE OF EXCHANGES OF SECURITIES
The following exchanges of a part of this Regulation S Temporary Global
Note for an interest in another Global Note or for Definitive Securities, or of
other Restricted global Notes or Definitive Securities for an interest in this
Regulation S Temporary global Note, have been made:
<TABLE>
<CAPTION>
Principal Amount Signature of
Amount of Amount of of this Global authorized
decrease in increase in Security officer of
Principal Amount Principal Amount following such Trustee or
Date of of this Global of this Global decrease Security
Exchange Security Security (or increase) Custodian
- -------- ---------------- ---------------- ---------------- ------------
<S> <C> <C> <C> <C>
</TABLE>
A1-11
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Clark Refining & Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 631105
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Re: Clark Refining & Marketing, Inc. ____________________ [notes]
Reference is hereby made to the Indenture with respect to the above-
referenced securities, dated as of November 21, 1997 (the "Indenture"), between
Clark Refining & Marketing, Inc., as issuer (the "Company"), and Marine Midland
Bank, 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 Note[s] specified in Annex A hereto, in the
principal amount of U.S. $_________ 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 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
Temporary Regulation S Global Note, 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)
B-1
<PAGE>
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, (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, the Temporary 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 beneficial
interest in the IAI Global Note or 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;
or
(d) [_] such Transfer is being effected to an Institutional
Accredited Investor and pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904,
and the Transferor hereby further certifies that it has not engaged in any
general solicitation within the meaning of Regulation D under the Securities Act
and the Transfer complies with the transfer restrictions applicable to
beneficial interests in a Restricted Global Note or Restricted Definitive Notes
and the requirements of the exemption claimed, which certification is supported
by (1) a certificate executed by the
B-2
<PAGE>
Transferee in the form of Exhibit D to the Indenture and (2) if such Transfer is
in respect of a principal amount of Notes at the time of transfer of less than
U.S. $250,000, an Opinion of Counsel provided by the Transferor or the
Transferee (a copy of which the Transferor has attached to this certification),
to the effect that such Transfer is in 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 be
subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the IAI Global Note and/or the Definitive Notes and in the
Indenture and the Securities Act.
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.
B-3
<PAGE>
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-4
<PAGE>
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
(iii) [_] IAI 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) [_] IAI Global Note (CUSIP ________); or
(iv) [_] Unrestricted Global Note (CUSIP ________); or
(b) [_] a Restricted Definitive Note; or
(c) [_] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-5
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Clark Refining & Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 631105
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Re: Clark Refining & Marketing, Inc. ____________________ [notes]
(CUSIP ______________)
Reference is hereby made to the Indenture with respect to the above-
referenced securities, dated as of November 21, 1997 (the "Indenture"), between
Clark Refining & Marketing, Inc., as issuer (the "Company"), and Marine Midland
Bank, 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 U.S.
$____________ 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 Unrestricted Global Note is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.
C-1
<PAGE>
(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 beneficial 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 restrictions on transfer enumerated in
the Private Placement Legend printed on the Restricted Definitive Note and in
the Indenture and the Securities Act.
C-2
<PAGE>
(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, ___ IAI 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
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Clark Refining & Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 631105
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Re: Clark Refining & Marketing, Inc. ________________________ [notes]
Reference is hereby made to the Indenture with respect to the
above-referenced securities, dated as of November 21, 1997 (the "Indenture"),
between Clark Refining & Marketing, Inc., as issuer (the "Company"), and Marine
Midland Bank, as trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
In connection with our proposed purchase of U.S. $____________
aggregate principal amount of:
(a) [_] a beneficial interest in a Global Note, or
(b) [_] a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or
any interest therein is subject to certain restrictions and conditions set forth
in the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not
been registered under the Securities Act, and that the Notes and any interest
therein may not be offered or sold except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for which we
are acting as hereinafter stated, that if we should sell the Notes or any
interest therein, we will do so only (A) to the Company or any subsidiary
thereof, (B) in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein), (c) to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a U.S. broker-dealer) to you and to the
Company a signed letter substantially in the form of this letter and, if such
transfer is in respect of a principal amount of Notes, at the time of transfer
of less than U.S. $250,000, an Opinion of Counsel in form reasonably acceptable
to the Company to the effect that such transfer is in
D-1
<PAGE>
compliance with the Securities Act, (D) outside the United States in accordance
with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the
provisions of Rule 144(k) under the Securities Act or (F) pursuant to an
effective registration statement under the Securities Act, and we further agree
to provide to any person purchasing the Definitive Note or beneficial interest
in a Global Note from us in a transaction meeting the requirements of clauses
(A) through (E) of this paragraph a notice advising such purchaser that resales
thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by us
will bear a legend to the foregoing effect. We further understand that any
subsequent transfer by us of the Notes or beneficial interest therein acquired
by us must be effected through one of the Placement Agents.
4. We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Notes, and
we and any accounts for which we are acting are each able to bear the economic
risk of our or its investment.
5. We are acquiring the Notes or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this letter and 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.
---------------------------------------
[Insert Name of Accredited Investor]
By:
----------------------------------
Name:
Title:
Dated: __________________, ____
D-2
<PAGE>
EXHIBIT 4.7
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
8 3/8% SENIOR NOTES DUE 2007
8 7/8% SENIOR SUBORDINATED NOTES DUE 2007
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT, dated as of November 21, 1997,
among Clark Refining & Marketing, Inc., a Delaware corporation (the "Company"),
and the purchasers set forth on Schedule I to the Notes Purchase Agreement
(collectively, the "Purchasers"), of (i) an aggregate of $100,000,000 principal
amount of 8 3/8% Senior Notes due 2007 (the "Senior Notes") and (ii) an
aggregate of $175,000,000 principal amount of 8 7/8% Senior Subordinated Notes
due 2007 (the "Subordinated Notes" and, together with the Senior Notes, the
"Clark Notes" and, each a "Series") of the Company. The Company proposes to
issue and sell to the Purchasers upon the terms set forth in the Notes Purchase
Agreement the Securities (as defined herein). As an inducement to the
Purchasers to enter into the Notes Purchase Agreement and in satisfaction of a
condition to the obligations of the Purchasers thereunder, the Company agrees
with the Purchasers for the benefit of holders (as defined herein) from time to
time of the Registrable Securities (as defined herein) as follows:
1. Certain Definitions.
For purposes of this Exchange and Registration Rights Agreement, the
following terms shall have the following respective meanings:
"Base Interest" shall mean the interest, if any, that would otherwise
accrue on the Securities under the terms thereof and the Indentures,
without giving effect to the provisions of this Agreement.
The term "broker-dealer" shall mean any broker or dealer registered
with the Commission under the Exchange Act.
"Closing" shall mean the date of the closing of the issuance and sale
of the Securities pursuant to the Notes Purchase Agreement.
"Commission" shall mean the United States Securities and Exchange
Commission, or any other federal agency at the time administering the
Exchange Act or the Securities Act, whichever is the relevant statute for
the particular purpose.
"Effective Time," in the case of (i) an Exchange Registration, shall
mean the time and date as of which the Commission declares an Exchange
Registration Statement effective or as of which an Exchange Registration
Statement otherwise becomes effective and (ii) a Shelf Registration, shall
mean the time and date as of which the Commission
<PAGE>
declares a Shelf Registration Statement effective or as of which a Shelf
Registration Statement otherwise becomes effective.
"Electing Holder" shall mean any holder of Registrable Securities that
has returned a completed and signed Notice and Questionnaire to the Company
in accordance with Section 3(d)(ii) or 3(d)(iii) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, or any
successor thereto, as the same shall be amended from time to time.
"Exchange Offer" shall have the meaning assigned thereto in Section
2(a) hereof.
"Exchange Registration" shall have the meaning assigned thereto in
Section 3(c) hereof.
"Exchange Registration Statement" shall have the meaning assigned
thereto in Section 2(a) hereof.
"Exchange Securities" shall have the meaning assigned thereto in
Section 2(a) hereof.
The term "holder" shall mean each of the Purchasers and other persons
who acquire Registrable Securities from time to time (including any
successors or assigns), in each case for so long as such person owns any
Registrable Securities.
"Indentures" shall mean the indentures, dated as of November 21, 1997,
between the Company and Bankers Trust Company, as Trustee, with respect to
the Senior Notes (the "Senior Notes Indenture") and Marine Midland, as
Trustee, with respect to the Subordinated Notes (the "Subordinated Notes
Indenture"), as the same shall be amended from time to time.
"Notes Purchase Agreement" shall mean the Purchase Agreement, dated as
of November 14, 1997, among the Purchasers and the Company relating to the
Securities.
"Notice and Questionnaire" means a Notice of Registration Statement
and Selling Securityholder Questionnaire substantially in the form of
Exhibit A hereto.
The term "person" shall mean a corporation, association, partnership,
organization, business, individual, government or political subdivision
thereof or governmental agency.
"Registrable Securities" shall mean the Securities; provided, however,
that a Security shall cease to be a Registrable Security when (i) in the
circumstances contemplated by Section 2(a) hereof, the Security has been
exchanged for an Exchange Security in an Exchange Offer as contemplated in
Section 2(a) hereof (provided that any Exchange Security received by a
broker-dealer in an Exchange Offer in exchange for a
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<PAGE>
Registrable Security that was not acquired by the broker-dealer directly
from the Company will also be a Registrable Security through and including
the earlier of the 90th day after the applicable Exchange Offer is
completed or such time as such broker-dealer no longer owns such Security);
(ii) in the circumstances contemplated by Section 2(b) hereof, a Shelf
Registration Statement registering such Security under the Securities Act
has been declared or becomes effective and such Security has been sold or
otherwise transferred by the holder thereof pursuant to and in a manner
contemplated by such effective Shelf Registration Statement; (iii) such
Security is sold pursuant to Rule 144 under circumstances in which any
legend borne by such Security relating to restrictions on transferability
thereof, under the Securities Act or otherwise, is removed by the Company
or pursuant to the applicable Indenture; (iv) such Security is eligible to
be sold pursuant to paragraph (k) of Rule 144; or (v) such Security shall
cease to be outstanding.
"Registration Default" shall have the meaning assigned thereto in
Section 2(c) hereof.
"Registration Expenses" shall have the meaning assigned thereto in
Section 4 hereof.
"Resale Period" shall have the meaning assigned thereto in Section
2(a) hereof.
"Restricted Holder" shall mean (i) a holder that is an affiliate of
the Company within the meaning of Rule 405, (ii) a holder who acquires
Exchange Securities outside the ordinary course of such holder's business,
(iii) a holder who has arrangements or understandings with any person to
participate in any Exchange Offer for the purpose of distributing Exchange
Securities and (iv) a holder that is a broker-dealer, but only with respect
to Exchange Securities received by such broker-dealer pursuant to an
Exchange Offer in exchange for Registrable Securities acquired by the
broker-dealer directly from the Company.
"Rule 144," "Rule 405" and "Rule 415" shall mean, in each case, such
rule promulgated under the Securities Act (or any successor provision), as
the same shall be amended from time to time.
"Securities" shall mean, collectively, the Senior Notes and the
Subordinated Notes, to be issued and sold to the Purchasers, and securities
issued in exchange therefor or in lieu thereof pursuant to the Indentures.
"Securities Act" shall mean the Securities Act of 1933, or any
successor thereto, as the same shall be amended from time to time.
"Shelf Registration" shall have the meaning assigned thereto in
Section 2(b) hereof.
"Shelf Registration Statement" shall have the meaning assigned thereto
in Section 2(b) hereof.
3
<PAGE>
"Special Interest" shall have the meaning assigned thereto in Section
2(c) hereof.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, or
any successor thereto, and the rules, regulations and forms promulgated
thereunder, all as the same shall be amended from time to time.
Unless the context otherwise requires, any reference herein to a "Section"
or "clause" refers to a Section or clause, as the case may be, of this Exchange
and Registration Rights Agreement, and the words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Exchange and
Registration Rights Agreement as a whole and not to any particular Section or
other subdivision.
2. Registration Under the Securities Act.
(a) Except as set forth in Section 2(b) below, the Company agrees to use
its reasonable best efforts to file under the Securities Act, as soon as
practicable, but no later than 90 days after the Closing, a registration
statement relating to an offer to exchange (such registration statement, an
"Exchange Registration Statement", and such offer, an "Exchange Offer") any and
all of any Series of the Securities for a like aggregate principal amount at
maturity of debt securities issued by the Company, which debt securities are
substantially identical to the Securities of such Series, respectively, (and are
entitled to the benefits of a trust indenture which is substantially identical
to the applicable Indenture or is the applicable Indenture and which has been
qualified under the Trust Indenture Act), except that they have been registered
pursuant to an effective registration statement under the Securities Act and do
not contain provisions for the additional interest contemplated in Section 2(c)
below (such new debt securities hereinafter called "Exchange Securities"). The
Company agrees to use its reasonable best efforts to cause such Exchange
Registration Statement to become effective under the Securities Act as soon as
practicable after the Closing. The applicable Exchange Offer will be registered
under the Securities Act on the appropriate form and will comply with all
applicable tender offer rules and regulations under the Exchange Act. The
Company further agrees to use its best efforts to commence the applicable
Exchange Offer promptly after such registration statement has become effective,
hold such Exchange Offer open for at least 20 business days and issue Exchange
Securities for all Registrable Securities of such Series that have been properly
tendered and not withdrawn on or prior to the expiration of such Exchange Offer.
Such Exchange Offer will be deemed to have been "completed" only if the
securities received by holders other than Restricted Holders in such Exchange
Offer for such Registrable Securities are, upon receipt, transferable by each
such holder without need for further compliance with Section 5 of the Securities
Act and the Exchange Act (except for the requirement to deliver a prospectus
included in the Exchange Registration Statement applicable to resales by any
broker-dealer of Exchange Securities received by such broker-dealer pursuant to
an Exchange Offer in exchange for Registrable Securities other than those
acquired by the broker-dealer directly from the Company), and without material
restrictions under the blue sky or securities laws of a substantial majority of
the States of the United States of America. Such Exchange Offer shall be deemed
to have been completed upon the earlier to occur of (i) the Company
4
<PAGE>
having exchanged the applicable Exchange Securities for all outstanding
Registrable Securities of such Series pursuant to the Exchange Offer and (ii)
the Company having exchanged, pursuant to such Exchange Offer, applicable
Exchange Securities for all Registrable Securities of such Series that have been
properly tendered and not withdrawn before the expiration of such Exchange
Offer, which shall be on a date that is at least 20 business days following the
commencement of such Exchange Offer. The Company agrees (x) to include in the
applicable Exchange Registration Statement a prospectus for use in connection
with any resales of such Exchange Securities by a broker-dealer, other than
resales of such Exchange Securities received by a broker-dealer pursuant to an
Exchange Offer in exchange for Registrable Securities acquired by the broker-
dealer directly from the Company, and (y) to keep such Exchange Registration
Statement effective for a period (the "Resale Period") beginning when such
Exchange Securities are first issued in such Exchange Offer and ending upon the
earlier of the expiration of the 90th day after such Exchange Offer has been
completed or such time as such broker-dealers no longer own any Registrable
Securities of such Series. With respect to such Exchange Registration Statement,
each broker-dealer that holds such Exchange Securities received in such Exchange
Offer in exchange for Registrable Securities not acquired by it directly from
the Company shall have the benefit of the rights of indemnification and
contribution set forth in Sections 6(a), (c), (d) and (e) hereof.
(b) If, prior to the time the applicable Exchange Offer is completed,
existing Commission interpretations are changed such that the applicable
Securities received by holders other than Restricted Holders in such Exchange
Offer for Registrable Securities of such Series are not or would not be, upon
receipt, transferable by each such holder without need for further compliance
with Section 5 of the Securities Act (except for the requirement to deliver a
prospectus included in the Exchange Registration Statement applicable to resales
by broker-dealers of Exchange Securities received by such broker-dealer pursuant
to an Exchange Offer in exchange for Registrable Securities other than those
acquired by the broker-dealer directly from the Company) or if such Exchange
Offer has not been consummated within 225 days following the Closing, in lieu of
conducting the Exchange Offer contemplated by Section 2(a) the Company shall
file under the Securities Act as soon as practicable, but no later than 45 days
after the date on which the obligation to file such "shelf" registration
statement arises, a "shelf" registration statement providing for the
registration of, and the sale on a continuous or delayed basis by the holders
of, all of the Registrable Securities of such Series, pursuant to Rule 415 or
any similar rule that may be adopted by the Commission (such filing, a "Shelf
Registration" and such registration statement, a "Shelf Registration
Statement"). In addition, in the event that the Purchasers shall not have resold
all of the applicable Securities initially purchased by them from the Company
pursuant to the Notes Purchase Agreement prior to the consummation of the
applicable Exchange Offer, the Company shall file under the Securities Act as
soon as practicable a Shelf Registration Statement in respect of such Series of
Securities. The Company agrees to use its reasonable best efforts (i) to cause
the applicable Shelf Registration Statement to become or be declared effective
no later than 105 days following the date on which the obligation to file such
Shelf Registration Statement arose and to keep such Shelf Registration Statement
continuously
5
<PAGE>
effective in order to permit the prospectus forming a part thereof to be usable
by holders for resales of such Registrable Securities for a period ending on the
earlier of the second anniversary of the effective date thereof or such time as
there are no longer any applicable Registrable Securities of such Series
outstanding, provided, however, that no holder shall be entitled to be named as
a selling securityholder in such Shelf Registration Statement or to use the
prospectus forming a part thereof for resales of applicable Registrable
Securities unless such holder is an Electing Holder, and (ii) after the
Effective Time of such Shelf Registration Statement, promptly upon the request
of any holder of applicable Registrable Securities that is not then an Electing
Holder, to take any action reasonably necessary to enable such holder to use the
prospectus forming a part thereof for resales of applicable Registrable
Securities, including, without limitation, any action necessary to identify such
holder as a selling securityholder in the applicable Shelf Registration
Statement, provided, however, that nothing in this Clause (ii) shall relieve any
such holder of the obligation to return a completed and signed Notice and
Questionnaire to the Company in accordance with Section 3(d)(iii) hereof. The
Company further agrees to supplement or make amendments to the applicable Shelf
Registration Statement, as and when required by the rules, regulations or
instructions applicable to the registration form used by the Company for such
Shelf Registration Statement or by the Securities Act or rules and regulations
thereunder for shelf registration, and the Company agrees to furnish to each
Electing Holder copies of any such supplement or amendment prior to its being
used or promptly following its filing with the Commission.
(c) In the event that (i) the Company has not filed the applicable Exchange
Registration Statement or Shelf Registration Statement on or before the date on
which such registration statement is required to be filed pursuant to Section
2(a) or 2(b), respectively, or (ii) such Exchange Registration Statement has not
become effective or been declared effective by the Commission within 180 days of
the Closing, or (iii) such Shelf Registration Statement has not become effective
within 105 days of the date on which the obligation to file such Shelf
Registration Statement arose, or (iv) the Exchange Offer has not been completed
within 30 business days after the effectiveness deadline of the Exchange
Registration Statement relating to such Exchange Offer (if such Exchange Offer
is then required to be made) or (v) any Exchange Registration Statement or Shelf
Registration Statement required by Section 2(a) or 2(b) hereof is filed and
declared effective but shall thereafter either be withdrawn by the Company or
shall become subject to an effective stop order issued pursuant to Section 8(d)
of the Securities Act suspending the effectiveness of such registration
statement (except as specifically permitted herein) without being succeeded
within 30 days by an additional registration statement filed and declared
effective (each such event referred to in clauses (i) through (v), a
"Registration Default" and each period during which a Registration Default has
occurred and is continuing, a "Registration Default Period"), then, as
liquidated damages for such Registration Default, subject to the provisions of
Section 9(b), special cash interest ("Special Interest"), in addition to Base
Interest, shall accrue and be payable at a per annum rate of 0.25% with respect
to such Series. If the Company has not completed the applicable Exchange Offer
(or, if applicable, the applicable Shelf Registration has not become effective)
by the 270th day following the Closing, the Special Interest shall
6
<PAGE>
accrue and be payable at a per annum rate of 0.5% with respect to such Series
until the Company has completed such Exchange Offer (or until such Shelf
Registration has become effective).
(d) The Company shall take all reasonable actions necessary or advisable to
be taken by it to ensure that the transactions contemplated herein are effected
as so contemplated.
(e) Any reference herein to a registration statement as of any time shall
be deemed to include any document incorporated, or deemed to be incorporated,
therein by reference as of such time and any reference herein to any post-
effective amendment to a registration statement as of any time shall be deemed
to include any document incorporated, or deemed to be incorporated, therein by
reference as of such time.
3. Registration Procedures.
If the Company files a registration statement pursuant to Section 2(a) or
Section 2(b), the following provisions shall apply:
(a) At or before the Effective Time of any Exchange Offer or any Shelf
Registration, as the case may be, the Company shall qualify the applicable
Indenture under the Trust Indenture Act.
(b) In the event that such qualification would require the appointment of a
new trustee under the applicable Indenture, the Company shall appoint a new
trustee thereunder pursuant to the applicable provisions of such Indenture.
(c) In connection with the Company's obligations with respect to the
registration of Exchange Securities as contemplated by Section 2(a) (an
"Exchange Registration"), if applicable, the Company shall, as soon as
practicable (or as otherwise specified):
(i) prepare and file with the Commission, as soon as practicable but
no later than 90 days after the Closing, an Exchange Registration Statement
on any form which may be utilized by the Company and which shall permit the
applicable Exchange Offer and resales of applicable Exchange Securities by
broker-dealers during the Resale Period to be effected as contemplated by
Section 2(a), and use its best efforts to cause such Exchange Registration
Statement to become effective as soon as practicable thereafter;
(ii) as soon as practicable prepare and file with the Commission such
amendments and supplements to such Exchange Registration Statement and the
prospectus included therein as may be necessary to effect and maintain the
effectiveness of such Exchange Registration Statement for the periods and
purposes contemplated in Section 2(a) hereof and as may be required by the
applicable rules and regulations of the Commission and the instructions
applicable to the form of such Exchange Registration Statement, and
promptly provide each
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<PAGE>
broker-dealer holding applicable Exchange Securities with such number of
copies of the prospectus included therein (as then amended or
supplemented), in conformity in all material respects with the requirements
of the Securities Act and the Trust Indenture Act and the rules and
regulations of the Commission thereunder, as such broker-dealer reasonably
may request prior to the expiration of the Resale Period, for use in
connection with resales of such Exchange Securities;
(iii) promptly notify each broker-dealer that has requested or
received copies of the prospectus included in such registration statement,
and confirm such advice in writing, (A) when such Exchange Registration
Statement or the prospectus included therein or any prospectus amendment or
supplement or post-effective amendment has been filed, and, with respect to
such Exchange Registration Statement or any post-effective amendment, when
the same has become effective, (B) of any comments by the Commission and by
the blue sky or securities commissioner or regulator of any state with
respect thereto or any request by the Commission for amendments or
supplements to such Exchange Registration Statement or prospectus or for
additional information, (C) of the issuance by the Commission of any stop
order suspending the effectiveness of such Exchange Registration Statement
or the initiation or threatening of any proceedings for that purpose, (D)
if at any time the representations and warranties of the Company
contemplated by Section 5 cease to be true and correct in all material
respects, (E) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the applicable Exchange
Securities for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose or (F) at any time during the Resale Period
when a prospectus is required to be delivered under the Securities Act,
that such Exchange Registration Statement, prospectus, prospectus amendment
or supplement or post-effective amendment does not conform in all material
respects to the applicable requirements of the Securities Act and the Trust
Indenture Act and the rules and regulations of the Commission thereunder or
contains an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing;
(iv) in the event that the Company would be required, pursuant to
Section 3(c)(iii)(F) above, to notify any broker-dealers holding Exchange
Securities, without unreasonable delay prepare and furnish to each such
holder a reasonable number of copies of a prospectus supplemented or
amended so that, as thereafter delivered to purchasers of such Exchange
Securities during the Resale Period, such prospectus shall conform in all
material respects to the applicable requirements of the Securities Act and
the Trust Indenture Act and the rules and regulations of the Commission
thereunder and shall not 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 in light of the circumstances
then existing;
8
<PAGE>
(v) use its reasonable best efforts to (A) register or qualify the
applicable Exchange Securities under the securities laws or blue sky laws
of such jurisdictions as are contemplated by Section 2(a), if such
registration or qualification is required by such laws, no later than the
commencement of the applicable Exchange Offer, (B) keep such registrations
or qualifications in effect and comply with such laws so as to permit the
continuance of offers, sales and dealings therein in such jurisdictions
until the expiration of the Resale Period and (C) take any and all other
actions as may be reasonably necessary or advisable to enable each broker-
dealer holding such Exchange Securities to consummate the disposition
thereof in such jurisdictions; provided, however, that the Company shall
not be required for any such purpose to (1) qualify as a foreign
corporation in any jurisdiction wherein it would not otherwise be required
to qualify but for the requirements of this Section 3(c)(vi), (2) consent
to general service of process in any such jurisdiction or (3) make any
changes to its certificate of incorporation or by-laws or any agreement
between it and its stockholders;
(vi) use its reasonable best efforts to obtain the consent or approval
of each governmental agency or authority, whether federal, state or local,
which may be required to effect the applicable Exchange Registration, the
applicable Exchange Offer and the offering and sale of the applicable
Exchange Securities by broker-dealers during the Resale Period;
(vii) provide a CUSIP number for all applicable Exchange Securities,
not later than the applicable Effective Time;
(viii) comply with all applicable rules and regulations of the
Commission, and make generally available to its securityholders as soon as
practicable but no later than eighteen months after the effective date of
such Exchange Registration Statement, an earning statement of the Company
and its subsidiaries complying with Section 11(a) of the Securities Act
(including, at the option of the Company, Rule 158 thereunder).
(d) In connection with the Company's obligations with respect to any Shelf
Registration, if applicable, the Company shall, as soon as practicable (or as
otherwise specified):
(i) prepare and file with the Commission, as soon as practicable but
in any case within the time periods specified in Section 2(b), a Shelf
Registration Statement on any form which may be utilized by the Company and
which shall register all of the applicable Registrable Securities for
resale by the holders thereof in accordance with such method or methods of
disposition as may be specified by such of the holders as, from time to
time, may be Electing Holders and use its reasonable best efforts to cause
such Shelf Registration Statement to become effective as soon as
practicable but in any case within the time periods specified in Section
2(b);
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<PAGE>
(ii) not less than 30 calendar days prior to the Effective Time of the
applicable Shelf Registration Statement, mail the Notice and Questionnaire
to the holders of applicable Registrable Securities; no holder shall be
entitled to be named as a selling securityholder in such Shelf Registration
Statement as of the Effective Time, and no holder shall be entitled to use
the prospectus forming a part thereof for resales of such Registrable
Securities at any time, unless such holder has returned a completed and
signed Notice and Questionnaire to the Company by the deadline for response
set forth therein; provided, however, holders of such Registrable
Securities shall have at least 28 calendar days from the date on which the
Notice and Questionnaire is first mailed to such holders to return a
completed and signed Notice and Questionnaire to the Company;
(iii) after the Effective Time of the applicable Shelf Registration
Statement, upon the request of any holder of applicable Registrable
Securities that is not then an Electing Holder, promptly send a Notice and
Questionnaire to such holder; provided that the Company shall not be
required to take any action to name such holder as a selling securityholder
in such Shelf Registration Statement or to enable such holder to use the
prospectus forming a part thereof for resales of such Registrable
Securities until such holder has returned a completed and signed Notice and
Questionnaire to the Company;
(iv) as soon as practicable prepare and file with the Commission such
amendments and supplements to such Shelf Registration Statement and the
prospectus included therein as may be necessary to effect and maintain the
effectiveness of such Shelf Registration Statement for the period specified
in Section 2(b) hereof and as may be required by the applicable rules and
regulations of the Commission and the instructions applicable to the form
of such Shelf Registration Statement, and furnish to the Electing Holders
copies of any such supplement or amendment simultaneously with or prior to
its being used or filed with the Commission;
(v) provide (A) the Electing Holders, (B) the underwriters (which
term, for purposes of this Exchange and Registration Rights Agreement,
shall include a person deemed to be an underwriter within the meaning of
Section 2(11) of the Securities Act), if any, thereof, (C) any sales or
placement agent therefor, (D) counsel for any such underwriter or agent and
(E) not more than one counsel for all the Electing Holders the opportunity
to participate in the preparation of such Shelf Registration Statement,
each prospectus included therein or filed with the Commission and each
amendment or supplement thereto;
(vi) for a reasonable period prior to the filing of such Shelf
Registration Statement, and throughout the period specified in Section
2(b), make available at reasonable times at the Company's principal place
of business or such other reasonable place for inspection by the persons
referred to in Section 3(d)(v) who shall certify to the Company that they
have a current intention to sell the applicable Registrable Securities
pursuant to the applicable Shelf Registration
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such financial and other information and books and records of the Company,
and cause the officers, employees, counsel and independent certified public
accountants of the Company to respond to such inquiries, as shall be
reasonably necessary, in the judgment of the respective counsel referred to
in such Section, to conduct a reasonable investigation within the meaning
of Section 11 of the Securities Act; provided, however, that each such
party shall be required to maintain in confidence and not to disclose to
any other person any information or records reasonably designated by the
Company as being confidential, until such time as (A) such information
becomes a matter of public record (whether by virtue of its inclusion in
such registration statement or otherwise), (B) such person shall be
required so to disclose such information pursuant to a subpoena or order of
any court or other governmental agency or body having jurisdiction over the
matter (subject to the requirements of such order, and only after such
person shall have given the Company prompt prior written notice of such
requirement) or (C) such information is required to be set forth in such
Shelf Registration Statement or the prospectus included therein or in an
amendment to such Shelf Registration Statement or an amendment or
supplement to such prospectus in order that such Shelf Registration
Statement, prospectus, amendment or supplement, as the case may be,
complies with applicable requirements of the federal securities laws and
the rules and regulations of the Commission and does not contain an untrue
statement of a material fact or omit to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing;
(vii) promptly notify each of the Electing Holders, any sales or
placement agent therefor and any underwriter thereof (which notification
may be made through any managing underwriter that is a representative of
such underwriter for such purpose) and confirm such advice in writing, (A)
when such Shelf Registration Statement or the prospectus included therein
or any prospectus amendment or supplement or post-effective amendment has
been filed, and, with respect to such Shelf Registration Statement or any
post-effective amendment, when the same has become effective, (B) of any
comments by the Commission and by the blue sky or securities commissioner
or regulator of any state with respect thereto or any request by the
Commission for amendments or supplements to such Shelf Registration
Statement or prospectus or for additional information, (C) of the issuance
by the Commission of any stop order suspending the effectiveness of such
Shelf Registration Statement or the initiation or threatening of any
proceedings for that purpose, (D) if at any time the representations and
warranties of the Company contemplated by Section 3(d)(xv) or Section 5
cease to be true and correct in all material respects, (E) of the receipt
by the Company of any notification with respect to the suspension of the
qualification of the applicable Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose or (F) if at any time when a prospectus is required to be delivered
under the Securities Act, such Shelf Registration Statement, prospectus,
prospectus amendment or supplement or
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<PAGE>
post-effective amendment does not conform in all material respects to the
applicable requirements of the Securities Act and the Trust Indenture Act
and the rules and regulations of the Commission thereunder or contains an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing;
(viii) use its reasonable best efforts to obtain the withdrawal of
any order suspending the effectiveness of such registration statement or
any post-effective amendment thereto at the earliest practicable date;
(ix) if requested by any managing underwriter or underwriters, any
placement or sales agent or any Electing Holder, promptly incorporate in a
prospectus supplement or post-effective amendment such information as is
required by the applicable rules and regulations of the Commission and as
such managing underwriter or underwriters, such agent or such Electing
Holder specifies should be included therein relating to the terms of the
sale of such Registrable Securities, including information with respect to
the principal amount at maturity of such Registrable Securities being sold
by such Electing Holder or agent or to any underwriters, the name and
description of such Electing Holder, agent or underwriter, the offering
price of such Registrable Securities and any discount, commission or other
compensation payable in respect thereof, the purchase price being paid
therefor by such underwriters and with respect to any other terms of the
offering of the applicable Registrable Securities to be sold by such
Electing Holder or agent or to such underwriters; and make all required
filings of such prospectus supplement or post-effective amendment promptly
after notification of the matters to be incorporated in such prospectus
supplement or post-effective amendment;
(x) furnish to each Electing Holder, each placement or sales agent, if
any, therefor, each underwriter, if any, thereof and the respective counsel
referred to in Section 3(d)(v) an executed copy (or, in the case of an
Electing Holder, a conformed copy) of such Shelf Registration Statement,
each such amendment and supplement thereto (in each case including all
exhibits thereto (in the case of an Electing Holder of the applicable
Registrable Securities, upon request) and documents incorporated by
reference therein) and such number of copies of such Shelf Registration
Statement (excluding exhibits thereto and documents incorporated by
reference therein unless specifically so requested by such Electing Holder,
agent or underwriter, as the case may be) and of the prospectus included in
such Shelf Registration Statement (including each preliminary prospectus
and any summary prospectus), in conformity in all material respects with
the applicable requirements of the Securities Act and the Trust Indenture
Act and the rules and regulations of the Commission thereunder, and such
other documents, as such Electing Holder, agent, if any, and underwriter,
if any, may reasonably request in order to facilitate the offering and
disposition of the applicable Registrable Securities owned by such Electing
Holder, offered or sold by such
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<PAGE>
agent or underwritten by such underwriter and to permit such Electing
Holder, agent and underwriter to satisfy the prospectus delivery
requirements of the Securities Act; and the Company hereby consents to the
use of such prospectus (including such preliminary and summary prospectus)
and any amendment or supplement thereto by each such Electing Holder and by
any such agent and underwriter, in each case in the form most recently
provided to such person by the Company, in connection with the offering and
sale of the Registrable Securities covered by the prospectus (including
such preliminary and summary prospectus) or any supplement or amendment
thereto;
(xi) use its reasonable best efforts to (A) register or qualify the
Registrable Securities to be included in such Shelf Registration Statement
under such securities laws or blue sky laws of such jurisdictions as any
Electing Holder and each placement or sales agent, if any, therefor and
underwriter, if any, thereof shall reasonably request, (B) keep such
registrations or qualifications in effect and comply with such laws so as
to permit the continuance of offers, sales and dealings therein in such
jurisdictions during the period the applicable Shelf Registration is
required to remain effective under Section 2(b) above and for so long as
may be necessary to enable any such Electing Holder, agent or underwriter
to complete its distribution of the applicable Securities pursuant to such
Shelf Registration Statement and (C) take any and all other actions as may
be reasonably necessary or advisable to enable each such Electing Holder,
agent, if any, and underwriter, if any, to consummate the disposition in
such jurisdictions of such Registrable Securities; provided, however, that
the Company shall not be required for any such purpose to (1) qualify as a
foreign corporation in any jurisdiction wherein it would not otherwise be
required to qualify but for the requirements of this Section 3(d)(xi), (2)
consent to general service of process in any such jurisdiction or (3) make
any changes to its certificate of incorporation or by-laws or any agreement
between it and its stockholders;
(xii) use its reasonable best efforts to obtain the consent or
approval of each governmental agency or authority, whether federal, state
or local, which may be required to effect the applicable Shelf Registration
or the offering or sale in connection therewith or to enable the selling
holder or holders to offer, or to consummate the disposition of, their
applicable Registrable Securities;
(xiii) cooperate with the Electing Holders and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing such Registrable Securities to be sold, which
certificates shall be printed, lithographed or engraved, or produced by any
combination of such methods, and which shall not bear any restrictive
legends; and, in the case of an underwritten offering, enable such
Registrable Securities to be in such denominations and registered in such
names as the managing underwriters may request at least two business days
prior to any sale of such Registrable Securities;
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<PAGE>
(xiv) provide a CUSIP number for all applicable Registrable
Securities, not later than the applicable Effective Time;
(xv) enter into one or more underwriting agreements, engagement
letters, agency agreements, "best efforts" underwriting agreements or
similar agreements, as appropriate, including customary provisions relating
to indemnification and contribution, and take such other actions in
connection therewith as any Electing Holders aggregating at least 20% in
aggregate principal amount at maturity of any Series of Registrable
Securities at the time outstanding shall reasonably request in order to
expedite or facilitate the disposition of such Series of Registrable
Securities:
(xvi) whether or not an agreement of the type referred to in Section
3(d)(xv) hereof is entered into and whether or not any portion of the
offering contemplated by the applicable Shelf Registration is an
underwritten offering or is made through a placement or sales agent or any
other entity, (A) make such representations and warranties to the Electing
Holders and the placement or sales agent, if any, therefor and the
underwriters, if any, thereof in form, substance and scope as are
customarily made in connection with an offering of securities pursuant to
any appropriate agreement or to a registration statement filed on the form
applicable to the applicable Shelf Registration; (B) obtain an opinion of
counsel to the Company in customary form and covering such matters, of the
type customarily covered by such an opinion, as the managing underwriters,
if any, or as any Electing Holders of at least 20% in aggregate principal
amount at maturity of the applicable Series of Registrable Securities at
the time outstanding may reasonably request, addressed to such Electing
Holder or Electing Holders and the placement or sales agent, if any,
therefor and the underwriters, if any, thereof and dated the effective date
of such Shelf Registration Statement (and if such Shelf Registration
Statement contemplates an underwritten offering of a part or all of the
applicable Registrable Securities, dated the date of the closing under the
underwriting agreement relating thereto) (it being agreed that the matters
to be covered by such opinion shall include the due incorporation and good
standing of the Company and its subsidiaries; the qualification of the
Company and its subsidiaries to transact business as foreign corporations;
the due authorization, execution and delivery of the relevant agreement of
the type referred to in Section 3(d)(xv) hereof; the due authorization,
execution, authentication and issuance, and the validity and
enforceability, of the applicable Securities; the absence of material legal
or governmental proceedings involving the Company; the absence of a breach
by the Company or any of its subsidiaries of, or a default under, material
agreements binding upon the Company or any subsidiary of the Company; the
absence of governmental approvals required to be obtained in connection
with the applicable Shelf Registration, the offering and sale of the
applicable Registrable Securities, this Exchange and Registration Rights
Agreement or any agreement of the type referred to in Section 3(d)(xv)
hereof, except such approvals, if any, as may be required under state
securities or blue sky laws; the material compliance as to form of such
Shelf Registration Statement and
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<PAGE>
any documents incorporated by reference therein and of the applicable
Indenture with the requirements of the Securities Act and the Trust
Indenture Act and the rules and regulations of the Commission thereunder,
respectively; and, as of the date of the opinion and of the applicable
Shelf Registration Statement or most recent post-effective amendment
thereto, as the case may be, the absence from such Shelf Registration
Statement and the prospectus included therein, as then amended or
supplemented, and from the documents incorporated by reference therein (in
each case other than the financial statements and other financial
information contained therein) of an untrue statement of a material fact or
the omission to state therein a material fact necessary to make the
statements therein not misleading (in the case of such documents, in light
of the circumstances existing at the time that such documents were filed
with the Commission under the Exchange Act)); (C) obtain a "cold comfort"
letter or letters from the independent certified public accountants of the
Company addressed to the selling Electing Holders, the placement or sales
agent, if any, therefor or the underwriters, if any, thereof, dated (i) the
effective date of such Shelf Registration Statement and (ii) the effective
date of any prospectus supplement to the prospectus included in such Shelf
Registration Statement or post-effective amendment to such Shelf
Registration Statement which includes unaudited or audited financial
statements as of a date or for a period subsequent to that of the latest
such statements included in such prospectus (and, if such Shelf
Registration Statement contemplates an underwritten offering pursuant to
any prospectus supplement to the prospectus included in such Shelf
Registration Statement or post-effective amendment to such Shelf
Registration Statement which includes unaudited or audited financial
statements as of a date or for a period subsequent to that of the latest
such statements included in such prospectus, dated the date of the closing
under the underwriting agreement relating thereto), such letter or letters
to be in customary form and covering such matters of the type customarily
covered by letters of such type; (D) deliver such documents and
certificates, including officers' certificates, as may be reasonably
requested by any Electing Holders of at least 20% in aggregate principal
amount at maturity of the applicable Series of Registrable Securities at
the time outstanding or the placement or sales agent, if any, therefor and
the managing underwriters, if any, thereof to evidence the accuracy of the
representations and warranties made pursuant to clause (A) above or those
contained in Section 5(a) hereof and the compliance with or satisfaction of
any agreements or conditions contained in the underwriting agreement or
other agreement entered into by the Company; and (E) undertake such
obligations relating to expense reimbursement, indemnification and
contribution as are provided in Section 6 hereof;
(xvii) notify in writing each holder of Registrable Securities of any
proposal by the Company to amend or waive any provision of this Exchange
and Registration Rights Agreement pursuant to Section 9(h) hereof and of
any amendment or waiver effected pursuant thereto, each of which notices
shall
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<PAGE>
contain the text of the amendment or waiver proposed or effected, as
the case may be;
(xviii) in the event that any broker-dealer registered under the
Exchange Act shall underwrite any Registrable Securities or participate as
a member of an underwriting syndicate or selling group or "assist in the
distribution" (within the meaning of the Rules of Fair Practice and the By-
Laws of the National Association of Securities Dealers, Inc. ("NASD") or
any successor thereto, as amended from time to time) thereof, whether as a
holder of such Registrable Securities or as an underwriter, a placement or
sales agent or a broker or dealer in respect thereof, or otherwise, assist
such broker-dealer in complying with the requirements of such Rules and By-
Laws, including by (A) if such Rules or By-Laws shall so require, engaging
a "qualified independent underwriter" (as defined in such Rules and By-Laws
(or any successor thereto)) to participate in the preparation of the
applicable Shelf Registration Statement relating to such Registrable
Securities, to exercise usual standards of due diligence in respect thereto
and, if any portion of the offering contemplated by such Shelf Registration
Statement is an underwritten offering or is made through a placement or
sales agent, to recommend the yield of such Registrable Securities, (B)
indemnifying any such qualified independent underwriter to the extent of
the indemnification of underwriters provided in Section 6 hereof (or to
such other customary extent as may be requested by such underwriter) and
(C) providing such information to such broker-dealer as may be required in
order for such broker-dealer to comply with the requirements of the Rules
of Fair Practice of the NASD; and
(xix) comply with all applicable rules and regulations of the
Commission, and make generally available to its securityholders as soon as
practicable but in any event not later than eighteen months after the
effective date of such Shelf Registration Statement, an earning statement
of the Company and its subsidiaries complying with Section 11(a) of the
Securities Act (including, at the option of the Company, Rule 158
thereunder).
(e) In the event that the Company would be required, pursuant to Section
3(d)(vii)(F) above, to notify the Electing Holders, the placement or sales
agent, if any, and the managing underwriters, if any, the Company shall without
delay prepare and furnish to each of the Electing Holders, to each placement or
sales agent, if any, and to each such underwriter, if any, a reasonable number
of copies of a prospectus supplemented or amended so that, as thereafter
delivered to purchasers of applicable Registrable Securities, such prospectus
shall conform in all material respects to the applicable requirements of the
Securities Act and the Trust Indenture Act and the rules and regulations of the
Commission thereunder and shall not 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 in light of the circumstances then
existing. Each Electing Holder agrees that upon receipt of any notice from the
Company pursuant to Section 3(d)(vii)(F) hereof, such Electing Holder shall
forthwith discontinue the disposition of applicable Registrable Securities
pursuant to the Shelf Registration
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<PAGE>
Statement applicable to such Registrable Securities until such Electing Holder
shall have received copies of such amended or supplemented prospectus, and if so
directed by the Company, such Electing Holder shall deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such Electing Holder's possession of the prospectus covering such Registrable
Securities at the time of receipt of such notice.
(f) In the event of a Shelf Registration, in addition to the information
required to be provided by each Electing Holder in its Notice Questionnaire, the
Company may require such Electing Holder to furnish to the Company such
additional information regarding such Electing Holder and such Electing Holder's
intended method of distribution of applicable Registrable Securities as may be
required in order to comply with the Securities Act. Each such Electing Holder
agrees to notify the Company as promptly as practicable of any inaccuracy or
change in information previously furnished by such Electing Holder to the
Company or of the occurrence of any event in either case as a result of which
any prospectus relating to such Shelf Registration contains or would contain an
untrue statement of a material fact regarding such Electing Holder or such
Electing Holder's intended method of disposition of such Registrable Securities
or omits to state any material fact regarding such Electing Holder or such
Electing Holder's intended method of disposition of such Registrable Securities
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, and promptly to furnish
to the Company any additional information required to correct and update any
previously furnished information or required so that such prospectus shall not
contain, with respect to such Electing Holder or the disposition of such
Registrable Securities, 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 in light of the circumstances then existing.
(g) Until the expiration of two years after the Closing, the Company will
not, and will not permit any of its "affiliates" (as defined in Rule 144) to,
resell any of the Securities that have been reacquired by any of them except
pursuant to an effective registration statement under the Securities Act.
4. Registration Expenses.
The Company agrees to bear and to pay or cause to be paid promptly all
expenses incident to the Company's performance of or compliance with this
Exchange and Registration Rights Agreement, including (a) all Commission and any
NASD registration, filing and review fees and expenses including fees and
disbursements of counsel for the placement or sales agent or underwriters in
connection with such registration, filing and review, (b) all fees and expenses
in connection with the qualification of the Securities for offering and sale
under the state securities and blue sky laws referred to in Section 3(d)(xi)
hereof and determination of their eligibility for investment under the laws of
such jurisdictions as any managing underwriters or the Electing Holders may
designate, including any fees and disbursements of counsel for the Electing
Holders (subject to the limitations of Clause (i) below) or underwriters in
connection with such qualification and determination, (c) all expenses relating
to the preparation, printing, production, distribution and reproduction of each
registration statement required to be filed
17
<PAGE>
hereunder, each prospectus included therein or prepared for distribution
pursuant hereto, each amendment or supplement to the foregoing, the expenses of
preparing the Securities for delivery and the expenses of printing or producing
any underwriting agreements, agreements among underwriters, selling agreements
and blue sky or legal investment memoranda and all other documents in connection
with the offering, sale or delivery of Securities to be disposed of (including
certificates representing the Securities), (d) messenger, telephone and delivery
expenses relating to the offering, sale or delivery of Securities and the
preparation of documents referred in clause (c) above, (e) fees and expenses of
the Trustees under the Indentures, any agent of the Trustees and any counsel for
the Trustees and of any collateral agent or custodian, (f) internal expenses
(including all salaries and expenses of the Company's officers and employees
performing legal or accounting duties), (g) fees, disbursements and expenses of
counsel and independent certified public accountants of the Company (including
the expenses of any opinions or "cold comfort" letters required by or incident
to such performance and compliance), (h) fees, disbursements and expenses of any
"qualified independent underwriter" engaged pursuant to Section 3(d)(xviii)
hereof, (i) fees, disbursements and expenses of one counsel for the Electing
Holders retained in connection with a Shelf Registration, as selected by the
Electing Holders of at least a majority in aggregate principal amount at
maturity of the applicable Series of Registrable Securities held by Electing
Holders (which counsel shall be reasonably satisfactory to the Company), (j) any
fees charged by securities rating services for rating the Securities, and (k)
fees, expenses and disbursements of any other persons, including special
experts, retained by the Company in connection with such registration
(collectively, the "Registration Expenses"). To the extent that any Registration
Expenses are incurred, assumed or paid by any holder of Registrable Securities
or any placement or sales agent therefor or underwriter thereof, the Company
shall reimburse such person for the full amount of the Registration Expenses so
incurred, assumed or paid promptly after receipt of a request therefor.
Notwithstanding the foregoing, the holders of the Registrable Securities being
registered shall pay all agency fees and commissions and underwriting discounts
and commissions attributable to the sale of such Registrable Securities and the
fees and disbursements of any counsel or other advisors or experts retained by
such holders (severally or jointly), other than the counsel and experts
specifically referred to above.
5. Representations and Warranties.
The Company represents and warrants to, and agrees with, each Purchaser and
each of the holders from time to time of Registrable Securities that:
(a) Each registration statement covering Registrable Securities and each
prospectus (including any preliminary or summary prospectus) contained therein
or furnished pursuant to Section 3(d) or Section 3(c) hereof and any further
amendments or supplements to any such registration statement or prospectus, when
it becomes effective or is filed with the Commission, as the case may be, and,
in the case of an underwritten offering of Registrable Securities, at the time
of the closing under the underwriting agreement relating thereto, will conform
in all material respects to the applicable requirements of the Securities Act
and the Trust Indenture Act and the rules and regulations of the Commission
thereunder and will not 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 at all times subsequent to the Effective
18
<PAGE>
Time when a prospectus would be required to be delivered under the Securities
Act, other than from (i) such time as a notice has been given to holders of
Registrable Securities pursuant to Section 3(d)(vii)(F) or Section 3(c)(iii)(F)
hereof until (ii) such time as the Company furnishes an amended or supplemented
prospectus pursuant to Section 3(e) or Section 3(c)(iv) hereof, each such
registration statement, and each prospectus (including any summary prospectus)
contained therein or furnished pursuant to Section 3(d) or Section 3(c) hereof,
as then amended or supplemented, will conform in all material respects to the
applicable requirements of the Securities Act and the Trust Indenture Act and
the rules and regulations of the Commission thereunder and will not 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 in
light of the circumstances then existing; provided, however, that this
representation and warranty shall not apply to any statements or omissions made
in reliance upon and in conformity with information furnished in writing to the
Company by a holder of Registrable Securities expressly for use therein.
(b) Any documents incorporated by reference in any prospectus referred to
in Section 5(a) hereof, when they become or became effective or are or were
filed with the Commission, as the case may be, will conform or conformed in all
material respects to the requirements of the Securities Act or the Exchange Act,
as applicable, and none of such documents will contain or contained an untrue
statement of a material fact or will omit or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by a holder of Registrable
Securities expressly for use therein.
(c) The compliance by the Company with all of the provisions of this
Exchange and Registration Rights Agreement and the consummation of the
transactions herein contemplated will not conflict with or result in a breach of
any of the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company or any subsidiary of the Company is a party or by which the
Company or any subsidiary of the Company is bound or to which any of the
property or assets of the Company or any subsidiary of the Company is subject,
nor will such action result in any violation of the provisions of the
certificate of incorporation, as amended, or the by-laws of the Company or any
statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any subsidiary of the Company or
any of their properties; and no consent, approval, authorization, order,
registration or qualification of or with any such court or governmental agency
or body is required for the consummation by the Company of the transactions
contemplated by this Exchange and Registration Rights Agreement, except the
registration under the Securities Act of the Securities, qualification of the
Indentures under the Trust Indenture Act and such consents, approvals,
authorizations, registrations or qualifications, if any, as may be required
under state securities or blue sky laws in connection with the offering and
distribution of the Securities.
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(d) This Exchange and Registration Rights Agreement has been duly
authorized, executed and delivered by the Company.
6. Indemnification.
(a) Indemnification by the Company. The Company shall indemnify and hold
harmless each of the holders of Registrable Securities included in an Exchange
Registration Statement, each of the Electing Holders of Registrable Securities
included in a Shelf Registration Statement and each person who participates as a
placement or sales agent or as an underwriter in any offering or sale of such
Registrable Securities against any losses, claims, damages or liabilities, joint
or several, to which such holder, agent or underwriter may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Exchange Registration Statement or Shelf Registration Statement, as the case may
be, under which such Registrable Securities were registered under the Securities
Act, or any preliminary, final or summary prospectus contained therein or
furnished by the Company to any such holder, Electing Holder, agent or
underwriter, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and the Company shall, and it hereby agrees to, reimburse such
holder, such Electing Holder, such agent and such underwriter for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such action or claim as such expenses are incurred; provided,
however, that the Company shall not be liable to any such person in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, or preliminary, final or
summary prospectus, or amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by such person
expressly for use therein;
(b) Indemnification by the Electing Holders and any Agents and
Underwriters. The Company may require, as a condition to including any
Registrable Securities in any registration statement filed pursuant to Section
2(b) hereof and to entering into any underwriting agreement with respect
thereto, that the Company shall have received an undertaking reasonably
satisfactory to it from the Electing Holder of such Registrable Securities and
from each underwriter named in any such underwriting agreement, severally and
not jointly, to (i) indemnify and hold harmless the Company, and all other
holders of applicable Registrable Securities, against any losses, claims,
damages or liabilities to which the Company or such other holders of applicable
Registrable Securities may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in such registration statement, or
any preliminary, final or summary prospectus contained therein or furnished by
the Company to any such Electing Holder, agent or underwriter, or any amendment
or supplement thereto, or arise out of or are based upon the omission or
20
<PAGE>
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such Electing
Holder or underwriter expressly for use therein, and (ii) reimburse the Company
for any legal or other expenses reasonably incurred by the Company in connection
with investigating or defending any such action or claim as such expenses are
incurred; provided, however, that no such Electing Holder shall be required to
undertake liability to any person under this Section 6(b) for any amounts in
excess of the dollar amount of the proceeds to be received by such Electing
Holder from the sale of such Electing Holder's applicable Registrable Securities
pursuant to such registration.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified party
under subsection (a) or (b) above of written notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to be
made against an indemnifying party pursuant to the indemnification provisions of
or contemplated by this Section 6, notify such indemnifying party in writing of
the commencement of such action; but the omission so to notify the indemnifying
party shall not relieve it from any liability which it may have to any
indemnified party other than under the indemnification provisions of or
contemplated by Section 6(a) or 6(b) hereof. In case any such action shall be
brought against any indemnified party and it shall notify an indemnifying party
of the commencement thereof, such indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, such indemnifying party shall
not be liable to such indemnified party for any legal expenses of other counsel
or any other expenses, in each case subsequently incurred by such indemnified
party, in connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the written consent of the
indemnified party, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action or claim
in respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to such
action or claim) unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability arising out of
such action 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) Contribution. If for any reason the indemnification provisions
contemplated by Section 6(a) or Section 6(b) are unavailable to or insufficient
to hold harmless an indemnified party in respect of any losses, claims, damages
or liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and the indemnified
21
<PAGE>
party in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by such indemnifying party or by such indemnified party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The parties hereto
agree that it would not be just and equitable if contributions pursuant to this
Section 6(d) were determined by pro rata allocation (even if the holders or any
agents or underwriters or all of them 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 in this Section 6(d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages, or
liabilities (or actions in respect thereof) referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 6(d), no holder shall
be required to contribute any amount in excess of the amount by which the dollar
amount of the proceeds received by such holder from the sale of any applicable
Registrable Securities (after deducting any fees, discounts and commissions
applicable thereto) exceeds the amount of any damages which such holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission, and no underwriter shall be required
to contribute any amount in excess of the amount by which the total price at
which the applicable Registrable Securities underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages which
such underwriter 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
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The holders' and any underwriters'
obligations in this Section 6(d) to contribute shall be several in proportion to
the principal amount at maturity of applicable Registrable Securities registered
or underwritten, as the case may be, by them and not joint.
(e) The obligations of the Company under this Section 6 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each officer, director and partner of
each holder, agent and underwriter and each person, if any, who controls any
holder, agent or underwriter within the meaning of the Securities Act; and the
obligations of the holders and any agents or underwriters contemplated by this
Section 6 shall be in addition to any liability which the respective holder,
agent or underwriter may otherwise have and shall extend, upon the same terms
and conditions, to each officer and director of the Company (including any
person who, with his consent, is named in any registration statement as about to
become a director of the Company) and to each person, if any, who controls the
Company within the meaning of the Securities Act.
7. Underwritten Offerings.
22
<PAGE>
(a) Selection of Underwriters. If any of the Registrable Securities
covered by the applicable Shelf Registration are to be sold pursuant to an
underwritten offering, the managing underwriter or underwriters thereof shall be
designated by Electing Holders holding at least a majority in aggregate
principal amount at maturity of the applicable Registrable Securities to be
included in such offering, provided that such designated managing underwriter or
underwriters is or are reasonably acceptable to the Company.
(b) Participation by Holders. Each holder of Registrable Securities
hereby agrees with each other such holder that no such holder may participate in
any underwritten offering hereunder unless such holder (i) agrees to sell such
holder's applicable Registrable Securities on the basis provided in any
underwriting arrangements approved by the persons entitled hereunder to approve
such arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
8. Rule 144.
The Company covenants to the holders of Registrable Securities that to the
extent it shall be required to do so under the Exchange Act, the Company shall
timely file the reports required to be filed by it under the Exchange Act or the
Securities Act (including the reports under Section 13 and 15(d) of the Exchange
Act referred to in subparagraph (c)(1) of Rule 144 adopted by the Commission
under the Securities Act) and the rules and regulations adopted by the
Commission thereunder, and shall take such further action as any holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitations of the exemption
provided by Rule 144 under the Securities Act, as such Rule may be amended from
time to time, or any similar or successor rule or regulation hereafter adopted
by the Commission. Upon the request of any holder of Registrable Securities in
connection with that holder's sale pursuant to Rule 144, the Company shall
deliver to such holder a written statement as to whether it has complied with
such requirements.
9. Miscellaneous.
(a) No Inconsistent Agreements. The Company represents, warrants,
covenants and agrees that it has not granted, and shall not grant, registration
rights with respect to Registrable Securities or any other securities which
would be inconsistent with the terms contained in this Exchange and Registration
Rights Agreement.
(b) Specific Performance. The parties hereto acknowledge that there would
be no adequate remedy at law if the Company fails to perform any of its
obligations hereunder and that the Purchasers and the holders from time to time
of the Registrable Securities may be irreparably harmed by any such failure, and
accordingly agree that the Purchasers and such holders, in addition to any other
remedy to which they may be entitled at law or in equity, shall be entitled to
compel specific performance of the obligations of the Company under this
Exchange and Registration Rights Agreement in
23
<PAGE>
accordance with the terms and conditions of this Exchange and Registration
Rights Agreement, in any court of the United States or any state thereof having
jurisdiction.
(c) Notices. All notices, requests, claims, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered by hand, if delivered personally or by courier, or
three days after being deposited in the mail (registered or certified mail,
postage prepaid, return receipt requested) as follows: If to the Company, to it
at 8182 Maryland Avenue, St. Louis, Missouri 63105, Attention: Secretary, with a
copy to Mayer, Brown & Platt, 190 South LaSalle Street, Chicago, Illinois 60603,
Attention: Richard S. Millard, and if to a holder, to the address of such holder
set forth in the security register or other records of the Company, or to such
other address as the Company or any such holder may have furnished to the other
in writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.
(d) Parties in Interest. All the terms and provisions of this Exchange and
Registration Rights Agreement shall be binding upon, shall inure to the benefit
of and shall be enforceable by the parties hereto and the holders from time to
time of the Registrable Securities and the respective successors and assigns of
the parties hereto and such holders. In the event that any transferee of any
holder of Registrable Securities shall acquire Registrable Securities, in any
manner, whether by gift, bequest, purchase, operation of law or otherwise, such
transferee shall, without any further writing or action of any kind, be deemed a
beneficiary hereof for all purposes and such Registrable Securities shall be
held subject to all of the terms of this Exchange and Registration Rights
Agreement, and by taking and holding such Registrable Securities such transferee
shall be entitled to receive the benefits of, and be conclusively deemed to have
agreed to be bound by all of the applicable terms and provisions of this
Exchange and Registration Rights Agreement. If the Company shall so request, any
such successor, assign or transferee shall agree in writing to acquire and hold
the Registrable Securities subject to all of the applicable terms hereof.
(e) Survival. The respective indemnities, agreements, representations,
warranties and each other provision set forth in this Exchange and Registration
Rights Agreement or made pursuant hereto shall remain in full force and effect
regardless of any investigation (or statement as to the results thereof) made by
or on behalf of any holder of Registrable Securities, any director, officer or
partner of such holder, any agent or underwriter or any director, officer or
partner thereof, or any controlling person of any of the foregoing, and shall
survive delivery of and payment for the Registrable Securities pursuant to the
Notes Purchase Agreement and the transfer and registration of Registrable
Securities by such holder and the consummation of any Exchange Offers.
(f) LAW GOVERNING. THIS EXCHANGE AND REGISTRATION RIGHTS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW
YORK.
24
<PAGE>
(g) Headings. The descriptive headings of the several Sections and
paragraphs of this Exchange and Registration Rights Agreement are inserted for
convenience only, do not constitute a part of this Exchange and Registration
Rights Agreement and shall not affect in any way the meaning or interpretation
of this Exchange and Registration Rights Agreement.
(h) Entire Agreement; Amendments. This Exchange and Registration Rights
Agreement and the other writings referred to herein (including the Indentures
and the form of Securities) or delivered pursuant hereto which form a part
hereof contain the entire understanding of the parties with respect to its
subject matter. This Exchange and Registration Rights Agreement supersedes all
prior agreements and understandings between the parties with respect to its
subject matter. This Exchange and Registration Rights Agreement may be amended
and the observance of any term of this Exchange and Registration Rights
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively) only by a written instrument duly executed by
the Company and the holders of at least a majority in aggregate principal amount
at maturity of each Series of the Registrable Securities at the time
outstanding. Each holder of any Registrable Securities at the time or thereafter
outstanding shall be bound by any amendment or waiver effected pursuant to this
Section 9(h), whether or not any notice, writing or marking indicating such
amendment or waiver appears on such Registrable Securities or is delivered to
such holder.
(i) Inspection. For so long as this Exchange and Registration Rights
Agreement shall be in effect, this Exchange and Registration Rights Agreement
and a complete list of the names and addresses of all the holders of Registrable
Securities shall be made available for inspection and copying on any business
day by any holder of Registrable Securities of the same Series for proper
purposes only (which shall include any purpose related to the rights of the
holders of Registrable Securities under the Securities, the Indentures and this
Agreement) at the offices of the Company at the address thereof set forth in
Section 9(c) above and at the office of the Trustee under the applicable
Indenture.
(j) Counterparts. This agreement may be executed by the parties in
counterparts, each of which shall be deemed to be an original, but all such
respective counterparts shall together constitute one and the same instrument.
25
<PAGE>
Agreed to and accepted as of the date referred to above.
CLARK REFINING & MARKETING, INC.
By:_________________________________
Name:
Title:
GOLDMAN, SACHS & CO.
BT ALEX. BROWN INCORPORATED
BEAR, STEARNS & CO. INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
LEHMAN BROTHERS INC.
By:_________________________________
(Goldman, Sachs & Co.)
On behalf of each of the Purchasers
26
<PAGE>
Exhibit A
CLARK REFINING & MARKETING, INC.
INSTRUCTION TO DTC PARTICIPANTS
-------------------------------
(Date of Mailing)
URGENT - IMMEDIATE ATTENTION REQUESTED
DEADLINE FOR RESPONSE: [DATE]/1/
--------------------------------
The Depository Trust Company ("DTC") has identified you as a DTC
Participant through which beneficial interests in the Clark Refining &
Marketing, Inc. (the "Company") 8 3/8% Senior Notes due 2007 (the "Securities")
are held.
The Company is in the process of registering the Securities under the
Securities Act of 1933 for resale by the beneficial owners thereof. In order to
have their Securities included in the registration statement, beneficial owners
must complete and return the enclosed Notice of Registration Statement and
Selling Securityholder Questionnaire.
It is important that beneficial owners of the Securities receive a copy of
the enclosed materials as soon as possible as their rights to have the
Securities included in the registration statement depend upon their returning
the Notice and Questionnaire by [DEADLINE FOR RESPONSE]. Please forward a copy
of the enclosed documents to each beneficial owner that holds interests in the
Securities through you. If you require more copies of the enclosed materials or
have any questions pertaining to this matter, please contact Clark Refining &
Marketing, Inc. 8182 Maryland Avenue, St. Louis, Missouri 63105, Attention:
Secretary, phone: (314) 854-1510.
- ----------------
/1/ Not less then 28 calendar days from date of mailing.
A-1
<PAGE>
Exhibit A
CLARK REFINING & MARKETING, INC.
INSTRUCTION TO DTC PARTICIPANTS
-------------------------------
(Date of Mailing)
URGENT - IMMEDIATE ATTENTION REQUESTED
DEADLINE FOR RESPONSE: [DATE]/2/
-----------------------------
The Depository Trust Company ("DTC") has identified you as a DTC
Participant through which beneficial interests in the Clark Refining &
Marketing, Inc. (the "Company") 8 7/8% Senior Subordinated Notes due 2007 (the
"Securities") are held.
The Company is in the process of registering the Securities under the
Securities Act of 1933 for resale by the beneficial owners thereof. In order to
have their Securities included in the registration statement, beneficial owners
must complete and return the enclosed Notice of Registration Statement and
Selling Securityholder Questionnaire.
It is important that beneficial owners of the Securities receive a copy of
the enclosed materials as soon as possible as their rights to have the
Securities included in the registration statement depend upon their returning
the Notice and Questionnaire by [DEADLINE FOR RESPONSE]. Please forward a copy
of the enclosed documents to each beneficial owner that holds interests in the
Securities through you. If you require more copies of the enclosed materials or
have any questions pertaining to this matter, please contact Clark Refining &
Marketing, Inc. 8182 Maryland Avenue, St. Louis, Missouri 63105, Attention:
Secretary, phone: (314) 854-1510.
- ----------------
/2/ Not less then 28 calendar days from date of mailing.
A-2
<PAGE>
Clark Refining & Marketing, Inc.
Notice of Registration Statement
and
Selling Securityholder Questionnaire
------------------------------------
(Date)
Reference is hereby made to the Exchange and Registration Rights Agreement
(the "Exchange and Registration Rights Agreement") between Clark Refining &
Marketing, Inc. (the "Company") and the Purchasers named therein. Pursuant to
the Exchange and Registration Rights Agreement, the Company has filed with the
United States Securities and Exchange Commission (the "Commission") a
registration statement on Form [ ] (the "Shelf Registration Statement") for the
registration and resale under Rule 415 of the Securities Act of 1933, as amended
(the "Securities Act"), of the Company's 8 3/8% Senior Notes due 2007 (the
"Securities"). A copy of the Exchange and Registration Rights Agreement is
attached hereto. All capitalized terms not otherwise defined herein shall have
the meanings ascribed thereto in the Exchange and Registration Rights Agreement.
Each beneficial owner of Registrable Securities (as defined below) is
entitled to have the Registrable Securities beneficially owned by it included in
the Shelf Registration Statement. In order to have Registrable Securities
included in the Shelf Registration Statement, this Notice of Registration
Statement and Selling Securityholder Questionnaire ("Notice and Questionnaire")
must be completed, executed and delivered to the Company's counsel at the
address set forth herein for receipt ON OR BEFORE [DEADLINE FOR RESPONSE].
Beneficial owners of Registrable Securities who do not complete, execute and
return this Notice and Questionnaire by such date (i) will not be named as
selling securityholders in the Shelf Registration Statement and (ii) may not use
the Prospectus forming a part thereof for resales of Registrable Securities.
Certain legal consequences arise from being named as a selling
securityholder in the Shelf Registration Statement and related Prospectus.
Accordingly, holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel regarding the consequences of being
named or not being named as a selling securityholder in the Shelf Registration
Statement and related Prospectus.
The term "Registrable Securities" is defined in the Exchange and
Registration Rights Agreement.
A-3
<PAGE>
Clark Refining & Marketing, Inc.
Notice of Registration Statement
and
Selling Securityholder Questionnaire
------------------------------------
(Date)
Reference is hereby made to the Exchange and Registration Rights Agreement
(the "Exchange and Registration Rights Agreement") between Clark Refining &
Marketing, Inc. (the "Company") and the Purchasers named therein. Pursuant to
the Exchange and Registration Rights Agreement, the Company has filed with the
United States Securities and Exchange Commission (the "Commission") a
registration statement on Form [ ] (the "Shelf Registration Statement") for
the registration and resale under Rule 415 of the Securities Act of 1933, as
amended (the "Securities Act"), of the Company's 8 7/8% Senior Subordinated
Notes due 2007 (the "Securities"). A copy of the Exchange and Registration
Rights Agreement is attached hereto. All capitalized terms not otherwise defined
herein shall have the meanings ascribed thereto in the Exchange and Registration
Rights Agreement.
Each beneficial owner of Registrable Securities (as defined below) is
entitled to have the Registrable Securities beneficially owned by it included in
the Shelf Registration Statement. In order to have Registrable Securities
included in the Shelf Registration Statement, this Notice of Registration
Statement and Selling Securityholder Questionnaire ("Notice and Questionnaire")
must be completed, executed and delivered to the Company's counsel at the
address set forth herein for receipt ON OR BEFORE [DEADLINE FOR RESPONSE].
Beneficial owners of Registrable Securities who do not complete, execute and
return this Notice and Questionnaire by such date (i) will not be named as
selling securityholders in the Shelf Registration Statement and (ii) may not use
the Prospectus forming a part thereof for resales of Registrable Securities.
Certain legal consequences arise from being named as a selling
securityholder in the Shelf Registration Statement and related Prospectus.
Accordingly, holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel regarding the consequences of being
named or not being named as a selling securityholder in the Shelf Registration
Statement and related Prospectus.
The term "Registrable Securities" is defined in the Exchange and
Registration Rights Agreement.
A-4
<PAGE>
ELECTION
The undersigned holder (the "Selling Securityholder") of Registrable
Securities hereby elects to include in the Shelf Registration Statement the
Registrable Securities beneficially owned by it and listed below in Item (3).
The undersigned, by signing and returning this Notice and Questionnaire, agrees
to be bound with respect to such Registrable Securities by the terms and
conditions of this Notice and Questionnaire and the Exchange and Registration
Rights Agreement, including, without limitation, Section 6 of the Exchange and
Registration Rights Agreement, as if the undersigned Selling Securityholder were
an original party thereto.
Upon any sale of Registrable Securities pursuant to the Shelf Registration
Statement, the Selling Securityholder will be required to deliver to the Company
and Trustee the Notice of Transfer set forth in Appendix A to the Prospectus and
as Exhibit B to the Exchange and Registration Rights Agreement.
The Selling Securityholder hereby provides the following information to the
Company and represents and warrants that such information is accurate and
complete:
A-5
<PAGE>
QUESTIONNAIRE
(1) (a) Full Legal Name of Selling Securityholder:
________________________________________________________________________
(b) Full Legal Name of Registered Holder (if not the same as in (a) above) of
Registrable Securities Listed in Item (3) below:
________________________________________________________________________
(c) Full Legal Name of DTC Participant (if applicable and if not the same as
(b) above) Through Which Registrable Securities Listed in Item (3) below
are Held:
________________________________________________________________________
(2) Address for Notices to Selling Securityholder:
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
Telephone: _______________________
Fax: _______________________
Contact Person: ______________________
(3) Beneficial Ownership of Securities:
Except as set forth below in this Item (3), the undersigned does not
beneficially own any Securities.
(a) Principal amount at maturity of Registrable Securities beneficially
owned: __________
CUSIP No(s). of such Registrable Securities:_______________________________
A-6
<PAGE>
(b) Principal amount at maturity of Securities other than Registrable
Securities beneficially owned: ___
CUSIP No(s). of such other Securities:
(c) Principal amount at maturity of Registrable Securities which the
undersigned wishes to be included in the Shelf Registration Statement:
________________________________
CUSIP No(s). of such Registrable Securities to be included in the Shelf
Registration Statement: ___
(4) Beneficial Ownership of Other Securities of the Company:
Except as set forth below in this Item (4), the undersigned Selling
Securityholder is not the beneficial or registered owner of any other securities
of the Company, other than the Securities listed above in Item (3).
State any exceptions here:
(5) Relationships with the Company:
Except as set forth below, neither the Selling Securityholder nor any of
its affiliates, officers, directors or principal equity holders (5 % or more)
has held any position or office or has had any other material relationship with
the Company (or its predecessors or affiliates) during the past three years.
State any exceptions here:
(6) Plan of Distribution:
Except as set forth below, the undersigned Selling Securityholder intends
to distribute the Registrable Securities listed above in Item (3) only as
follows (if at all): Such Registrable Securities may be sold from time to time
directly by the undersigned Selling Securityholder or, alternatively, through
underwriters, broker-dealers or agents. Such Registrable Securities may be sold
in one or more transactions affixed prices, at prevailing market prices at the
time of sale, at varying prices determined at the time of sale, or at negotiated
prices. Such sales may be effected in transactions (which may involve crosses or
block transitions) (i) on any national securities exchange or quotation service
on which the Registered Securities may be listed or quoted at the time of sale,
(ii) in the over-the-counter market, (iii) in transactions otherwise than on
such exchanges or services or in the over-the-counter market, or (iv) through
the writing of options. In connection with sales of the Registrable Securities
or other vise, the Selling Securityholder may enter into hedging transactions
with broker-dealers, which may in turn engage in short sales of the Registrable
Securities in the course of hedging the positions they assume. The Selling
Securityholder may also sell Registrable Securities short and deliver
Registrable Securities to
A-7
<PAGE>
close out such short positions, or loan or pledge Registrable Securities to
broker-dealers that in turn may sell such securities.
State any exceptions here:
By signing below, the Selling Securityholder acknowledges that it
understands its obligation to comply, and agrees that it will comply, with the
provisions of the Exchange Act and the rules and regulations thereunder,
particularly Regulation M (which governs manipulation, stabilization and trading
activity during a distribution of securities).
In the event that the Selling Securityholder transfers all or any portion
of the Registrable Securities listed in Item (3) above after the date on which
such information is provided to the Company, the Selling Securityholder agrees
to notify the transferee(s) at the time of the transfer of its rights and
obligations under this Notice and Questionnaire and the Exchange and
Registration Rights Agreement.
By signing below, the Selling Securityholder consents to the disclosure of
the information contained herein in its answers to Items (1) through (6) above
and the inclusion of such information in the Shelf Registration Statement and
related Prospectus. The Selling Securityholder understands that such information
will be relied upon by the Company, and any underwriters in an underwritten
offering of such Selling Securityholder's Registrable Securities listed in
Item(3) above, in connection with the preparation of the Shelf Registration
Statement and related Prospectus.
In accordance with the Selling Securityholder's obligation under Section
3(d) of the Exchange and Registration Rights Agreement to provide such
information as may be required by law for inclusion in the Shelf Registration
Statement, the Selling Securityholder agrees to promptly notify the Company of
any inaccuracies or changes in the information provided herein which may occur
subsequent to the date hereof at any time while the Shelf Registration Statement
remains in effect. All notices hereunder and pursuant to the Exchange and
Registration Rights Agreement shall be made in writing, by hand-delivery, first-
class mail, or air courier guaranteeing overnight delivery as follows:
(i) To the Company:
Clark Refining & Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 63105
Attention: Secretary
(314) 854-1510
(ii) With a copy to:
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
A-8
<PAGE>
Attention: Richard S. Millard
(312) 701-7161
Once this Notice and Questionnaire is executed by the Selling
Securityholder and received by the Company's counsel, the terms of this Notice
and Questionnaire, and the representations and warranties contained herein,
shall be binding on, shall inure to the benefit of and shall be enforceable by
the respective successors, heirs, personal representatives, and assigns of the
Company and the Selling Securityholder (with respect to the Registrable
Securities beneficially owned by such Selling Securityholder and listed in Item
(3) above. This Agreement shall be governed in all respects by the laws of the
State of New York.
A-9
<PAGE>
IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused
this Notice and Questionnaire to be executed and delivered either in person or
by its duly authorized agent.
Dated: ____________________
____________________________________________________
Selling Securityholder
Print/type full legal name of beneficial
owner of Registrable Securities)
By:_________________________________________________
Name:
Title:
PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON
OR BEFORE [DEADLINE FOR RESPONSE] TO THE COMPANY'S COUNSEL AT:
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Attention: Richard S. Millard
Telephone: (312) 701-7161
Facsimile: (312) 701-7711
A-10
<PAGE>
Exhibit B
NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT
Clark Refining & Marketing, Inc.
c/o Bankers Trust Company
130 Liberty Street
New York, New York 10006
Attention: Trust Officer
Re: Clark Refining & Marketing, Inc. (the "Company") __%
due 2007
Dear Sirs:
Please be advised that ____________________ has transferred $______________
aggregate principal amount at maturity of the above-referenced Notes pursuant to
an effective Registration Statement on Form [____] (File No. 333-____ ) filed by
the Company.
We hereby certify that the prospectus delivery requirements, if any, of the
Securities Act of 1933, as amended, have been satisfied and that the above-named
beneficial owner of the Notes is named as a "Selling Holder" in the Prospectus
dated , 199_ or in supplements thereto, and that the aggregate principal
amount at maturity of the Notes transferred are the Notes listed in such
Prospectus opposite such owner's name.
Dated:
Very truly yours,
_______________________________
(Name)
By:_____________________________
(Authorized Signature)
B-1
<PAGE>
Exhibit 5.1
____________ ___, 1998
Clark Refining & Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 63105
Re: Clark Refining & Marketing, Inc.
Registration Statement on Form S-4
----------------------------------
Dear Ladies and Gentlemen:
We have represented Clark Refining & Marketing, Inc., a Delaware corporation
(the "Company"), in connection with the preparation and filing with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
of a Registration Statement on Form S-4 (the "Registration Statement") relating
to the Company's 8 3/8% New Senior Notes due November 15, 2007 (the "New Senior
Notes") and 8 7/8% New Senior Subordinated Notes due November 15, 2007 (the "New
Senior Subordinated Notes" and, together with the New Senior Notes, the "New
Notes") to be issued under the indentures, dated as of November 21, 1997,
between the Company and Bankers Trust Company for the New Senior Notes, and
Marine Midland Bank for the New Senior Subordinated Notes.
In connection with our representation, we have examined such corporate
and other records, instruments, certificates and documents as we consider
necessary to enable us to express the opinions set forth below.
Based upon the foregoing, we are of the opinion that:
1. The Company is a corporation duly organized and validly existing in good
standing under the laws of the State of Delaware.
2. The Indentures constitute a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other laws
affecting the enforceability of creditors' rights generally and to court
decisions with respect thereto and to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).
3. The New Notes, upon the due execution, authentication, issuance and
delivery thereof in accordance with the Indentures, will constitute valid and
legally binding obligations of the Company entitled to the benefits provided by
the Indentures, and enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other laws
affecting the enforceability of creditors' rights generally and to court
decisions with respect thereto and to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to all references to this firm in such Registration
Statement.
Very truly yours,
Mayer, Brown & Platt
<PAGE>
Exhibit 8.1
_________ __, 1998
Clark Refining & Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 63105
Re: Clark Refining & Marketing, Inc.
Registration Statement on Form S-4
--------------------------------------
Dear Ladies and Gentlemen:
We have represented Clark Refining & Marketing, Inc., a Delaware
corporation (the "Company"), in connection with the preparation and filing with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended, of a Registration Statement on Form S-4 (the "Registration Statement")
relating to the Company's 8 3/8% New Senior Notes due November 15, 2007 (the
"New Senior Notes") and 8 7/8% New Senior Subordinated Notes due November 15,
2007 (the "New Senior Subordinated Notes") to be issued under the indentures,
dated as of November 21, 1997 (the "Indentures"), between the Company and
Bankers Trust Company for the New Senior Notes, and Marine Midland Bank for the
New Senior Subordinated Notes.
In connection with our representation, we have examined such corporate and
other records, instruments, certificates and documents as we consider necessary
to enable us to express the opinions set forth below.
Based upon and subject to the foregoing, and having regard for legal
considerations which we deem relevant, we hereby confirm, and adopt as our
opinion, the statements contained in the Prospectus contained in the above-
referenced Registration Statement on Form S-4 under the caption "Certain Federal
Income Tax Considerations."
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to all references to this firm in such Registration
Statement.
Very truly yours,
Mayer, Brown & Platt
<PAGE>
EXHIBIT 10.11
CLARK REFINING & MARKETING, INC.
AMENDMENT NO. 1
TO CREDIT AGREEMENT
This AMENDMENT NO. 1 (the "Amendment") is dated as of October 29, 1997
and entered into by and among Clark Refining & Marketing, Inc., a Delaware
corporation (the "Borrower"), Bankers Trust Company, a New York Banking
corporation, as Administrative Agent and Collateral Agent, The Toronto-Dominion
Bank, a Canadian chartered bank, as Syndication Agent, and BankBoston, N.A., a
national banking association, as Documentation Agent, and the other financial
institutions party hereto. This Amendment amends the Credit Agreement (as
amended, amended and restated, supplemented or otherwise modified, the "Credit
Agreement") dated as of September 25, 1997 by and among the parties hereto.
Capitalized terms used herein without definition shall have the same meanings
herein as set forth in the Credit Agreement.
RECITALS
WHEREAS, the parties hereto entered into the Credit Agreement, which
provides for a loan facility to the Borrower;
WHEREAS, the parties hereto desire to make certain amendments as set
forth below.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows;
Article I
AMENDMENTS TO THE CREDIT AGREEMENT
The definition of "Change of Control" set forth in Section 1.01 of the
Credit Agreement is hereby deleted in its entirety and the following definition
is inserted in lieu thereof:
<PAGE>
"Change of Control" means any of (a) the failure of Holdings to own at all
times 100% of the outstanding Voting Shares of the Company, (b) any person or
"group" (as such term is defined in Section 13(d) of the Exchange Act) other
than TrizecHahn, or Occidental or the shareholders of TrizecHahn and their
families, related trusts and controlled entities controls, directly or
indirectly, whether by ownership of Voting Shares, contract or otherwise, the
power to direct the affairs of or control the composition of at least a majority
of the board of directors or other equivalent body of Holdings or (c) the
acquisition of the beneficial ownership, whether directly or indirectly of more
than 25% of the outstanding capital stock of Holdings (including any stock so
owned on the Effective Date) by any Person or "group" (as such term is defined
in Section 13(d) of the Exchange Act), other than TrizecHahn or Occidental or
the shareholders of TrizecHahn and their families, related trusts and controlled
entities provided, that, (i) the entering into a definitive agreement to sell
and the subsequent sale by TrizecHahn of all of its equity interests in Holdings
to one or more of the Fund Affiliates shall not be deemed a Change of Control
and (ii) as long as the Fund Affiliates maintain the power to direct the affairs
or control the board or other equivalent body of Holdings(as described in clause
(b) above), a Change of Control shall not be deemed to occur under clause (c)
above unless and until a Person or "group" (as such term is defined in Section
13(d) of the Exchange Act) acquires or holds more than 35% of the outstanding
capital stock of Holdings. Upon the sale by TrizecHahn of its equity interest
in Holdings to the Fund Affiliates, "Fund Affiliates" shall be substituted for
"TrizecHahn" in clauses (b) and (c) of this definition.
The following definition shall be added to Section 1.01 of the Credit
Agreement:
"Fund Affiliates" means Blackstone Capital Partners III Merchant Banking
Fund L.P., a Delaware limited partnership, Blackstone Offshore Capital Partners
III L.P., a Delaware limited partnership, each of their respective Affiliates
that is not an operating company or controlled by an operating company and each
general partner of any of them who is a partner or employee of the Blackstone
Group L.P. and their families, related trusts and controlled entities.
-2-
<PAGE>
Article II
EFFECTIVENESS OF AMENDMENTS
This Amendment shall become effective on the opening of business in
New York on the Business Day on which the Administrative Agent has notified the
Borrower and the Banks that the Administrative Agent has executed a counterpart
signature page of this Amendment and has received executed counterpart signature
pages of this Amendment from the Borrower and the Majority Banks.
Article III
MISCELLANEOUS
3.01 Reference to and Effect on the Credit Agreement and the Other
Loan Documents.
(a) This Amendment modifies the Credit Agreement to the extent
set forth herein, is hereby incorporated by reference into the Credit
Agreement and is made a part thereof. On and after the effective date,
each reference in the Credit Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import referring to the Credit
Agreement, and each reference in the other Loan Documents to the "Credit
Agreement", "thereunder", "thereof" or words of like import referring to
the Credit Agreement shall mean and be a reference to the Credit Agreement
as amended by this Amendment.
(b) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.
(c) The execution, delivery and performance of this Amendment
shall not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of the
Administrative Agent, any Bank or any Issuing Bank under, the Credit
Agreement or any of the other Loan Documents.
3.02 Headings. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this
-3-
<PAGE>
Amendment for any other purpose or be given any substantive effect.
3.03 Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
3.04 Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
-4-
<PAGE>
Amendment No. 1 to Credit Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
CLARK REFINING & MARKETING, INC.
By: /s/ Jeffrey S. Beyersdorfer
-----------------------------
Name: Jeffrey S. Beyersdorfer
Title: Vice President--Corporate Development
AGENTS
------
BANKERS TRUST COMPANY
as Administrative Agent
and Collateral Agent
By: /s/ Bruce W. Addison
-----------------------------
Name: Bruce W. Addison
Title: Vice President
THE TORONTO DOMINION BANK
as Syndications Agent
By: /s/ David G. Parker
-----------------------------
Name: David G. Parker
Title: Manager--Credit Admin.
BANKBOSTON, N.A.
as Documentation Agent
By: /s/ Christopher Holmgren
-----------------------------
Name: Christopher Holmgren
Title: Director
-5-
<PAGE>
LENDERS
-------
ABN AMRO BANK
as a Bank
By: /s/ Scott J. Albert
-----------------------------
Name: Scott J. Albert
Title: Vice President
By: /s/ James R. Morgan
-----------------------------
Name: James R. Morgan
Title: Group Vice President
BANKBOSTON, N.A.
as a Bank
By: /s/ Christopher Holmgren
-----------------------------
Name: Christopher Holmgren
Title: Director
BANKERS TRUST COMPANY
as a Bank
By: /s/ Bruce W. Addison
-----------------------------
Name: Bruce W. Addison
Title: Vice President
BANK OF SCOTLAND
as a Bank
By: /s/ Annie Chiu Tat
-----------------------------
Name: Annie Chiu Tat
Title: Vice President
-6-
<PAGE>
COMERICA BANK
as a Bank
By: /s/ Thomas J. Randall
-----------------------------
Name: Thomas J. Randall
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH
as a Bank
By: /s/ Philippe Soustra
-----------------------------
Name: Philippe Soustra
Title: Senior Vice President
THE FIRST NATIONAL BANK OF CHICAGO
as a Bank
By: /s/ William V. Clifford
-----------------------------
Name: William V. Clifford
Title: Vice President
THE FUJI BANK, LIMITED
as a Bank
By:
-----------------------------
Name:
Title:
-7-
<PAGE>
GREEN TREE FINANCIAL SERVICING
CORPORATION
as a Bank
By: /s/ Christopher A. Gouskos
-----------------------------
Name: Christopher A. Gouskos
Title: V.P., General Manager
HIBERNIA NATIONAL BANK
as a Bank
By: /s/ Gary Colbertson
-----------------------------
Name: Gary Colbertson
Title: Officer
MERCANTILE BANK NATIONAL ASSOCIATION
as a Bank
By:
-----------------------------
Name:
Title:
MITSUBISHI TRUST & BANKING CORP.
as a Bank
By: /s/ Mr. Hachiro Hosoda
-----------------------------
Name: Mr. Hachiro Hosoda
Title: Deputy General Manager
By: /s/ Mr. Nobuo Tominaga
-----------------------------
Name: Mr. Nobuo Tominaga
Title: Chief Manager
THE SANWA BANK LIMITED
as a Bank
By: /s/ C. L. Murphy
-----------------------------
Name: C. L. Murphy
Title: Senior Vice President
-8-
<PAGE>
STANDARD CHARTERED BANK
as a Bank
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
TORONTO DOMINION (TEXAS), INC.
as a Bank
By: /s/ Frederic Hawley
-----------------------------
Name: Frederic Hawley
Title: Vice President
UNION BANK OF CALIFORNIA, N.A.
as a Bank
By: /s/ Randall Osterberg
-----------------------------
Name: Randall Osterberg
Title: Vice President
WELLS FARGO BANK (TEXAS), N.A.
as a Bank
By: /s/ Charles D. Kirkham
-----------------------------
Name: Charles D. Kirkham
Title: Vice President
-9-
<PAGE>
DEN NORSKE BANK ASA
as a Bank
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
-10-
<PAGE>
ISSUING BANKS
-------------
BANKERS TRUST COMPANY
as Issuing Bank
By: ____________________________
Name:
Title:
TORONTO DOMINION (TEXAS), INC.
as Issuing Bank
By: /s/ Frederic Hawley
____________________________
Name: Frederic Hawley
Title: Vice President
BANKBOSTON, N.A.
as Issuing Bank
By: /s/ Christopher Holmgren
____________________________
Name: Christopher Holmgren
Title: Director
-11-
<PAGE>
EXHIBIT 10.12
CLARK REFINING & MARKETING, INC.
AMENDMENT NO. 2
TO CREDIT AGREEMENT
This AMENDMENT NO. 2 (the "Amendment") is dated as of November 7, 1997
and entered into by and among Clark Refining & Marketing, Inc., a Delaware
corporation (the "Borrower"), Bankers Trust Company, a New York Banking
corporation, as Administrative Agent and Collateral Agent, The Toronto-Dominion
Bank, a Canadian chartered bank, as Syndication Agent, and BankBoston, N.A., a
national banking association, as Documentation Agent, and the other financial
institutions party hereto. This Amendment amends the Credit Agreement (as
amended, amended and restated, supplemented or otherwise modified, the "Credit
Agreement") dated as of September 25, 1997 by and among the parties hereto.
Capitalized terms used herein without definition shall have the same meanings
herein as set forth in the Credit Agreement.
RECITALS
WHEREAS, the parties hereto entered into the Credit Agreement, which
provides for a loan facility to the Borrower;
WHEREAS, the parties hereto desire to make certain amendments to the
Credit Agreement as set forth below.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows;
Article I
AMENDMENTS TO THE CREDIT AGREEMENT
1.01 Amendment to Section 1.01 of the Credit Agreement.
(a) The following definitions shall be inserted in Section 1.01
of the Credit Agreement:
<PAGE>
"Agents" means the Administrative Agent, the Syndication Agent and the
Documentation Agent, collectively.
"Floating and Fixed Rate Notes" means the senior and subordinated, as
the case may be, Floating and Fixed Rate Notes or loans to be issued under the
Floating and Fixed Rate Note Indentures in an aggregate amount not to exceed
$400,000,000 for the purposes described in, and otherwise in accordance with,
Section 8.05(i).
"Floating and Fixed Rate Note Indentures" means each of the indentures
and/or credit agreements to be entered into by the Company pursuant to which the
Floating and Fixed Rate Notes are to be issued.
(b) The definition of "Cumulative Cash Flow" shall be amended by
deleting the words "Senior Notes" from clause (b)(v) thereto and inserting
the words "9-1/2% Notes or the Floating and Fixed Rate Notes" in lieu
thereof.
(c) The definition of "Institutional Finance Documents" shall be
amended by deleting the words "the Senior Notes, the Senior Note Indenture"
therein and inserting the words "the 9-1/2% Notes, the 9-1/2% Note
Indentures, the Floating and Fixed Rate Notes, the Floating and Fixed Rate
Note Indentures" in lieu thereof.
(d) The definition of "Holdings Note Indentures" shall be
amended by changing its name to "Holdings Note Indenture", by deleting
clause (i) thereof in its entirety and by deleting the words "and (ii)"
therein.
(e) The definition of "Holdings Notes" shall be amended by
deleting clause (i) thereof in its entirety and by deleting the words "and
(ii)" therein.
(f) The definitions of "Senior Notes", "Senior Note Indentures",
"10-1/2% Notes" and "10-1/2% Note Indenture" shall be deleted from Section
1.01 of the Credit Agreement.
(g) All references to the "Holdings Note Indentures" in the
Credit Agreement shall be construed to refer to the "Holdings Note
Indenture".
-2-
<PAGE>
1.02 Amendment to Section 6.24. Section 6.24 of the Credit Agreement
shall be deleted in its entirety and the following Section 6.24 shall be
inserted in lieu thereof (provided that, until the Holdings Senior Secured Zero
Coupon Notes due 2000 are repurchased or redeemed in whole, that portion of
existing Section 6.24 relating to the indenture governing such Notes shall
continue in effect):
"6.24 Holdings Note Indenture, 9-1/2% Note Indenture and Floating
and Fixed Rate Note Indentures. The Indebtedness to be incurred by the Company
under this Agreement will be (i) "Permitted Indebtedness" under the Floating and
Fixed Rate Note Indentures pursuant to the definition of such term contained
therein and (ii) "Permitted Indebtedness" under the 9-1/2% Note Indenture
pursuant to clause (ii) of the definition of such term contained in the 9-1/2%
Note Indenture as this Agreement constitutes a refinancing, renewal, extension,
refunding or replacement of the Existing Credit Agreement (which constitutes the
"Credit Agreement" as defined in the 9-1/2% Note Indenture). The Loan Documents,
when executed and delivered by the parties thereto, are the "Credit Agreement"
as such term is used in clause (b) of Section 1016 of the 9-1/2% Note Indenture.
The execution, delivery and performance of the Loan Documents and the provisions
contained herein and therein do not contravene or conflict with, result in a
breach or violation of, or constitute a default under any of the terms,
conditions or provisions of the Holdings Note Indenture, the Holdings Notes, the
9-1/2% Note Indenture, the 9-1/2% Notes, the Floating and Fixed Rate Note
Indenture or the Floating and Fixed Rate Notes."
1.03 Amendment to Section 8.05.
(a) Clause (g) of Section 8.05 of the Credit Agreement shall be
amended by deleting the words "Senior Notes" therein and inserting the
words "9-1/2% Notes or the Floating and Fixed Rate Notes" in lieu thereof
and by deleting the words "Senior Note Indentures" therein and inserting
the words "9-1/2% Note Indenture and/or the applicable Floating and Fixed
Rate Note Indenture" in lieu thereof.
(b) Clause (h) of Section 8.05 of the Credit Agreement shall be
deleted in its entirety and the following clause (h) shall be inserted in
lieu thereof:
-3-
<PAGE>
"(h) Indebtedness incurred by Unrestricted Subsidiaries to the extent
permitted under the 9-1/2% Note Indenture, the Holdings Note Indenture and the
Floating and Fixed Rate Note Indentures;".
(c) The following clause (i) shall be inserted after clause (h)
of Section 8.05 of the Credit Agreement and clause (i) shall be re-lettered
as clause (j):
"(i) Indebtedness of the Company, in an aggregate amount not to exceed
$400,000,000 (in the form of floating and fixed rate notes or loans), incurred
to refinance in whole the 10-1/2% Notes and to replenish the Company's cash
reserves following a dividend payment to Holdings, the proceeds of which will
have been or shall be used to repurchase and/or redeem in whole the Holdings
Senior Secured Zero Coupon Notes due 2000 and to pay certain fees and expenses,
which Indebtedness shall be substantially on the terms set forth in the 1997
Refinancing Indebtedness Term Sheet attached hereto as Annex I and such other
terms (including, as applicable, as to subordination) as are satisfactory to the
Agents in their discretion; provided, that a minimum of $250,000,000 of such
Indebtedness provides for a fixed interest rate and $175,000,000 of such
$250,000,000 of Indebtedness is subordinated in right of payment to all the
Obligations; and".
1.04 Amendments to Section 8.11.
(a) Section 8.11 of the Credit Agreement shall be amended by
inserting the following clause (c) at the end of the first proviso thereof:
"and (c) redeem the 10-1/2% Notes in accordance with Section 8.05(i)".
(b) Clause (iii) and clause (b) of the first proviso in Section
8.11 of the Credit Agreement shall be amended by deleting the words "Senior
Notes" each place where such words appear and inserting the words "9-1/2% Notes
or the Floating and Fixed Rate Notes" in lieu thereof and by deleting clause (c)
in its entirety and inserting the following clause (c) in lieu thereof:
"(c) in addition to clause (b) above, prepay or redeem not more than 35%
of the aggregate principal amount of the Floating and Fixed Rate Notes
originally issued which bear a
-4-
<PAGE>
fixed interest rate, with the proceeds received from the issuance of Capital
Stock of the Company or Holdings in accordance with the terms of such Notes as
in effect on the dates of their respective indentures or credit agreements".
1.05 Amendments to Section 8.16. Clause (c) of Section 8.16 of the
Credit Agreement shall be amended by deleting the amount "$300,000,000" and
inserting the amount "$280,000,000" in lieu thereof and by inserting at the end
of such clause the following proviso:
"provided, that such required amount shall be decreased by an amount equal
to the cash and non-cash equity adjustments of the Company in respect of matters
identified to the Administrative Agent prior to November 7, 1997, in an
aggregate amount not to exceed $80,000,000 (a maximum of $10,000,000 of which
may be cash equity adjustments), at the time any such adjustments are actually
made".
1.06 Amendments to Section 8.18. Section 8.18 of the Credit Agreement
shall be amended by deleting the words "any of the Senior Notes," and inserting
the words "any of the 9-1/2% Notes, any of the Floating and Fixed Rate Notes,"
in lieu thereof and deleting the words "Senior Note Indentures" and inserting
the words "the 9-1/2% Note Indenture, the Floating and Fixed Rate Note
Indentures," in lieu thereof.
1.07 Amendment to Section 9.01.
(a) Section 9.01(e) of the Credit Agreement shall be amended by
inserting the following proviso at the end thereof:
"(it being understood that the obligation of the Company to offer to
repurchase the 9-1/2% Notes, the 10-1/2% Notes or the Holdings Notes arising
solely out of the sale by TrizecHahn of all of its equity interest in the
Company to one or more of the Fund Affiliates shall not itself be deemed an
Event of Default under this Section 9.01(e))".
(b) Section 9.01 (o) of the Credit Agreement shall be amended by
deleting the provisos at the end thereof.
1.08 Addition of Annex I. Annex I attached hereto shall be attached
to the Credit Agreement as Annex I to the Credit Agreement.
-5-
<PAGE>
1.09 Extensions of Credit. It shall be a condition precedent to the
making of each Loan and the issuance of each Letter of Credit that (a) the
Obligations in respect thereof will be "Senior Debt" as such term will be
defined in the indenture or credit agreement relating to the Floating and Fixed
Rate Notes that are senior subordinated and (b) each Notice of Borrowing and L/C
Request will contain a representation and warranty by the Company to that
effect.
Article II
EFFECTIVENESS OF AMENDMENTS
2.01 Effectiveness of Amendments under Section 1.01 (a), 1.03(c),
1.04 (a), 1.07(a) and 1.08. The provisions of Sections 1.01(a), 1.03(c),
1.04(a), 1.07(a) and 1.08 of this Amendment shall become effective on the
opening of business in New York on the Business Day on which the Administrative
Agent has notified the Borrower and the Banks that the Administrative Agent has
executed a counterpart signature page of this Amendment and has received
executed counterpart signature pages of this Amendment from the Borrower and the
Majority Banks.
2.02 Effectiveness of Amendments under Sections 1.01(b) - (g), 1.02,
1.03 (a) and (b), 1.04(b), 1.06, 1.07(b) and 1.09. The provisions of Sections
1.01 (b) - (g), 1.02, 1.03 (a) and (b), 1.04(b), 1.06, 1.07(b) and 1.09 shall
become effective concurrently with the issuance of the Floating and Fixed Rate
Notes.
2.03 Effectiveness of Amendments under Section 1.05. The provisions
of Section 1.05 shall become effective concurrently with the Company's payment
to Holdings of the dividend described in Section 8.05(i) of the Credit
Agreement, as amended hereby.
Article III
MISCELLANEOUS
3.01 Reference to and Effect on the Credit Agreement and the Other
Loan Documents.
(a) This Amendment modifies the Credit Agreement to the extent
set forth herein, is hereby incorporated by reference into the Credit
Agreement and
-6-
<PAGE>
is made a part thereof. On and after the effective date, each reference in
the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein"
or words of like import referring to the Credit Agreement, and each
reference in the other Loan Documents to the "Credit Agreement",
"thereunder", "thereof" or words of like import referring to the Credit
Agreement shall mean and be a reference to the Credit Agreement as amended
by this Amendment.
(b) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.
(c) The execution, delivery and performance of this Amendment
shall not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of the
Administrative Agent, any Bank or any Issuing Bank under, the Credit
Agreement or any of the other Loan Documents.
3.02 Representations and Warranties; No Default or Event of Default.
On the date of effectiveness of any of the amendments herein (after giving
effect to the consummation of the transactions contemplated by this Amendment to
have occurred on or prior to such date), the Borrower shall be deemed to have
certified to the Banks that, after giving effect to the amendments contained
herein that become effective on such date all of the representations and
warranties contained in the Credit Agreement are true and correct on and as of
the date thereof with the same effect as if made on and as of such date (except
to the extent such representations and warranties expressly refer to an earlier
date, in which case they shall be true and correct as of such earlier date and
except to the extent (x) the representations and warranties set forth in Section
6.05 of the Credit Agreement relate to any litigation which has been
specifically disclosed to the Banks and which has been added to Schedule 6.05 to
the Credit Agreement with the written approval of the Majority Banks and (y) the
representation and warranty set forth in Section 6.25 of the Credit Agreement
relates to any event or condition which has been specifically disclosed to the
Banks and which has been added to Schedule 6.25 to the Credit Agreement with the
written approval of the Majority Banks).
-7-
<PAGE>
3.03 Headings. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
3.04 Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
3.05 Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
-8-
<PAGE>
Amendment No. 2 to Credit Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
CLARK REFINING & MARKETING, INC.
By: /s/ Jeffrey S. Beyersdorfer
-------------------------------
Name: Jeffrey S. Beyersdorfer
Title: Vice President--Corporate Development
AGENTS
------
BANKERS TRUST COMPANY
as Administrative Agent
and Collateral Agent
By: /s/ Bruce W. Addison
-------------------------------
Name: Bruce W. Addison
Title: Vice President
THE TORONTO DOMINION BANK
as Syndications Agent
By: /s/ David G. Parker
-------------------------------
Name: David G. Parker
Title: Manager Credit Admin
BANKBOSTON, N.A.
as Documentation Agent
By: /s/ Christopher Holmgren
-------------------------------
Name: Christopher Holmgren
Title: Director
-9-
<PAGE>
LENDERS
-------
ABN AMRO BANK
as a Bank
By: /s/ Scott S. Albert
------------------------------
Name: Scott S. Albert
Title: Vice President
By: /s/ Mary L. Honda
------------------------------
Name: Mary L. Honda
Title: Vice President
BANKBOSTON, N.A.
as a Bank
By: /s/ Christopher Holmgren
------------------------------
Name: Christopher Holmgren
Title: Director
BANKERS TRUST COMPANY
as a Bank
By: /s/ Bruce W. Addison
------------------------------
Name: Bruce W. Addison
Title: Vice President
BANK OF SCOTLAND
as a Bank
By: /s/ Annie Chiu Tat
------------------------------
Name: Annie Chiu Tat
Title: Vice President
-10-
<PAGE>
COMERICA BANK
as a Bank
By: /s/ Thomas J. Randall
-----------------------------------------------------
Name: Thomas J. Randall
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH
as a Bank
By: /s/ Philippe Soustra
-------------------------------------------------------
Name: Philippe Soustra
Title: Senior Vice President
THE FIRST NATIONAL BANK OF CHICAGO
as a Bank
By: /s/ William V. Clifford
-------------------------------------------------------
Name: Willima V. Clifford
Title: Vice President
THE FUJI BANK, LIMITED
as a Bank
By: -----------------------------------------------------
Name:
Title:
11
<PAGE>
GREEN TREE FINANCIAL SERVICING
CORPORATION
as a Bank
By: /s/ Christopher A. Gouskos
-------------------------------------------------------
Name: Christopher A. Gouskos
Title: V.P., General Manager
HIBERNIA NATIONAL BANK
as a Bank
By:
-------------------------------------------------------
Name:
Title:
MERCANTILE BANK NATIONAL ASSOCIATION
as a Bank
By:
-------------------------------------------------------
Name:
Title:
MITSUBISHI TRUST & BANKING CORP.
as a Bank
By: /s/ Mr. Nobuo Tominaga
-------------------------------------------------------
Name: Mr. Nobuo Tominaga
Title: Chief Manager
THE SANWA BANK LIMITED
as a Bank
By:
-------------------------------------------------------
Name:
Title:
-12-
<PAGE>
STANDARD CHARTERED BANK
as a Bank
By: /s/ Francois D. Bordes
-------------------------------------------------------
Name: Francois D. Bordes
Title: Vice President
By: /s/ Kristina McDavid
-------------------------------------------------------
Name: Kristina McDavid
Title: Vice President
TORONTO DOMINION (TEXAS), INC.
as a Bank
By: /s/ Neva Nesbitt
-------------------------------------------------------
Name: Neva Nesbitt
Title: Vice President
UNION BANK OF CALIFORNIA, N.A.
as a Bank
By: /s/ Randall Osterberg
-------------------------------------------------------
Name: Randall Osterberg
Title: Vice President
By: /s/ Walter M. Roth
-------------------------------------------------------
Name: Walter M. Roth
Title: Vice President
WELLS FARGO BANK (TEXAS), N.A.
as a Bank
By: /s/ Charles D. Kirkham
-------------------------------------------------------
Name: Charles D. Kirkham
Title: Vice President
-13-
<PAGE>
DEN NORSKE BANK ASA
as a Bank
By: /s/ Byron L. Cooley
-------------------------------------------------------
Name: Byron L. Cooley
Title: Senior Vice President
By: /s/ J. Morten Kreutz
-------------------------------------------------------
Name: J. Morten Kreutz
Title: Vice President
-14-
<PAGE>
ISSUING BANKS
-------------
BANKERS TRUST COMPANY
as Issuing Bank
By: /s/ Bruce W. Addison
----------------------------
Name: Bruce W. Addison
Title: Vice President
TORONTO DOMINION (TEXAS), INC.
as Issuing Bank
By:
----------------------------
Name:
Title:
BANKBOSTON, N.A.
as Issuing Bank
By: /s/ Christopher Holmgren
----------------------------
Name: Christopher Holmgren
Title: Director
-15-
<PAGE>
EXHIBIT 10.13
CLARK REFINING & MARKETING, INC.
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of November 21, 1997, and entered
into by and among CLARK REFINING & MARKETING, INC., a Delaware corporation
("Company"), GOLDMAN SACHS CREDIT PARTNERS L.P., as arranger (in such
capacity, "Arranger"), GOLDMAN SACHS CREDIT PARTNERS L.P. ("GSCP"), as
syndication agent (in such capacity, "Syndication Agent"), STATE STREET BANK
AND TRUST COMPANY OF MISSOURI, N.A. ("State Street"), as payment agent (the
"Paying Agent"), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES
HEREOF (each individually referred to herein as a "Lender" and collectively as
"Lenders"), and GOLDMAN SACHS CREDIT PARTNERS ("GSCP"), as administrative
agent for Lenders (in such capacity, "Administrative Agent").
R E C I T A L S
WHEREAS, on or before the Closing Date, Company will issue and sell
(i) not less than $125,000,000 in aggregate principal amount of Fixed Rate
Senior Notes and (ii) not less than $175,000,000 in aggregate principal amount
of Subordinated Notes; and
WHEREAS, Lenders have agreed to extend certain credit facilities to
Company, the proceeds of which will be used together with the proceeds of the
issuance and sale of the Fixed Rate Senior Notes and the Subordinated Notes
described above, (i) to redeem all of Company's 10-1/2% Senior Notes, (ii) to
replenish Company's cash reserves or (iii) for other general corporate purposes.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Company, Lenders and Agent agree as
follows:
SECTION 1.
DEFINITIONS
1.1 Certain Defined Terms.
The following terms used in this Agreement shall have the following
meanings:
"Acquired Debt" means with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or
1
<PAGE>
became a Subsidiary of such specified Person, including, without
limitation, Indebtedness incurred in connection with, or in contemplation
of, such other Person merging with or into or becoming a Subsidiary of such
specified Person, and (ii) Indebtedness secured by a Lien encumbering any
asset acquired by such specified Person.
"Adjusted Eurodollar Rate" means, for each Interest Period during
which any Eurodollar Loan is outstanding subsequent to the initial Interest
Period, the rate determined by Company (notice of such rate to be sent to
the Paying Agent by Company on the date of determination thereof) equal to
the average (rounded upwards, if necessary, to the nearest 1/16 of 1%) of
the offered rates for deposits in U.S. dollars with maturities comparable
to such Interest Period, as set forth on the Reuters Screen LIBO Page as of
11:00 a.m., London time, on the Interest Rate Determination Date for such
Interest Period; provided, however, that if only one such offered rate
appears on the Reuters Screen LIBO Page, the Adjusted Eurodollar Rate for
such Interest Period shall mean such offered rate. If such rate is not
available at 11:00 a.m., London time, on the Interest Rate Determination
Date for such Interest Period, then the Adjusted Eurodollar Rate for such
Interest Period shall mean the arithmetic mean (rounded upwards, if
necessary, to the nearest 1/16 of 1%) of the interest rates per annum at
which deposits in amounts equal to US $1,000,000 are offered by the
Reference Banks to leading banks in the London Interbank Market for a
period comparable to such Interest Period as of 11:00 a.m., London time, on
the Interest Rate Determination Date for such Interest Period. If on any
Interest Rate Determination Date, at least two of the Reference Banks
provide such offered quotations, then the Adjusted Eurodollar Rate for such
Interest Period shall be determined in accordance with the preceding
sentence on the basis of the offered quotation of those Reference Banks
providing such quotations.
"Administrative Agent" has the meaning assigned to that term in the
introduction to this Agreement and also means and includes any successor
Administrative Agent appointed pursuant to subsection 8.5.
"Affected Lender" has the meaning assigned to that term in subsection
2.6B.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled"
have meanings correlative to the foregoing.
"Agent" means, individually, each of Arranger, Syndication Agent,
Paying Agent and Administrative Agent and "Agents" means Arranger,
Syndication Agent, Paying Agent and Administrative Agent, collectively.
2
<PAGE>
"Agreement" means this Credit Agreement dated as of November 21,
1997, as it may be amended, supplemented or otherwise modified from time to
time.
"AOC Payment" means all payments made to AOC Limited Partnership, a
limited partnership organized under the laws of the State of Missouri,
constituting ``Additional Redemption Consideration" required to be paid by
Holdings pursuant to Section 2.4 of the Stock Purchase and Redemption
Agreement.
"Arranger" has the meaning assigned to that term in the introduction
to this Agreement.
"Asset Disposition" by any Person means any transfer, conveyance,
sale, lease or other disposition by such Person or any of its Restricted
Subsidiaries (including a consolidation or merger or other sale of any such
Restricted Subsidiaries with, into or to another Person in a transaction in
which such Restricted Subsidiary ceases to be a Restricted Subsidiary, but
excluding a disposition by a Restricted Subsidiary of such Person to such
Person or a Restricted Subsidiary of such Person or by such Person to a
Restricted Subsidiary of such Person) of (i) shares of Capital Stock (other
than directors' qualifying shares) or other ownership interests of a
Restricted Subsidiary of such Person, (ii) substantially all of the assets
of such Person or any of its Restricted Subsidiaries representing a
division or line of business or (iii) other assets or rights of such Person
or any of its Restricted Subsidiaries outside of the ordinary course of
business, which in the case of either clause (i), (ii) or (iii), whether in
a single transaction or a series of related transactions, result in Net
Available Proceeds in excess of $10,000,000; provided that (x) any
transfer, conveyance, sale, lease or other disposition of assets securing
the Existing Credit Agreement in connection with the enforcement of the
security interests therein and (y) any sale of crude oil pursuant to the
contracts governing the transactions contemplated by the Gulf Merger
Agreement and Gulf Oil Purchase Contract shall not be deemed an Asset
Disposition hereunder.
"Asset Disposition Trigger Date" has the meaning assigned to that
term in subsection 6.7.
"Assignment Agreement" means an Assignment Agreement in substantially
the form of Exhibit V annexed hereto.
"Attributable Indebtedness" means the total net amount of rent
required to be paid during the remaining primary term of any particular
lease under which any Person is at the time liable, discounted at the rate
per annum equal to the weighted average interest rate borne by the Loans,
the Fixed Rate Senior Notes and the Subordinated Notes.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
3
<PAGE>
"Base Rate" means the per annum rate, at any time, equal to the sum of
(i) the higher of (x) the Prime Rate or (y) the rate which is 1/2 of 1% in
excess of the Federal Funds Effective Rate plus (ii) 1.75%.
"Base Rate Loans" means Loans bearing interest at rates determined
by reference to the Base Rate.
"Blackstone" means Blackstone Capital Partners III Merchant Banking
Fund L.P. and its Affiliates.
"Blackstone Transaction" means the acquisition of 13,500,000 shares
of common stock of Holdings previously held by Trizec Hahn Corporation and
certain of its Subsidiaries.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of Company to have been duly adopted by
the board of Directors and to be in full force and effect on the date of
such certification, as set forth in an Officers' Certificate delivered to
the Administrative Agent.
"Borrowing Base" means, as of any date, an amount equal to the sum
of (i) 95% of the accounts receivable owned by Company and its Restricted
Subsidiaries (excluding any accounts receivable from Restricted
Subsidiaries and any accounts receivable that are more than 90 days past
due) as of such date, plus (ii) 90% of the market value of inventory owned
by Company and its Restricted Subsidiaries as of such date, plus (iii) 100%
of the cash and Cash Equivalents owned by Company and its Restricted
Subsidiaries as of such date that are, as of such date, held in one or more
separate accounts under the direct control of the agent bank under the
Existing Credit Agreement and that are as of such date pledged to secure
working capital borrowings under the Existing Credit Agreement, minus (iv)
the principal amount of borrowings outstanding as of such date under the
Existing Credit Agreement to the extent that the amount of such borrowings
exceeds the sum of clauses (i) and (ii) above, all of the foregoing
calculated on a consolidated basis in accordance with GAAP.
"Business Day" means (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which is
a legal holiday under the laws of the State of New York or the state in
which the Funding and Payment Office is located or is a day on which
banking institutions located in such states are authorized or required by
law or other governmental action to close, and (ii) with respect to all
notices, determinations, fundings and payments in connection with the
Adjusted Eurodollar Rate or any Eurodollar Rate Loans, any day that is a
Business Day described in clause (i) above and that is also a day for
trading by and between banks in Dollar deposits in the London interbank
market.
4
<PAGE>
"Capital Lease" means, at the time any determination thereof is to
be made, any lease of property, real or personal or mixed, in respect of
which the present value of the minimum rental commitment would be
capitalized on a balance sheet of the lessee in accordance with GAAP.
"Capitalized Lease Obligation" of any Person means any lease of any
property (whether real, personal or mixed) by such Person as lessee which,
in conformity with GAAP, is required to be accounted for as a Capital Lease
on the balance sheet of that Person.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of any association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock and (iii) in the case of a partnership,
partnership interests (whether general or limited).
"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof, (iii) certificates of
deposit and eurodollar time deposits with maturities of six months or less
from the date of acquisition, bankers' acceptances with maturities not
exceeding six months and overnight bank deposits, in each case with any
domestic commercial bank having capital and surplus in excess of
$500,000,000 and a Keefe Bank Watch Rating of ``B" or better, (iv)
repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (ii) and (iii)
entered into with any financial institution meeting the qualifications
specified in clause (iii) above and (v) commercial paper having the highest
rating obtainable from Moody's or S&P and, in each case, maturing within
six months after the date of acquisition.
"Certificate re Non-Bank Status" means a certificate substantially
in the form of Exhibit VI annexed hereto delivered by a Lender to Agent
pursuant to subsection 2.7B(iii).
"Change of Control" means any transaction the result of which is
that any Person (an "Acquiring Person") other than Blackstone, or a
Person a majority of whose voting equity is owned by Blackstone, becomes
the "Beneficial Owner" (as determined in accordance with Rule 13d-3 of
the Exchange Act), directly or indirectly, of shares of stock of Company or
Holdings entitling such Acquiring Person to exercise 50% or more of the
total voting power of all classes of stock of Company or Holdings, as the
case may be, entitled to vote in elections of directors.
"Change of Control Triggering Event" means the occurrence of a
Change of Control resulting in a Rating Decline.
5
<PAGE>
"Chevron Payment" means that certain contingent payment obligation
of Holdings to Chevron U.S.A. Inc. based on industry refining margins and
the volume of refined oil products produced at the Port Arthur Refinery
over a five-year period, pursuant to Section 3.1(d) of the Asset Purchase
Agreement, dated as of August 18, 1994, between Holdings and Chevron U.S.A.
Inc., as amended.
"Closing Date" means the date on or before November 21, 1997, on
which the Loans are made.
"Commission" 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 Agreement such commission is not existing
and performing the duties now assigned to it under the Trust indenture Act,
the body performing such duties at such time.
"Commitment" means the commitment of a Lender to make a Loan to
Company pursuant to subsection 2.1A, and "Commitments" means such commit
ments of all Lenders in the aggregate.
"Company" has the meaning assigned to that term in the introduction
to this Agreement until a successor Person shall have become such pursuant
to the applicable provisions of this Agreement, and thereafter "Company"
shall mean such successor Person.
"Consolidated Adjusted Net Worth" of any Person means the total
amount of consolidated stockholder's equity (par value plus additional
paid-in capital (including all Capital Stock except as excluded below) plus
retained earnings or minus accumulated deficit) of such Person as reflected
on the consolidated balance sheet of such Person and its Restricted
Subsidiaries for the most recent Fiscal Quarter prior to the event
requiring such determination to be made, after excluding (to the extent
otherwise included therein and without duplication) the following (the
amount of such stockholder's equity and deductions therefrom to be
computed, except as noted below, in accordance with GAAP consistently
applied): (i) any amount receivable but not paid from sales of Capital
Stock of such Person or its Restricted Subsidiaries determined on a
consolidated basis; (ii) any revaluation or other write-up in book value of
assets subsequent to the date hereof (other than write-ups of oil inventory
previously written down and other than reevaluations or write-ups upon the
acquisition of assets acquired in a transaction to be accounted for by
purchase accounting under GAAP); (iii) treasury stock; (iv) an amount equal
to the excess, if any, of the amount reflected on the books and records of
such Person or its Restricted Subsidiaries for the securities of any Person
which is not a Restricted Subsidiary of such Person over the lesser of cost
or market value (as determined in good faith by the board of directors of
such Person or such Restricted Subsidiary); (v) Disqualified Capital Stock;
(vi) equity securities of such Person or its Restricted Subsidiaries which
are not Disqualified Capital Stock but which are exchangeable for or
convertible into debt
6
<PAGE>
securities of such Person or such Restricted Subsidiary, as the case may
be, other than at the option of such Person or such Restricted Subsidiary
except to the extent that the exchange or conversion rights in such other
equity securities cannot, under any circumstances, be exercised prior to
November 15, 2004; and (vii) the cumulative foreign currency translation
adjustment, if any; and (viii) write-offs of non-cash items in an amount
not to exceed $80,000,000.
"Consolidated Net Operating Income" means, when used with reference
to any Person, for any period, the aggregate of the Net Income of such
Person and its Restricted Subsidiaries for such period, on a consolidated
basis, determined in accordance with GAAP, provided that (i) the Net Income
of any Person which is not a Subsidiary of such Person or is accounted for
by the equity method of accounting shall be included only to the extent of
the amount of dividends or distributions paid to such Person or its
Restricted Subsidiaries, (ii) the Net Income of any Unrestricted Subsidiary
shall be excluded (except to the extent distributed to Company or one of
its Subsidiaries), (iii) the Net Income of any Person acquired in a pooling
of interests transaction for any period prior to the date of such
acquisition shall be excluded, (iv) extraordinary gains and losses and
gains and losses from the sale of assets outside the ordinary course of
such Person's business shall be excluded, (v) the cumulative effect of
changes in accounting principles in the year of adoption of such changes
shall be excluded and (vi) the tax effect of any of the items described in
clauses (i) through (v) above shall be excluded.
"Consolidated Net Tangible Assets" of a Person means the
consolidated total assets of such Person and its Restricted Subsidiaries
determined in accordance with GAAP, less the sum of (i) all current
liabilities and current liability items, and (ii) all goodwill, trade
names, trademarks, patents, organization expense, unamortized debt discount
and expense and other similar intangibles properly classified as
intangibles in accordance with GAAP.
"Consolidated Operating Cash Flow" means with respect to any Person,
Consolidated Net Operating Income of such Person and its Restricted
Subsidiaries without giving effect to gains and losses on securities
transactions (net of related taxes) for the period described below,
increased by the sum of (i) consolidated Fixed Charges of such Person and
its Restricted Subsidiaries which reduced Consolidated Net Operating Income
for such period, (ii) consolidated income tax expense (net of taxes
relating to gains and losses on securities transactions) of such Person and
its Restricted Subsidiaries which reduced Consolidated Net Operating Income
for such period, (iii) consolidated depreciation and amortization expense
(including amortization of purchase accounting adjustments) of such Person
and its Restricted Subsidiaries and other noncash items to the extent any
of which reduced Consolidated Net Operating Income for such period, (iv)
expenses incurred in connection with the Blackstone Transaction in an
amount not to exceed $9,000,000, and (v) any annual management monitoring,
consulting and advisory fees and related expenses paid to Blackstone and
its Affiliates in an amount not to exceed
7
<PAGE>
$2,000,000, less noncash items which increased Consolidated Net Operating
Income for such period, all as determined for such Person and its
consolidated Restricted Subsidiaries in accordance with GAAP for the four
full Fiscal Quarters for which financial information in respect thereof is
available immediately prior to the Transaction Date.
"Consolidated Operating Cash Flow Ratio" means, with respect to any
Person, the ratio of (i) Consolidated Operating Cash Flow of such Person
and its Restricted Subsidiaries for the four Fiscal Quarters for which
financial information in respect thereof is available immediately prior to
the Transaction Date to (ii) the aggregate Fixed Charges of such Person and
its Restricted Subsidiaries for such four Fiscal Quarters, such Fixed
Charges to be calculated on the basis of the amount of the Indebtedness and
Capitalized Lease Obligations of such Person and its Restricted
Subsidiaries outstanding on the Transaction Date and assuming the
continuation of market interest rate levels prevailing on the Transaction
Date in any calculation of interest rates in respect of floating interest
rate obligations; provided, however, that if such Person or any Restricted
Subsidiary of such Person shall have acquired, sold or otherwise disposed
of any Material Asset or engaged in an Equity Offering during the four full
Fiscal Quarters for which financial information in respect thereof is
available immediately prior to the Transaction Date or during the period
from the end of such fourth full Fiscal Quarter to and including the
Transaction Date, the calculation required in clause (i) above will be made
giving effect to such acquisition, sale or disposition or the other
investment of the Net Available Proceeds of such Equity Offering on a pro
forma basis as if such acquisition, sale, disposition or investment had
occurred at the beginning of such four full Fiscal Quarter period without
giving effect to clause (iii) of the definition of "Consolidated Net
Operating Income" (that is, including in such calculation the Net Income
for the relevant prior period of any Person acquired in a pooling of
interests transaction, notwithstanding the provisions of said clause
(iii)); provided, further, that Fixed Charges of such Person during the
applicable period shall not include the amount of consolidated interest
expense which is directly attributable to Indebtedness to the extent such
Indebtedness is reduced by the proceeds of the incurrence of such
Indebtedness which gave rise to the need to calculate the Consolidated
Operating Cash Flow Ratio. Any such pro forma calculation may include
adjustments appropriate, in the reasonable determination of Company as set
forth in an Officer's Certificate, to (i) reflect operating expense
reductions reasonably expected to result from the acquisition by Company of
such Material Asset or (ii) eliminate the effect of any extraordinary
accounting event with respect to any acquired Person on Consolidated Net
Operating Income.
"Disposition" means, with respect to any Person, any merger,
consolidation or other business combination involving such Person (whether
or not such Person is the Surviving Person) or the sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially
all of such Person's assets.
8
<PAGE>
"Disqualified Capital Stock" means any Capital Stock of Company
that, either by its terms or by the terms of any security into which it is
convertible or exchangeable, is, or upon the happening of any event or
passage of time would be, required to be redeemed or purchased (other than
pursuant to an offer to repurchase such Capital Stock following a Change of
Control, which offer may not be completed until 45 days after Company
prepays the Loans, if required by Lenders, pursuant to subsection
2.4B(ii)(b)), including at the option of the holder, in whole or in part,
or has, or upon the happening of an event or passage of time would have, a
redemption, sinking fund or similar payment due, on or prior to November
15, 2004.
"Dollars" and the sign "$" mean the lawful money of the United
States of America.
"Eligible Assignee" means (A) (i) a commercial bank organized under
the laws of the United States or any state thereof; (ii) a savings and loan
association or savings bank organized under the laws of the United States
or any state thereof; (iii) a commercial bank organized under the laws of
any other country or a political subdivision thereof; provided that (x)
such bank is acting through a branch or agency located in the United States
or (y) such bank is organized under the laws of a country that is a member
of the Organization for Economic Cooperation and Development or a political
subdivision of such country; and (iv) any other entity which is an
"accredited investor" (as defined in Regulation D under the Securities
Act) which extends credit or buys loans as one of its businesses including
insurance companies, mutual funds and lease financing companies; and (B)
any Lender, any Affiliate of any Lender and, with respect to any Lender
that is an investment fund that invests in commercial loans, any other
investment fund that invests in commercial loans and that is managed or
advised by the same investment advisor as such Lender or by an Affiliate of
such investment advisor; provided that no Affiliate of Holdings shall be an
Eligible Assignee.
"Equity Offering" means any public or private sale of Capital Stock
(including options, warrants or rights with respect thereto) of Company or
of Holdings.
"Eurodollar Rate Loans" means Loans bearing interest at rates
determined by reference to the Adjusted Eurodollar Rate as provided in
subsection 2.2A.
"Event of Default" means each of the events set forth in Section 7.
"Excess Proceeds" has the meaning assigned to that term in
subjection 6.7.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
9
<PAGE>
"Exchange Debentures" means the 11-1/2% Subordinated Exchange
Debentures due 2009 which may be exchanged for the Exchangeable Preferred
Stock of Holdings at the option of Holdings.
"Exchangeable Preferred Stock" means the 11-1/2% Senior Cumulative
Exchangeable Preferred Stock of Holdings.
"Excluded Contribution" means the net cash proceeds received by
Company after the Closing Date from (a) contributions to its common equity
capital and (b) the sale (other than to a Subsidiary or to any Company or
Subsidiary management equity plan or stock option plan or any other
management or employee benefit plan or agreement) of Capital Stock of
Company (other than Disqualified Capital Stock), in each case, designated
as Excluded Contributions pursuant to an Officers' Certificate.
"Existing Credit Agreement" means that certain Credit Agreement,
dated as of September 25, 1997, by and among Company and the financial
institutions party thereto, including any related notes, recorded or
otherwise perfected under applicable law (including any conditional sale or
other title guarantees, collateral documents, instruments and agreements
executed in connection therewith), and in each case as amended, modified,
extended, renewed, refunded, replaced or refinanced from time to time.
"Existing Indebtedness" means any Indebtedness of Company and its
Subsidiaries incurred or outstanding as of the Closing Date and in any
event Indebtedness evidenced by the Existing Credit Agreement whether or
not outstanding on the Closing Date.
"Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average
of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for
such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is
not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by Administrative
Agent from three Federal funds brokers of recognized standing selected by
Administrative Agent.
"Fiscal Quarter" means a fiscal quarter of any Fiscal Year.
"Fiscal Year" means the fiscal year of Company and its Subsidiaries
ending on December 31 of each calendar year.
"Fixed Charges" of any Person means, for any period, the sum of (i)
consolidated Interest Expense of such Person and its Restricted
Subsidiaries, plus (ii) all but the principal component of rentals in
respect of consolidated Capitalized Lease
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Obligations of such Person and its Restricted Subsidiaries paid, accrued or
scheduled to be paid or accrued by such Person and its Restricted
Subsidiaries during such period, and determined in accordance with GAAP
plus (iii) all cash dividend payments (excluding items eliminated in
consolidation) on any series of preferred stock of such Person. For
purposes of this definition, (a) interest on Indebtedness which accrues on
a fluctuating basis for periods succeeding the date of determination shall
be deemed to accrue at a rate equal to the average daily rate of interest
in effect during such immediately preceding Fiscal Quarter, and (b)
interest on a Capitalized Lease Obligation shall be deemed to accrue at an
interest rate reasonably determined in good faith by the chief financial
officer, treasurer or controller of such Person to be the rate of interest
implicit in such Capitalized Lease Obligation in accordance with GAAP
(including Statement of Financial Accounting Standards No. 13 of the
Financial Accounting Standards Board).
"Fixed Rate Senior Notes" means the senior notes due November 15, 2007
issued by Company pursuant to the Fixed Rate Senior Note Indenture.
"Fixed Rate Senior Note Indenture" means the Indenture dated as of
November 21, 1997 between Company and Bankers Trust Company, as trustee,
pursuant to which the Fixed Rate Senior Notes are issued, as such Indenture
may hereafter be amended, restated, supplemented or otherwise modified from
time to time in accordance with the terms hereof and thereof.
"Funding and Payment Office" means (i) the office of Paying Agent or
(ii) such other office of Paying Agent as may hereafter be designated from
time to time in a written notice delivered by Paying Agent to Company and
each Lender.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entities as have been approved by a significant
segment of the accounting profession, which are in effect on the Closing
Date.
"GSCP" has the meaning assigned to that term in the introduction to
this Agreement.
"Guaranty" means a guaranty (other than by endorsement of negotiable
instruments for collection in the ordinary course of business) direct or
indirect, in any manner (including, without limitation, letters of credit
and reimbursement agreements in respect thereto), of all or any part of any
Indebtedness.
"Gulf" means Gulf Resources Corporation, a Panamanian corporation.
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"Gulf Merger Agreement" means the Agreement and Plan of Merger, dated
as of November 3, 1995, among Company, Gulf and GFR, Inc.
"Gulf Oil Purchase Contract" means the Crude Oil Purchase Contract
between GFR, Inc. and Gulf.
"Gulf Payments" means all payments (other than the initial purchase
price of $26,900,000 under the Gulf Oil Purchase Contract) to Gulf and/or
any of its Affiliates, in each case, pursuant to the Gulf Merger Agreement,
the Gulf Oil Purchase Contract, the Gulf Stockholders' Agreement and the
Gulf Pledge Agreement, as each is in effect on the date hereof.
"Gulf Pledge Agreement" means the Pledge Agreement among Company, Gulf
and Gulf Resources Holdings, Inc.
"Gulf Stockholder's Agreement" means the Stockholders' Agreement among
Company, Gulf and Gulf Resources Holdings, Inc.
"Hazardous Material" means (i) any "hazardous substance" as defined by
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, (ii) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended, (iii) any petroleum or petroleum
product, (iv) any polychlorinated biphenyl, and (v) any pollutant or
contaminant or hazardous, dangerous or toxic chemical, material, waste or
substance regulated under or within the meaning of any other law relating
to protection of human health or the environment or imposing liability or
standards of conduct concerning any such chemical material, waste or
substance.
"Holdings" means Clark USA, Inc., a Delaware corporation and the
direct parent of Company.
"Holdings Note Indentures" means (i) that certain Indenture, dated as
of May 15, 1993 between Holdings and Bankers Trust Company, as trustee,
relating to the Senior Secured Zero Coupon Notes, due 2000, Series A, and
(ii) that certain Indenture, dated as of December 1, 1995 between Holdings
and Chase Manhattan Bank N.A., as trustee, relating to the 10-7/8% Notes,
due December 1, 2005, in each case, as the same may hereafter be amended,
restated, supplemented or otherwise modified from time to time in
accordance with the terms hereof and thereof.
"Holdings 10-7/8% Notes" means the 10-7/8% Notes due December 1, 2005
of Holdings issued pursuant to the Holdings Note Indenture dated as of
December 1, 1995.
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"Indebtedness" with respect to any Person, means any indebtedness,
including, in the case of Company, the Loans, the indebtedness evidenced by
the Existing Credit Agreement, the 10-1/2% Senior Notes, the 9-1/2% Senior
Notes, the Fixed Rate Senior Notes and the Subordinated Notes, in each
case, whether or not contingent, in respect of borrowed money or evidenced
by bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or representing the balance
deferred and unpaid of the purchase price of any property (including
pursuant to Capital Leases) (except any such balance that constitutes a
trade payable in the ordinary course of business that is not overdue by
more than 90 days from the invoice date or being contested in good faith),
if and to the extent any of the foregoing indebtedness would appear as a
liability upon a balance sheet of such Person prepared on a consolidated
basis in accordance with GAAP, and shall also include, to the extent not
otherwise included, the Guaranty of Indebtedness of other Persons not
included in the financial statements of Company, the maximum fixed
redemption or repurchase of Disqualified Capital Stock (or if not
redeemable or subject to repurchase, the issue price) and the maximum fixed
redemption or repurchase price (or if not redeemable or subject to
repurchase, the issue price) of Preferred Stock issued by any Restricted
Subsidiary of Company to any Person other than Company or a Restricted
Subsidiary.
"Indemnitee" has the meaning assigned to that term in subsection 9.3.
"Interest Expense" of any Person means, for any period, the aggregate
amount of interest expense in respect of Indebtedness (excluding (a) the
Chevron Payment, (b) the AOC Payment, (c) the Gulf Payments and (d) the
amortization of debt issuance expense relating to the Loans and the New
Notes, but including without limitation or duplication (i) amortization of
debt issuance expense with respect to other Indebtedness, (ii) amortization
of original issue discount on any Indebtedness and (iii) the interest
portion of any deferred payment obligation, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financings and the net cost associated with Interest Swap
Obligations) paid, accrued or scheduled to be paid or accrued by such
Person during such period, determined in accordance with GAAP.
"Interest Swap Obligations" means, when used with reference to any
Person, the obligations of such person under (i) interest rate swap
agreements, interest rate exchange agreements, interest rate cap
agreements, and interest rate collar agreements, (ii) currency swap
agreements and currency exchange agreements and (iii) other similar
agreements or arrangements, which are, in each such case, designed solely
to protect such Person against fluctuations in interest rates or currency
exchange rates.
"Interest Payment Date" means (i) with respect to any Base Rate Loan,
each February 15, May 15, August 15 and November 15 of each year,
commencing on the first such date to occur after the Closing Date, and (ii)
with respect to any Eurodollar Rate Loan, the last day of each Interest
Period applicable to such Loan.
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"Interest Period" means with respect to any Eurodollar Rate Loan, the
period from and including a scheduled Interest Payment Date (or November
21, 1997, in the case of the initial Interest Period) through the day next
preceding the following scheduled Interest Payment Date.
"Interest Rate Determination Date" means, with respect to any Interest
Period, the second Business Day prior to the first day of such Interest
Period.
"Investment" means, when used with reference to any Person, any direct
or indirect advances, loans or other extensions of credit or capital
contributions by such Person to (by means of transfers of property to
others or payments for property or services for the account or use of
others, or otherwise), or purchases or acquisitions by such Person of
Capital Stock, bonds, notes, debentures or other securities issued by, any
other Person or any Guaranty or assumption of any liability (contingent or
otherwise) by such Person of any Indebtedness or any principal (and
premium, if any), interest, penalties, fees, indemnifications,
reimbursements, damages and other liabilities payable under the
documentation governing any Indebtedness, of any other Person and all other
items that are or would be classified as investments on a balance sheet
prepared in accordance with GAAP.
"Investment Grade Rating" means (i) a Moody's Rating of Baa3 or higher
and an S&P Rating of at least BB+ or (ii) an S&P Rating of BBB- or higher
and a Moody's Rating of at least Ba1 or, in each case, if Moody's or S&P
shall change their rating system, equivalent ratings.
"Investment Grade Rating Event" means the first day on which the Fixed
Rate Senior Notes or the Loans are assigned an Investment Grade Rating.
"Lender" and "Lenders" means the persons identified as "Lenders" and
listed on the signature pages of this Agreement, together with their
successors and permitted assigns pursuant to subsection 9.1.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind (except for taxes not
yet owing) in respect of such asset, whether or not filed, retention
agreement, any lease in the nature thereof, any option or other agreement
to sell and, with respect to which, any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction.
"Loan Documents" means this Agreement and the Notes.
"Loan Exposure" means, with respect to any Lender as of any date of
determination (i) prior to the funding of the Loans, that Lender's
Commitment and (ii)
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after the funding of the Loans, the outstanding principal amount of the
Loan of that Lender.
"Loans" means the Loans made by Lenders to Company pursuant to
subsection 2.1A.
"Margin Stock" has the meaning assigned to that term in Regulation U
of the Board of Governors of the Federal Reserve System as in effect from
time to time.
"Material Adverse Effect" means a material adverse effect upon (i) the
business, operations, properties, assets, in each case taken as a whole, or
financial condition of Company and its Subsidiaries taken as a whole or
(ii) the ability of Company and its Subsidiaries taken as a whole to
perform, or of Agents or Lenders to enforce, the Obligations.
"Material Asset" means, with respect to Company or any Restricted
Subsidiary of Company, any asset, related group of assets, business or
division of Company or any Restricted Subsidiary of Company (including any
capital stock of any Restricted Subsidiary of Company) which (i) for the
most recent fiscal year of Company, accounted or would have accounted for
more than 3% of the consolidated revenue of Company or (ii) as at the end
of such fiscal year, represented or would have represented more than 3% of
the consolidated assets of Company or has a fair market value in excess of
$10,000,000 all as shown (x) with respect to any sale or disposition, on
the consolidated financial statements of Company for such fiscal year or
such shorter periods as such assets, business or division were owned by
Company or any Restricted Subsidiary of Company and (y) with respect to any
acquisition, on consolidated pro forma financial statements of Company for
the four full Fiscal Quarters for which financial information in respect
thereof is available immediately prior to such acquisition, giving effect
thereto on a pro forma basis as if such acquisition had occurred at the
beginning of such four full Fiscal Quarters.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Available Proceeds" means cash or readily marketable cash
equivalents received (including by way of sale or discounting of a note,
installment receivable or other receivable, but excluding any other
consideration received in the form of assumption by the acquiree of
Indebtedness or other obligations relating to such properties or assets or
received in any other noncash form) net of (i) all legal and accounting
expenses, commissions and other fees and expenses incurred and all federal,
state, provincial, foreign and local taxes required to be accrued as a
liability as a consequence of such issuance, and (ii) all payments made by
such Person or its Subsidiaries on any Indebtedness which must, in order to
obtain a necessary consent to such issuance or by applicable law, be repaid
out of the proceeds from such issuance.
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"Net Income" of any Person for any period means the net income (loss)
from continuing operations of such Person for such period, determined in
accordance with GAAP.
"New Notes" means the Fixed Rate Senior Notes and the Subordinated
Notes.
"9-1/2% Senior Notes" means the senior notes due September 15, 2004
issued by Company pursuant to the 9-1/2% Senior Note Indenture.
"9-1/2% Senior Note Indenture" means the Indenture dated as of
September 15, 1992 between Company and Bank of New York, N.A., as trustee,
pursuant to which the 9-1/2% Senior Notes were issued, as such Indenture
may hereafter be amended, restated, supplemented or otherwise modified from
time to time in accordance with the terms hereof and thereof.
"Non-Recourse Debt" means Indebtedness (i) as to which neither Company
nor any of its Restricted Subsidiaries (a) provides credit support of any
kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a
guarantor or otherwise), or (c) constitutes the lender; and (ii) no default
with respect to which (including any rights that the holders thereof may
have to take enforcement action against an Unrestricted Subsidiary) would
permit (upon notice, lapse of time or both) any holder of any other
Indebtedness of Company or any of its Restricted Subsidiaries to declare a
default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity.
"Notes" means (i) the promissory notes of Company issued pursuant to
subsection 2.1E on the Closing Date and (ii) any promissory notes issued by
Company pursuant to the last sentence of subsection 9.1B(i) in connection
with assignments of the Commitments or Loans of any Lenders, in each case
any promissory notes of Company issued pursuant to subsection 2.1E to
evidence the Loans of any Lenders, substantially in the form of Exhibit II
annexed hereto, as they may be amended, supplemented or otherwise modified
from time to time.
"Notice of Borrowing" means a notice substantially in the form of
Exhibit I annexed hereto delivered by Company to Paying Agent pursuant to
subsection 2.1B with respect to a proposed borrowing.
"Obligations" means all obligations of every nature of Company from
time to time owed to Agents, Lenders or any of them under the Loan
Documents, whether for principal, interest, fees (including prepayment fees
under subsections 2.4B(i)(b) and 2.4B(ii)(b)), expenses, indemnification or
otherwise.
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"Offering Circular" means the offering circular dated November 17,
1997 and prepared by Company in connection with the issuance of the Fixed
Rate Senior Notes and the Subordinated Notes.
"Officers' Certificate" means a certificate signed by at least two
officers of Company, one signature being that of the Chairman of the Board,
a Vice Chairman of the Board, the President or a Vice President, and the
other signature being that of the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary, of Company, and delivered to the
Administrative Agent. One of the officers signing an Officers' Certificate
given pursuant to subsection 5.1B shall be the principal executive,
financial or accounting officer of Company.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for Company, and whose opinion is reasonably satisfactory to Paying
Agent.
"Paying Agent" has the meaning assigned to that term in the
introduction to this Agreement and also means and includes any successor
Paying Agent appointed pursuant to subsection 8.6.
"Permitted Indebtedness" means Indebtedness incurred by Company or its
Restricted Subsidiaries (i) to renew, extend, refinance or refund
Indebtedness that is permitted to be incurred pursuant to the Consolidated
Operating Cash Flow Ratio test set forth in subsection 6.1 or clauses (ii)
through (iv) and (xi) below; provided, however, that such Indebtedness does
not exceed the principal amount of the Indebtedness so renewed, extended,
refinanced or refunded 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 Company or such Restricted Subsidiary as necessary to accomplish such
refinancing by means of a tender offer or privately negotiated repurchase,
plus the expenses of Company or such Restricted Subsidiary incurred in
connection with such refinancing; and provided, however, that Indebtedness
the proceeds of which are used to refinance or refund such Indebtedness
shall only be permitted if (A) in the case of any refinancing or refunding
of Indebtedness that is pari passu with the Obligations the refinancing or
refunding Indebtedness is made pari passu with the Obligations or
subordinated to the Obligations, (B) in the case of any refinancing or
refunding of Indebtedness that is subordinated to the Obligations the
refinancing or refunding of Indebtedness is made subordinated to the
Obligations at least to the same extent as such Indebtedness being
refinanced or refunded was subordinated to the Obligations and (C) in the
case of the refinancing or refunding of Indebtedness that is subordinated
to the Obligations, the refinancing or refunding Indebtedness by its terms,
or by the terms of any agreement or instrument pursuant to which such
Indebtedness is issued, (x) does not provide for payments of principal of
such Indebtedness at the stated maturity thereof or by way of a sinking
fund applicable thereto or by way of any mandatory redemption, defeasance,
retirement or repurchase thereof by Company or such
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Restricted Subsidiary (including any redemption, retirement or repurchase which
is contingent upon events or circumstances, but excluding any retirement
required by virtue of acceleration of such Indebtedness upon an event of default
thereunder), in each case prior to the final stated maturity of the Indebtedness
being refinanced or refunded and (y) does not permit redemption or other
retirement (including pursuant to an offer to purchase made by Company or such
Restricted Subsidiary) of such Indebtedness at the option of the holder thereof
prior to the final stated maturity of the Indebtedness being refinanced or
refunded, other than a redemption or other retirement at the option of the
holder of such Indebtedness (including pursuant to an offer to purchase made by
Company or such Restricted Subsidiary), which is conditioned upon the change of
control of Company or such Restricted Subsidiary); (ii) arising from time to
time under the Existing Credit Agreement in an aggregate principal amount which,
together with any obligations under clause (xi) below, do not exceed the greater
of (a) $500,000,000 at any one time outstanding less the aggregate amount of all
proceeds of all Asset Dispositions that have been applied since the Closing Date
to permanently reduce the outstanding amount of such Indebtedness and (b) the
amount of the Borrowing Base as of such date (calculated on a pro forma basis
after giving effect to such borrowing and the application of the proceeds
therefrom); (iii) outstanding or incurred on the Closing Date; (iv) evidenced by
trade letters of credit incurred in the ordinary course of business not to
exceed $20,000,000 in the aggregate at any time; (v) between or among Company
and/or its Restricted Subsidiaries other than Restricted Subsidiaries owned in
any part by the Principal Shareholders; (vi) which is Subordinated Debt; (vii)
arising out of Sale and Leaseback Transactions or Capitalized Lease Obligations
relating to computers and other office equipment and elements, catalysts or
other chemicals used in connection with the refining of petroleum or petroleum
by-products; (viii) the proceeds of which are used to make the Chevron Payment,
the AOC Payment and the Gulf Payments; (ix) arising out of Interest Swap
Obligations; (x) in connection with capital projects qualifying under Section
142(a) (or any successor provision) of the Internal Revenue Code of 1986, as
amended, in an amount not to exceed $75,000,000 in the aggregate at any time;
(xi) obligations of Company or any Restricted Subsidiary in connection with any
Qualified Securitization Transaction in an amount which, together with any
amount under clause (ii) above, does not exceed the greater of (a) $500,000,000
at any one time outstanding less the aggregate amount of all proceeds of all
Asset Dispositions that have been applied since the Closing Date to permanently
reduce the outstanding amount of such Indebtedness and (b) the amount of the
Borrowing Base as of such date (calculated on a pro forma basis after giving
effect to such borrowing and the application of the proceeds therefrom); (xii)
any guarantee by Company of Indebtedness of any of its Restricted Subsidiaries
so long as the incurrence of such Indebtedness is permitted to be incurred under
subsection 6.1; (xiii) Indebtedness or preferred stock of Persons that are
acquired by Company or any of its Restricted Subsidiaries or merged into Company
or a Restricted Subsidiary in accordance with subsection 6.6; provided that such
Indebtedness or preferred stock is not incurred in contemplation of such
acquisition or merger; and provided further that after giving effect to such
acquisition or merger either (A) Company would be permitted to incur at least
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$1.00 of additional Indebtedness under the Consolidated Operating Cash Flow
Ratio test set forth in subsection 6.1 or (B) Company's Consolidated Operating
Cash Flow Ratio is equal to or greater than such ratio immediately prior to such
acquisition or merger; (xiv) in an amount not greater than twice the aggregate
amount of cash contributions made to the capital of Company; (xv) in exchange
for, or the proceeds of which are used to refund or refinance the 10-7/8% Notes;
provided, however, that after giving effect to such exchange, refunding or
refinancing, the Consolidated Operating Cash Flow Ratio exceeds 1.75 to 1.0 and
such Indebtedness shall be subordinated to the Obligations to at least the same
extent as the Subordinated Notes are subordinated to the Obligations, and (xvi)
in addition to Indebtedness permitted by clauses (i) through (xv) above,
Indebtedness not to exceed on a consolidated basis for Company and its
Restricted Subsidiaries at any time $75,000,000.
``Permitted Liens'' means (i) Liens in favor of Company; (ii) Liens on
property of a Person existing at the time such Person is merged into or
consolidated with Company, provided that such Liens were in existence prior to
the contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with Company;
(iii) Liens on property existing at the time of acquisition thereof by Company,
provided that such Liens were in existence prior to the contemplation of such
acquisition; (iv) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business; (v) Liens existing on the Closing
Date; (vi) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded, provided that any
reserve or other appropriate provision as shall be required in conformity with
GAAP shall have been made therefor; (vii) Liens imposed by law, such as
mechanics', carriers', warehousemen's, materialmen's, and vendors' Liens,
incurred in good faith in the ordinary course of business with respect to
amounts not yet delinquent or being contested in good faith by appropriate
proceedings if a reserve or other appropriate provisions, if any, as shall be
required by GAAP shall have been made therefor; (viii) zoning restrictions,
easements, licenses, covenants, reservations, restrictions on the use of real
property or minor irregularities of title incident thereto that do not, in the
aggregate, materially detract from the value of the property or the assets of
Company or impair the use of such property in the operation of Company's
business; (ix) judgment Liens to the extent that such judgments do not cause or
constitute a Potential Event of Default or an Event of Default; (x) Liens to
secure the payment of all or a part of the purchase price of property or assets
acquired or the construction costs of property or assets constructed in the
ordinary course of business on or after the Closing Date, provided that (a) such
property or assets are used in the Principal Business of Company, (b) at the
time of incurrence of any such Lien, the aggregate principal amount of the
obligations secured by such Lien shall not exceed the lesser of the cost or fair
market value of the assets or property (or portions thereof) so acquired or
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constructed, (c) each such Lien shall encumber only the assets or property (or
portions thereof) so acquired or constructed and shall attach to such assets or
property within 180 days of the purchase or construction thereof and (d) any
Indebtedness secured by such Lien shall have been permitted to be incurred
pursuant to subsection 6.1; (xi) Liens incurred in the ordinary course of
business of Company with respect to obligations that do not exceed 5% of
Consolidated Net Tangible Assets at any one time outstanding; (xii) Liens
incurred in connection with Interest Swap Obligations; (xiii) Liens on any
Securitization Program Assets in connection with any Qualified Securitization
Transaction and; (xiv) Liens to secure obligations owing from time to time under
the Existing Credit Agreement and Guaranties thereof.
``Person'' means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, estate, limited liability company,
unincorporated organization or government or any agency or political subdivision
thereof.
``Port Arthur Refinery'' means the refinery in Port Arthur, Texas, and
certain other assets acquired from Chevron U.S.A., Inc.
``Potential Event of Default'' means a condition or event that, after
notice or lapse of time or both, would constitute an Event of Default.
``Preferred Stock'' means any share of Capital Stock of any Person in
respect of which the holder thereof is entitled to receive payment before any
other payment is made with respect to any other Capital Stock of such Person.
``Preliminary Offering Circular'' means the preliminary offering circular
dated November 6, 1997 and prepared by Company in connection with the issuance
of the New Notes.
``Prime Rate'' means the rate that Administrative Agent announces from time
to time as its prime lending rate, as in effect from time to time. The Prime
Rate is a reference rate and does not necessarily represent the lowest or best
rate actually charged to any customer. Administrative Agent or any other Lender
may make commercial loans or other loans at rates of interest at, above or below
the Prime Rate.
``Principal Business'' means, with respect to Company and its Restricted
Subsidiaries, (i) the business of the acquisition, processing, marketing,
refining, storage and/or transportation of hydrocarbons and/or royalty or other
interests in crude oil or associated products related thereto, (ii) the
acquisition, operation, improvement, leasing and other use of convenience
stores, retail service stations, truck stops and other public accommodations in
connection therewith, (iii) any business currently engaged in by Company or its
Restricted Subsidiaries on the Closing Date, and (iv) any activity or business
that is a reasonable extension, development or expansion of, or reasonably
related to, any of the foregoing.
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``Principal Property'' means (i) any refinery and related pipelines,
terminalling and processing equipment or (ii) any other real property or
marketing assets or related group of such assets of Company having a fair market
value in excess of $20,000,000.
``Principal Shareholders'' means (i) Blackstone, (ii) Occidental Petroleum
Corporation, (iii) Gulf and (iv) Affiliates of the Persons described in the
foregoing clauses (i) through (iii), other than Company and its Subsidiaries.
``Pro Rata Share'' means, with respect to each Lender, the percentage
obtained by dividing (x) the Loan Exposure of that Lender by (y) the aggregate
Loan Exposure of all Lenders, as such percentage may be adjusted by assignments
permitted pursuant to subsection 9.1. The initial Pro Rata Share of each Lender
is set forth opposite the name of that Lender in Schedule 2.1 annexed hereto.
``Purchase Agreement'' means the Purchase Agreement dated November 14, 1997
between the Purchasers and Company relating to the issuance and purchase of the
New Notes.
``Purchasers'' means BT Alex Brown Incorporated, Bear, Stearns & Co. Inc.,
Donaldson, Lufkin & Jenrette Securities Corporation and Lehman Brothers Inc.,
and Goldman, Sachs & Co.
``Qualified Securitization Transaction'' means any transaction or series of
transactions that may be entered into by Company or any of its Subsidiaries
pursuant to which Company or any of its Subsidiaries may sell, convey, grant a
security interest in or otherwise transfer to a Securitization Special Purpose
Entity, and such Securitization Special Purpose Entity may sell, convey, grant a
security interest in, or otherwise transfer to any other Person, any
Securitization Program Assets (whether now existing or arising in the future).
``Rating Agencies'' means (i) S&P and Moody's or (ii) if S&P or Moody's or
both of them are not making ratings of the Fixed Rate Senior Notes or
Subordinated Notes publicly available, a nationally recognized U.S. rating
agency or agencies, as the case may be, selected by Company, which will be
substituted for S&P or Moody's or both, as the case may be.
``Rating Category'' means (i) with respect to S&P, any of the following
categories (any of which may include a ``+'' or ``-''): AAA, AA, A, BBB, BB, B,
CCC, CC, C and D (or equivalent successor categories); (ii) with respect to
Moody's, any of the following categories (any of which may include a ``1,''
``2'' or ``3''): Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C and D (or equivalent
successor categories), and (iii) the equivalent of any such categories of S&P or
Moody's used by another Rating Agency, if applicable.
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``Rating Decline'' means that at any time within 90 days (which period
shall be extended so long as the rating of the New Notes is under publicly
announced consideration for possible down grade by any Rating Agency) after the
date of public notice of a Change of Control, or of the intention of Company or
of any Person to effect a Change of Control, the rating of the New Notes is
decreased by both Rating Agencies by one or more categories and the ratings on
the New Notes following such downgrade is below Investment Grade.
``Receivables'' means all rights of Company or any Subsidiary of Company to
payments (whether constituting accounts, chattel paper, instruments, general
intangibles or otherwise, and including the right to payment of any interest or
finance charges), which rights are identified in the accounting records of
Company or such Subsidiary as accounts receivable.
``Reference Banks'' means each of Barclays Bank PLC, London Branch, the
Bank of Tokyo, Ltd., London Branch, Bankers Trust Company, London Branch, and
National Westminster Bank PLC, London Branch, and any such replacement bank
thereof as listed on the Reuters Screen LIBO Page and their respective
successors, and if any such banks are not at the applicable time providing
interest rates as contemplated within the definition of the ``Adjusted
Eurodollar Rate,'' Reference Banks shall mean the remaining bank or banks so
providing such rates. In the event that less than two of such banks are
providing such rates, Company shall use reasonable efforts to appoint additional
Reference Banks so that there are at least two such banks providing such rates;
provided, however, that such banks appointed by Company shall be London offices
of leading banks engaged in the Eurodollar Market.
``Register'' has the meaning assigned to that term in subsection 2.1D.
``Regulation D'' means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
``Requisite Lenders'' means Lenders having or holding more than 50% of
the aggregate Loan Exposure of all Lenders.
``Restricted Debt Prepayment'' means any purchase, redemption, defeasance
(including, but not limited to, in-substance or legal defeasance) or other
acquisition or retirement for value (collectively a ``prepayment'') other than
in connection with a concurrent issuance of pari passu or Subordinated
Indebtedness, directly or indirectly, by Company or a Restricted Subsidiary of
Company, prior to the scheduled maturity on or prior to any scheduled repayment
of principal (and premium, if any) or sinking fund payment in respect of
Indebtedness of Company (other than the Obligations) which is subordinate in
right of payment to the Obligations.
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``Restricted Investment'' means any direct or indirect Investment by
Company or any Restricted Subsidiary of Company in (i) any Affiliate of Company
which is not a Restricted Subsidiary of Company and (ii) any Unrestricted
Subsidiary of Company, other than direct or indirect investments in (a) Polymer
Asphalt L.L.C., a Missouri limited liability company, (b) Bagel Street Holdings,
Inc. and (c) any pipeline company in which Company or any of its Restricted
Subsidiaries now owns or hereafter acquires any interest; provided that the
aggregate amount of Investments made by Company or any of its Restricted
Subsidiaries pursuant to clauses (a), (b) and (c) above shall not exceed
$25,000,000 in the aggregate at any one time outstanding provided, that no
Investment in a Securitization Special Purpose Entity in connection with a
Qualified Securitization Transaction shall be a Restricted Investment.
``Restricted Payment'' means (i) any Stock Payment, (ii) any Restricted
Investment, or (iii) any Restricted Debt Prepayment. Notwithstanding the
foregoing, Restricted Payments shall not include (a) payments by Company to any
Restricted Subsidiary of Company, (b) payments by any Restricted Subsidiary of
Company to Company or any other Restricted Subsidiary of Company, (c) the
Chevron Payment, (d) the AOC Payment and (e) the Gulf Payments.
``Restricted Subsidiary'' of a Person means any Subsidiary of the referent
Person that is not (i) an Unrestricted Subsidiary or (ii) a direct or indirect
Subsidiary of an Unrestricted Subsidiary.
``Reuters Screen LIBO Page'' means the display designated as page ``LIBO''
on the Reuter Monitor Money Rates Service (or such other page as may replace the
LIBO page on that service for the purpose of displaying London Interbank Offered
Rates of leading banks).
``S&P'' means Standard & Poor's Rating Services and its successors.
``Sale and Leaseback Transaction'' of any Person means an arrangement with
any lender or investor or to which such lender or investor is a party providing
for the leasing by such Person of any property or asset of such Person which has
been or is being sold or transferred by such Person more than 365 days after the
acquisition thereof or the completion of construction or commencement of
operation thereof to such lender or investor or to any Person to whom funds have
been or are to be advanced by such lender or investor on the security of such
property or asset. The stated maturity of such arrangement shall be the date of
the last payment of rent or any other amount due under such arrangement prior to
the first date on which such arrangement may be terminated by the lessee without
payment of a penalty.
``Securities Act'' means the Securities Act of 1933, as amended from time
to time, and any successor statute.
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``Securitization Program Assets'' means (a) all Receivables and inventory
which are described as being transferred by Company or any Subsidiary of Company
pursuant to documents relating to any Qualified Securitization Transaction, (b)
all Securitization Related Assets, and (c) all collections (including
recoveries) and other proceeds of the assets described in the foregoing clauses.
``Securitization Related Assets'' means (i) any rights arising under the
documentation governing or relating to Receivables (including rights in respect
of Liens securing such Receivables and other credit support in respect of such
Receivables) or to inventory, (ii) any proceeds of such Receivables or inventory
and any lockboxes or accounts in which such proceeds are deposited, (iii) spread
accounts and other similar accounts (and any amounts on deposit therein)
established in connection with a Qualified Securitization Transaction, (iv) any
warranty, indemnity, dilution and other intercompany claim arising out of the
documents relating to such Qualified Securitization Transaction and (v) other
assets which are customarily transferred or in respect of which security
interests are customarily granted in connection with asset securitization
transactions involving accounts receivable or inventory.
``Securitization Special Purpose Entity'' means a Person (including,
without limitation, a Subsidiary of Company) created in connection with the
transactions contemplated by a Qualified Securitization Transaction, which
Person engages in no activities other than those incidental to such Qualified
Securitization Transaction.
``Shareholder/Affiliate Transaction'' has the meaning assigned to that term
in subsection 6.8.
``State Street'' has the meaning assigned to that term in the Introduction
to this Agreement.
``Stock Payment'' means, with respect to Company, any dividend, either in
cash or in property (except dividends payable in Capital Stock of Company which
is not convertible into Indebtedness), on, or the making by Company of any other
distribution in respect of, its Capital Stock, now or hereafter outstanding, or
the redemption, repurchase, retirement, defeasance or any acquisition for value
by Company, directly or indirectly, of its Capital Stock or any warrants, rights
or options to purchase or acquire shares of any class of its Capital Stock, now
or hereafter outstanding (other than in exchange for Company's Capital Stock
(other than Disqualified Capital Stock) or options, warrants or other rights to
purchase Company's Capital Stock (other than Disqualified Capital Stock)).
``Stock Purchase and Redemption Agreement'' means that certain Stock
Purchase and Redemption Agreement dated as of December 30, 1992, by and among
AOC
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Limited Partnership, P. Anthony Novelly, Samuel R. Goldstein, G&N Investments,
Inc., The Horsham Corporation, Company and Holdings.
``Subordinated Indebtedness'' means (i) the Indebtedness of Company
evidenced by the Subordinated Notes and (ii) any other Indebtedness of Company
which is subordinated in right of payment to the Obligations and with respect to
which no payments of principal (by way of sinking fund, mandatory redemption,
maturity or otherwise, including, without limitation, at the option of the
holder thereof (other than pursuant to an offer to repurchase such Subordinated
Indebtedness following a change of control, which offer may not be completed
until 45 days after Company prepays the Loans, if required by Lenders, pursuant
to subsection 2.4B(ii)(b)) are required to be made by Company at any time prior
to November 15, 2004.
``Subordinated Notes'' means the senior subordinated notes due November 15,
2007 issued by Company pursuant to the Subordinated Note Indenture.
``Subordinated Note Indenture'' means the Indenture dated as of November
21, 1997 between Company and Marine Midland Bank, as trustee, pursuant to which
the Subordinated Notes are issued, as such Indenture may hereafter be amended,
restated, supplemented or otherwise modified from time to time in accordance
with the terms hereof and thereof.
``Subsidiary'' of any Person means (i) a corporation more than 50% of the
total voting power of all classes of the outstanding voting stock of which is
owned, directly or indirectly, by such Person or by one or more other
Subsidiaries of such Person or by such Person and one or more Subsidiaries
thereof or (ii) any other Person (other than a corporation) in which such
Person, or one or more other Subsidiaries of such Person or such Person and one
or more other Subsidiaries thereof, directly or indirectly, has at least a
majority ownership and the power to direct the policies, management and affairs
thereof.
``Surviving Person'' means, with respect to any Person involved in or that
makes any Disposition, the Person formed by or surviving such Disposition or the
Person to which such Disposition is made.
``Syndication Agent'' has the meaning assigned to that term in the
introduction to this Agreement.
``Tax'' or ``Taxes'' means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or
assessed; provided that ``Tax on the overall net income'' of a Person shall be
construed as a reference to a tax imposed by the jurisdiction in which that
Person is organized or in which that Person's principal office (and/or, in the
case of a Lender, its lending office) is located or in which
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that Person (and/or, in the case of a Lender, its lending office) is deemed to
be doing business on all or part of the net income, profits or gains (whether
worldwide, or only insofar as such income, profits or gains are considered to
arise in or to relate to a particular jurisdiction, or otherwise) of that Person
(and/or, in the case of a Lender, its lending office).
``10-1/2% Senior Notes'' means the senior notes due December 1, 2001 issued
by Company pursuant to the 10-1/2% Senior Note Indenture.
``10-1/2% Senior Note Indenture'' means the Indenture dated as of December
1, 1991 between Company and Bank of New York, N.A., as trustee, pursuant to
which the 10-1/2% Senior Notes were issued, as such Indenture may hereafter be
amended, restated, supplemented or otherwise modified from time to time in
accordance with the terms hereof and thereof.
``Transaction Date'' means the date on which the Indebtedness giving rise
to the need to calculate the Consolidated Operating Cash Flow Ratio was incurred
or the date on which, pursuant to the terms of this Agreement, the transaction
giving rise to the need to calculate the Consolidated Operating Cash Flow Ratio
occurred.
``Trust Indenture Act'' means the Trust Indenture Act of 1939 as in force
at the Closing Date; provided, however, that in the event the Trust Indenture
Act of 1939 is amended after such date, ``Trust Indenture Act'' means, to the
extent required by any such amendment, the Trust Indenture Act of 1939 as so
amended.
``Unrestricted Subsidiary'' means any Subsidiary that is designated by the
board of directors of Company as an Unrestricted Subsidiary pursuant to a duly
adopted board resolution; but only to the extent that such Subsidiary: (a) has
no Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement,
contract, arrangement or understanding with Company or any Restricted Subsidiary
of Company unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to Company or such Restricted Subsidiary
than those that might be obtained at the time from Persons who are not
Affiliates of Company; (c) is a Person with respect to which neither Company nor
any of its Restricted Subsidiaries has any direct or indirect obligation (x) to
subscribe for additional Capital Stock (including options, warrants or other
rights to acquire Capital Stock) or (y) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any specified levels of
operating results; and (d) has not guaranteed or otherwise directly or
indirectly provided credit support for any Indebtedness of Company or any of its
Restricted Subsidiaries. The board of directors of Company may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that such designation (i) shall be deemed to be an incurrence of Indebtedness by
a Restricted Subsidiary of Company of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if (1) such
Indebtedness is
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permitted under subsection 6.1, and (2) no Potential Event of Default or
Event of Default would be in existence following such designation, and (ii)
such designation shall otherwise be permitted pursuant to that last
paragraph of subsection 6.5.
``Wholly Owned Restricted Subsidiary'' of any Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock
or other ownership interests of which (other than directors' qualifying
shares) shall at the time be owned by such Person or by one or more Wholly
Owned Restricted Subsidiaries of such Person or by such Person and one or
more Wholly Owned Restricted Subsidiaries of such Person.
``Wholly Owned U.S. Restricted Subsidiary'' of any Person means a
Wholly Owned Restricted Subsidiary of such Person which is organized under
the laws of any state in the United States or of the District of Columbia.
1.2 Accounting Terms.
All accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with GAAP.
1.3 Other Definitional Provisions and Rules of Construction.
A. Any of the terms defined herein may, unless the context otherwise
requires, be used in the singular or the plural, depending on the reference.
B. References to ``Sections'' and ``subsections'' shall be to Sections
and subsections, respectively, of this Agreement unless otherwise specifically
provided.
C. The use in any of the Loan Documents of the word ``include'' or
``including'', when following any general statement, term or matter, shall not
be construed to limit such statement, term or matter to the specific items or
matters set forth immediately following such word or to similar items or
matters, whether or not nonlimiting language (such as ``without limitation'' or
``but not limited to'' or words of similar import) is used with reference
thereto, but rather shall be deemed to refer to all other items or matters that
fall within the broadest possible scope of such general statement, term or
matter.
1.4 Compliance Certificates and Opinions.
Upon any application or request by Company to the Administrative Agent or
Paying Agent to take any action under any provision of this Agreement or the
other Loan Documents, Company shall furnish to the Administrative Agent or
Paying Agent, as applicable, such certificates and opinions as may be required
to be delivered under equivalent circumstances to the trustee under the Fixed
Rate Senior Note Indenture pursuant to the Trust Indenture Act. Each such
certificate or opinion shall be given in the form of an Officers' Certificate,
if to be given by an officer of
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Company, or an Opinion of Counsel, if to be given by counsel, and shall comply
with the requirements of the Trust Indenture Act and any other requirements set
forth in this Agreement.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Agreement shall include:
(i) a statement that each individual signing such certificate or opinion
has read such covenant or condition and the definitions herein relating
thereto;
(ii) 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;
(iii) 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
(iv) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
1.5 Form of Documents Delivered to Agents.
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 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 that the certificate or
opinion or representations with respect to the matters upon which such
certificate or opinion is based are erroneous. Any such certificate or Opinion
of Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of
Company stating that the information with respect to such factual matters is in
the possession of Company unless such counsel knows that the certificate or
opinion or representation 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 Agreement, they may, but need not, be consolidated and
form one instrument.
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SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 Commitments; Making of Loans; the Register; Notes.
A. Commitments. Subject to the terms and conditions of this Agreement
and in reliance upon the representations and warranties of Company herein set
forth, each Lender hereby severally agrees to lend to Company on the Closing
Date an amount not exceeding its Pro Rata Share of the aggregate amount of the
Commitments to be used for the purposes identified in subsection 2.5A. The
amount of each Lender's Commitment is set forth opposite its name on Schedule
2.1 annexed hereto and the aggregate amount of the Commitments is $125,000,000.
Each Lender's Commitment shall expire immediately and without further action on
December 1, 1997 if the Loans are not made on or before that date. Company may
make only one borrowing under the Commitments. Amounts borrowed under this
subsection 2.1A and subsequently repaid or prepaid may not be reborrowed.
B. Borrowing Mechanics. Company shall deliver to Administrative Agent a
Notice of Borrowing no later than 10:00 A.M. (New York City time) at least one
Business Days in advance of the proposed Closing Date. The Notice of Borrowing
shall specify (i) the proposed Closing Date (which shall be a Business Day) and
(ii) the amount of Loans requested. Loans may be continued as or converted into
Base Rate Loans and Eurodollar Rate Loans in the manner provided in subsection
2.6. In lieu of delivering the above-described Notice of Borrowing, Company may
give Administrative Agent telephonic notice by the required time of any proposed
borrowing under this subsection 2.1B; provided that such notice shall be
promptly confirmed in writing by delivery of a Notice of Borrowing to Paying
Agent on or before the Closing Date.
Neither Administrative Agent nor any Lender shall incur any liability to
Company in acting upon any telephonic notice referred to above that
Administrative Agent reasonably believes to have been given by a duly authorized
officer or other person authorized to borrow on behalf of Company or for
otherwise acting in good faith under this subsection 2.1B, and upon funding of
Loans by Lenders in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected Loans hereunder.
Except as otherwise provided in subsection 2.6, a Notice of Borrowing for a
Eurodollar Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable
on and after the related Interest Rate Determination Date, and Company shall be
bound to make a borrowing in accordance therewith.
C. Disbursement of Funds. Promptly after receipt by Administrative Agent
of a Notice of Borrowing pursuant to subsection 2.1B (or telephonic notice in
lieu thereof), Administrative Agent shall notify each Lender of the proposed
borrowing. Each Lender shall make the amount of its Loan available to
Administrative Agent, in same day funds in Dollars, at the office of
Administrative Agent, not later than 12:00 Noon (New York City time) on the
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Closing Date. Upon satisfaction or waiver of the conditions precedent specified
in Section 3, Administrative Agent shall make the proceeds of such Loans
available to Company on the Closing Date by causing an amount of same day funds
in Dollars equal to the proceeds of all such Loans received by Administrative
Agent from Lenders to be credited to the account of Company as specified in the
Notice of Borrowing.
Unless Administrative Agent shall have been notified by any Lender prior to
the Closing Date that such Lender does not intend to make available to
Administrative Agent the amount of such Lender's Loan requested on the Closing
Date, Administrative Agent may assume that such Lender has made such amount
available to Paying Agent on the Closing Date and Paying Agent may, in its sole
discretion, but shall not be obligated to, make available to Company a
corresponding amount on the Closing Date. If such corre sponding amount is not
in fact made available to Administrative Agent by such Lender, Administrative
Agent shall be entitled to recover such corresponding amount on demand from such
Lender together with interest thereon, for each day from the Closing Date until
the date such amount is paid to Administrative Agent, at the customary rate set
by Administrative Agent for the correction of errors among banks for three
Business Days and thereafter at the Base Rate. Nothing in this subsection 2.1C
shall be deemed to relieve any Lender from its obligation to fulfill its
Commitment hereunder or to prejudice any rights that Company may have against
any Lender as a result of any default by such Lender hereunder.
D. The Register.
(i) Paying Agent shall maintain, at its address referred to in
subsection 9.6, a register for the recordation of the names and addresses
of Lenders and the Commitment and Loan of each Lender from time to time
(the ``Register''). The Register shall be available for inspection by
Company or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(ii) Paying Agent shall record in the Register the Commitment and the
Loan from time to time of each Lender and each repayment or prepayment in
respect of the principal amount of the Loan of each Lender. Any such
recordation shall be conclusive and binding on Company and each Lender,
absent manifest error; provided that failure to make any such recordation,
or any error in such recordation, shall not affect any Lender's Commitment
or Company's Obligations in respect of any applicable Loan.
(iii) Each Lender shall record on its internal records (including the
Note held by such Lender) the amount of the Loan made by it and each
payment in respect thereof; provided that in the event of any inconsistency
between the Register and any Lender's records, the recordations in the
Register shall govern.
(iv) Company, Administrative Agent, Paying Agent and Lenders shall
deem and treat the Persons listed as Lenders in the Register as the holders
and owners of the
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corresponding Commitments and Loans listed therein for all purposes hereof,
and no assignment or transfer of any such Commitment or Loan shall be
effective, in each case unless and until an Assignment Agreement effecting
the assignment or transfer thereof shall have been accepted by Paying Agent
and recorded in the Register and a copy thereof delivered to Company as
provided in subsection 9.1B(ii). Prior to such recordation, all amounts
owed with respect to the applicable Commitment or Loan shall be owed to the
Lender listed in the Register as the owner thereof, and any request,
authority or consent of any Person who, at the time of making such request
or giving such authority or consent, is listed in the Register as a Lender
shall be conclusive and binding on any subsequent holder, assignee or
transferee of the corresponding Commitment or Loan.
(v) Company hereby designates Paying Agent to serve as Company's
agent solely for purposes of maintaining the Register as provided in this
subsection 2.1D, and Company hereby agrees that, to the extent Paying Agent
serves in such capacity, Paying Agent and its officers, directors,
employees, agents and affiliates shall constitute Indemnitees for all
purposes under subsection 9.3.
E. Notes. Company shall execute and deliver to each Lender (or to
Administrative Agent for that Lender) on the Closing Date a Note substantially
in the form of Exhibit II annexed hereto to evidence that Lender's Loan, in the
principal amount of that Lender's Loan and with other appropriate insertions.
2.2 Interest on the Loans.
A. Rate of Interest. Subject to the provisions of subsections 2.6 and
2.7, each Loan shall bear interest on the unpaid principal amount thereof from
the date made through payment of such Loan (whether by acceleration or
otherwise) at the sum of the Adjusted Eurodollar Rate plus 2.75% per annum. The
basis for determining the interest rate with respect to any Loan may be changed
from time to time pursuant to subsection 2.6.
B. Interest Periods. The Interest Period applicable to each Eurodollar
Rate Loan shall be a three month period; provided that:
(i) the initial Interest Period for any Eurodollar Rate Loan shall
commence on the Closing Date, in the case of a Loan initially made as a
Eurodollar Rate Loan, or on (a) the day on which the next preceding
Interest Period applicable thereto expires or (b) only in the circumstances
provided in subsection 2.6D(ii) (where all Eurodollar Rate Loans have
theretofore been converted into Base Rate Loans), on the business Day
specified in subsection 2.6D(ii);
(ii) each successive Interest Period shall commence on the day on
which the next preceding Interest Period expires;
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(iii) if an Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that, if any Interest Period would
otherwise expire on a day that is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall,
subject to clause (v) of this subsection 2.2B, end on the last Business Day
of a calendar month;
(v) no Interest Period with respect to any portion of the Loans
shall extend beyond November 15, 2004;
(vi) no Interest Period with respect to any portion of the Loans
shall extend beyond a date on which Company is required to make a scheduled
payment of principal of the Loans unless the sum of (a) the aggregate
principal amount of Loans that are Base Rate Loans plus (b) the aggregate
principal amount of Loans that are Eurodollar Rate Loans with Interest
Periods expiring on or before such date equals or exceeds the principal
amount required to be paid on the Loans on such date; and
(vii) there shall be no more than one Interest Period outstanding at
any time.
C. Interest Payments. Interest on each Loan shall be payable in arrears
on and to each Interest Payment Date applicable to that Loan, upon any
prepayment of that Loan (to the extent accrued on the amount being prepaid) and
at maturity (including final maturity).
D. Computation of Interest. Interest on the Loans shall be computed (i)
in the case of Base Rate Loans, on the basis of a 365-day year or 366-day year,
as the case may be, and (ii) in the case of Eurodollar Rate Loans, on the basis
of a 360-day year, in each case for the actual number of days elapsed in the
period during which it accrues. In computing interest on any Loan, the date of
the making of such Loan or the first day of an Interest Period applicable to
such Loan or, with respect to a Base Rate Loan being converted from a Eurodollar
Rate Loan, the date of conversion of such Eurodollar Rate Loan to such Base Rate
Loan, as the case may be, shall be included, and the date of payment of such
Loan or the expiration date of an Interest Period applicable to such Loan or,
with respect to a Base Rate Loan being converted to a Eurodollar Rate Loan, the
date of conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the
case may be, shall be excluded; provided that if a Loan is repaid on the same
day on which it is made, one day's interest shall be paid on that Loan.
E. Defaulted Interest. If Company defaults in a payment of interest on
the Loans, it shall pay the defaulted interest in any lawful manner plus, to the
extent lawful, interest payable on demand on the defaulted interest, to the
Lenders at the rate otherwise payable hereunder with
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respect to the applicable Loans. Payment or acceptance of the increased rates of
interest provided for in this subsection 2.2E is not a permitted alternative to
timely payment and shall not constitute a waiver of any Event of Default or
otherwise prejudice or limit any rights or remedies of Agents or any Lender.
2.3 Fees.
Company agrees to pay to Paying Agent and Administrative Agent such fees in
the amounts and at the times separately agreed upon between Company and Paying
Agent and Administrative Agent.
2.4 Repayments and Prepayments; General Provisions Regarding Payments.
A. Scheduled Payments of Loans. Company shall make principal payments on
the Loans in installments on the dates and in the amounts set forth below:
<TABLE>
<CAPTION>
=======================================
Date Scheduled
Repayment of Loans
=======================================
<S> <C>
November 15, 2003 $ 31,250,000
- ---------------------------------------
November 15, 2004 $ 93,750,000
- ---------------------------------------
TOTAL: $125,000,000
=======================================
</TABLE>
; provided that the scheduled installments of principal of the Loans set
forth above shall be reduced in connection with any voluntary or mandatory
prepayments of the Loans in accordance with subsection 2.4B(iii); and
provided, further that the Loans and all other amounts owed hereunder with
respect to the Loans shall be paid in full no later than November 15, 2004,
and the final installment payable by Company in respect of the Loans on
such date shall be in an amount, if such amount is different from that
specified above, sufficient to repay all amounts owing by Company under
this Agreement with respect to the Loans.
B. Prepayments.
(i) Voluntary Prepayments.
(a) Company may, upon not less than one Business Day's prior
written or telephonic notice, in the case of Base Rate Loans, and
three Business Days' prior written or telephonic notice, in the case
of Eurodollar Rate Loans, in each case given to Paying Agent by 12:00
Noon (New York City time) on the date required and, if given by
telephone, promptly confirmed in writing to Paying Agent (which
original written or telephonic notice Paying Agent will promptly
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<PAGE>
transmit by telefacsimile or telephone to each Lender), at any time
and from time to time prepay any Loans on any Business Day in whole or
in part in an aggregate minimum amount of $1,000,000 and integral
multiples of $100,000 in excess of that amount. Notice of prepayment
having been given as aforesaid, the principal amount of the Loans
specified in such notice shall become due and payable on the
prepayment date specified therein. Any such voluntary prepayment shall
be applied as specified in subsection 2.4B(iii).
(b) Prepayment Fees. If any portion of the Loan is prepaid
pursuant to clause (a) of subsection 2.4B(i) on or prior to the second
anniversary of the Closing Date (other than pursuant to subsection
2.9B(i)), Company shall pay to Paying Agent, for distribution to
Lenders in accordance with their Pro Rata Shares, a fee equal to (x)
2.50% of the principal amount of Loans so prepaid during the period
commencing on the Closing Date and ending on the day prior to the
first anniversary of the Closing Date and (y) 1.25% of the principal
amount of Loans so prepaid during the period commencing on the first
anniversary of the Closing Date and ending on the second anniversary
of the Closing Date.
(ii) Mandatory Prepayments. The Loans shall be prepaid in the
amounts and under the circumstances set forth below, all such prepayments
to be applied as set forth below or as more specifically provided in
subsection 2.4B(iii):
(a) Prepayments From Net Asset Sale Proceeds. Upon any Asset
Disposition Trigger Date, Company shall offer to prepay the Loans in
accordance with the procedures set forth in subsection 2.4B(iii)(d)
and, upon completion of such offer, shall prepay the Loans to the
extent required pursuant to such subsection.
(b) Prepayments Upon Change of Control. No later than 30 days
following the date on which a Change of Control Triggering Event
occurs, Company shall offer to prepay the principal amount of the
Loans and all other amounts outstanding hereunder (including interest,
fees and expenses) pursuant to the provisions of subsection
2.4B(iii)(d) and, upon completion of such offer, shall prepay the
Loans and such other amounts to the extent required pursuant to such
subsection.
(c) Prepayment Fees. If any portion of the Loan is prepaid
pursuant to clause (b) of subsection 2.4B(ii), Company shall pay to
Paying Agent, for distribution to Lenders in accordance with their Pro
Rata Shares, a fee equal to 1.00% of the principal amount of Loans so
prepaid.
(iii) Application of Prepayments.
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<PAGE>
(a) Application of Voluntary Prepayments. Any voluntary
prepayments of the Loans pursuant to subsection 2.4B(i) shall be
applied to reduce the scheduled installments of principal of the Loans
in the order specified in the applicable notice of prepayment (or if
no such order is specified, on a pro rata basis (in accordance with
the respective outstanding principal amounts of each such
installment).
(b) Application of Mandatory Prepayments. Any mandatory
prepayments of the Loans pursuant to subsection 2.4B(ii) shall be
applied to reduce the scheduled installments of principal of the Loans
in the order specified in the applicable notice of prepayment (or if
no such order is specified, on a pro rata basis (in accordance with
the respective outstanding principal amounts of each such
installment).
(c) Application of Prepayments to Base Rate Loans and Eurodollar
Rate Loans. Any prepayment of the Loans shall be applied first to Base
Rate Loans to the full extent thereof before application to Eurodollar
Rate Loans, in each case in a manner which minimizes the amount of any
payments required to be made by Company pursuant to subsection 2.6C.
(d) Mandatory Offer to Prepay Loans. Within 30 days following a
Change of Control resulting in a Rating Decline, and on any Asset
Disposition Trigger Date, (1) Company shall send written notice to
Paying Agent and each Lender stating (A) that an offer is being made
to prepay the Loans pursuant to this subsection 2.4B(iii)(d) (an
"Optional Prepayment"), (B) the payment date in respect of such
Optional Prepayment (the "Optional Prepayment Date"), which Optional
Prepayment Date shall be no earlier than 30 days nor later than 70
days from the date such notice is sent, (C) in the case of a
prepayment pursuant to subsection 2.4B(ii)(a), (1) the aggregate
amount of Excess Proceeds available (as determined pursuant to
subsection 6.7) to prepay the Loans and, to the extent required
pursuant to the applicable indenture, to redeem the New Notes, the
9-1/2% Senior Notes, and the Holdings 10-7/8% Notes and any other
Indebtedness of Holdings or Company entitled to receive such offer of
redemption or repayment (collectively, the "Offer Notes"), and (2)
the aggregate outstanding principal amount under each series of Offer
Notes as of the date of such notice, (D) in the case of a Change of
Control, the circumstances and material facts regarding such Change of
Control, to the extent known to Company (including information with
respect to pro forma and historical financial information after giving
effect to such Change of Control, and information regarding the Person
or Persons acquiring control), and (E) such other information required
by this Agreement and applicable laws and regulations and (F) that
each Lender has the option to accept all or a portion of such Optional
Prepayment. Each Lender may exercise such option by giving written
notice to Company and Paying Agent of its election to do so on or
before the third Business Day (the "Cutoff Date") prior to the
Optional
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<PAGE>
Prepayment Date (it being understood that any Lender which does not
notify Company and Paying Agent of its election to exercise such
option on or before the Cutoff Date shall be deemed to have elected,
as of the Cutoff Date, not to accept such Optional Prepayment). In the
case of an Optional Prepayment under subsection 2.4B(ii)(a), (x) on
the Business Day next succeeding the related Cutoff Date, Company
shall notify the Paying Agent of the aggregate principal amount of
Offer Notes (plus accrued interest and premium, if any, through the
Optional Prepayment Date) tendered for purchase pursuant to the offer
procedures in respect of Excess Proceeds under each applicable
indenture and (y) on the Business Day next preceding the related
Optional Prepayment Date, Paying Agent shall notify Company and each
Lender that has exercised its option to receive a prepayment in
respect thereof (each, a ``Receiving Lender''), of the amount of such
Optional Prepayment to be paid to such Receiving Lender, which amount
shall be equal to (A) a fraction the numerator of which is the
aggregate amount of the Loans (plus accrued interest through the
Optional Prepayment Date) tendered by such Receiving Lender for
prepayment and the denominator of which is the aggregate principal
amount of all Loans (plus accrued interest through the Optional
Prepayment Date) tendered for prepayment plus the aggregate principal
amount of all Offer Notes (plus accrued interest and premium, if any,
through the Optional Prepayment Date) tendered for redemption pursuant
to the offer procedures in respect of Excess Proceeds under each
applicable indenture multiplied by (B) the aggregate amount of Excess
Proceeds available for prepayment under subsection 6.7. On the
Optional Prepayment Date, Company shall pay to Paying Agent the amount
of the Optional Prepayment, which amount shall be applied to prepay
the Loans (plus accrued interest through the Optional Prepayment Date)
of the Receiving Lenders (which prepayment shall be applied to the
scheduled installments of principal of the Loans in accordance with
subsection 2.4B(iii)(b) and which prepayment shall result in a
corresponding adjustment to the Pro Rata Share of each Lender pursuant
to the operation of the definition thereof).
C. General Provisions Regarding Payments.
(i) Manner and Time of Payment. All payments by Company of
principal, interest, fees and other Obligations hereunder and under the
Notes shall be made in Dollars in same day funds, without defense, setoff
or counterclaim, free of any restriction or condition, and delivered to
Paying Agent not later than 1:00 p.m. (New York City time) on the date due
at the Funding and Payment Office for the account of Lenders; funds
received by Paying Agent after that time on such due date shall be deemed
to have been paid by Company on the next succeeding Business Day. Company
hereby authorizes Paying Agent to (but Paying Agent shall have no
obligation to) charge its accounts with Paying Agent in order to cause
timely payment to be made to Paying Agent of all principal, interest, fees
and expenses due hereunder (subject to sufficient funds being available in
its accounts for that purpose).
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<PAGE>
(ii) Application of Payments to Principal and Interest. All
payments in respect of the principal amount of any Loan shall include
payment of accrued interest on the principal amount being repaid or
prepaid, and all such payments (and, in any event, any payment in respect
of any Loan on a date when interest is due and payable with respect to such
Loan) shall be applied to the payment of interest before application to
principal.
(iii) Apportionment of Payments. Aggregate principal and interest
payments shall be apportioned among all outstanding Loans to which such
payments relate, in each case proportionately to Lenders' respective Pro
Rata Shares. Paying Agent shall promptly distribute to each Lender, at its
primary address set forth below its name on the appropriate signature page
hereof or at such other address as such Lender may request, its Pro Rata
Share of all such payments received by Paying Agent. Notwithstanding the
foregoing provisions of this subsection 2.4C(iii), if, pursuant to the
provisions of subsection 2.6B, any Affected Lender makes Base Rate Loans in
lieu of its Pro Rata Share of any Eurodollar Rate Loans, Paying Agent shall
give effect thereto in apportioning payments received thereafter.
(iv) Payments on Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the payment of
interest hereunder or of the commitment fees hereunder, as the case may be.
(v) Notation of Payment. Each Lender agrees that before disposing
of the Note held by it, or any part thereof (other than by granting
participations therein), that Lender will make a notation thereon of the
Loan evidenced by that Note and all principal payments previously made
thereon and of the date to which interest thereon has been paid; provided
that the failure to make (or any error in the making of) a notation of the
Loan made under such Note shall not limit or otherwise affect the
obligations of Company hereunder or under such Note with respect to such
Loan or any payments of principal or interest on such Note.
2.5 Use of Proceeds.
A. Loans. The proceeds of the Loans, together with the proceeds of the
New Notes, shall be applied by Company (i) to redeem or repay the 10-1/2% Senior
Notes, (ii) to replenish Company's cash reserves or (iii) for other general
corporate purposes.
B. Margin Regulations. No portion of the proceeds of any borrowing under
this Agreement shall be used by Company or any of its Subsidiaries in any manner
that might cause the borrowing or the application of such proceeds to violate
Regulation G, Regulation U, Regulation T or Regulation X of the Board of
Governors of the Federal Reserve System or any
37
<PAGE>
other regulation of such Board or to violate the Exchange Act, in each case as
in effect on the date or dates of such borrowing and such use of proceeds.
2.6 Special Provisions Governing Eurodollar Rate Loans.
Notwithstanding any other provision of this Agreement to the contrary, the
following provisions shall govern with respect to Eurodollar Rate Loans as to
the matters covered:
A. Inability to Determine Applicable Interest Rate. In the event that
Paying Agent shall have determined (which determination shall be final and
conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans, that by reason of
circumstances affecting the London interbank market adequate and fair means do
not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted Eurodollar Rate, Paying Agent
shall on such date give notice (by telefacsimile or by telephone confirmed in
writing) to Company and each Lender of such determination, whereupon (i) no
Loans may be made as, or converted to, Eurodollar Rate Loans until such time as
Paying Agent notifies Company and Lenders that the circumstances giving rise to
such notice no longer exist and (ii) on the last day of the then current
Interest Period, all Eurodollar Rate Loans shall be automatically converted to
Base Rate Loans, until such time as the Paying Agent notifies Company and
Lenders that the circumstances giving rise to such notice by the Paying Agent no
longer exist, in which event, subsection 2.6E shall apply.
B. Illegality or Impracticability of Eurodollar Rate Loans. In the event
that on any date any Lender shall have reasonably determined (which
determination shall be made only after consultation with Company and Paying
Agent) that the making, maintaining or continuation of its Eurodollar Rate Loans
(i) has become unlawful as a result of compliance by such Lender in good faith
with any law, treaty, governmental rule, regulation, guideline or order (or
would conflict with any such treaty, governmental rule, regulation, guideline or
order not having the force of law even though the failure to comply therewith
would not be unlawful) or (ii) has become impracticable, or would cause such
Lender material hardship, as a result of contingencies occurring after the date
of this Agreement which materially and adversely affect the London interbank
market or the position of such Lender in that market, then, and in any such
event, such Lender shall be an ``Affected Lender'' and it shall on that day give
notice (by telefacsimile or by telephone confirmed in writing) to Company and
Paying Agent of such determination (which notice Paying Agent shall promptly
transmit to each other Lender). Thereafter (a) the obligation of the Affected
Lender to convert Loans to Eurodollar Rate Loans pursuant to subsection 2.6D
shall be suspended until such notice shall be withdrawn by the Affected Lender,
(b) the Affected Lender's obligation to maintain its outstanding Eurodollar Rate
Loans (the ``Affected Loans'') shall be terminated at the earlier to occur of
the expiration of the Interest Period then in effect with respect to the
Affected Loans or when required by law, and (c) the Affected Loans shall
automatically convert into Base Rate Loans on the date of such termination until
such time as the circumstances described in this subsection 2.6B shall no longer
be applicable in which event, subsection 2.6D shall apply.
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<PAGE>
C. Compensation For Breakage or Non-Commencement of Interest Periods.
Company shall compensate each Lender, upon written request by that Lender (which
request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including any interest paid by that
Lender to lenders of funds borrowed by it to make or carry its Eurodollar Rate
Loans and any loss, expense or liability sustained by that Lender in connection
with the liquidation or re-employment of such funds) which that Lender may
sustain: (i) if for any reason (other than a default by that Lender or such
Lender's becoming an Affected Lender) a borrowing of any Eurodollar Rate Loan
does not occur on a date specified therefor in a Notice of Borrowing or a
telephonic request for borrowing, or a conversion to or continuation of any
Eurodollar Rate Loan does not occur on the date specified therefor pursuant to
this Agreement, (ii) if any prepayment (including any prepayment pursuant to
subsection 2.4B(i)(a) or other principal payment or any conversion of any of its
Eurodollar Rate Loans occurs on a date prior to the last day of an Interest
Period applicable to that Loan, (iii) if any prepayment of any of its Eurodollar
Rate Loans is not made on any date specified in a notice of prepayment given by
Company, or (iv) as a consequence of any other default by Company in the
repayment of its Eurodollar Rate Loans when required by the terms of this
Agreement.
D. Conversion of Base Rate Loans. In the event that any Base Rate Loan
is outstanding at any time when the relevant circumstances described in
subsections 2.6A or 2.6B,as the case may be, cease to be applicable, the
respective Lender or Lenders or Paying Agent (as applicable) shall give prompt
notice thereof to Company and Paying Agent (as applicable) and, subject to the
provisions of subsection 2.6G, (i) if any Eurodollar Rate Loans are outstanding
at that time from Lenders who were not affected by such circumstances or as a
result of the application of the following clause (ii)), then on the last day of
the Interest Period then applicable thereto, the Base Rate Loans of the
respective affected Lender or Lenders to which the circumstances described above
have ceased to be applicable shall be converted into (and thereafter shall form
a part of) the Eurodollar Rate Loans (until such time, if any, as subsection
2.6A or 2.6B shall thereafter become applicable) and (ii) if no Eurodollar Rate
Loans remain outstanding at such time, then on the third Business Day thereafter
the Base Rate Loans of the respective Lender or Lenders to which the
circumstances described above shall cease to be applicable shall be converted
into Eurodollar Rate Loans (with an Interest Period of three months beginning on
said third Business Day).
E. Booking of Eurodollar Rate Loans. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of any of its branch
offices or the office of an Affiliate of that Lender.
F. Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation
of all amounts payable to a Lender under this subsection 2.6 and under
subsection 2.7A shall be made as though that Lender had actually funded each of
its relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to the definition of Adjusted
Eurodollar Rate in an amount equal to the amount of such Eurodollar Rate Loan
and having a maturity comparable to the relevant Interest Period and through the
transfer of such
39
<PAGE>
Eurodollar deposit from an offshore office of that Lender to a domestic office
of that Lender in the United States of America; provided, however, that each
Lender may fund each of its Eurodollar Rate Loans in any manner it sees fit and
the foregoing assumptions shall be utilized only for the purposes of calculating
amounts payable under this subsection 2.6 and under subsection 2.7A.
G. Eurodollar Rate Loans After Default. After the occurrence of and
during the continuation of an Event of Default and upon the written direction of
Requisite Lenders delivered to Paying Agent and Company, all Eurodollar Rate
Loans shall be converted to Base Rate Loans after the expiration of any Interest
Period then in effect for each respective Loan.
2.7 Increased Costs; Taxes; Capital Adequacy.
A. Compensation for Increased Costs and Taxes. Subject to the provisions
of subsection 2.7B (which shall be controlling with respect to the matters
covered thereby), in the event that any Lender shall reasonably determine that
any law, treaty or governmental rule, regulation or order, or any change therein
or in the interpretation, administration or application thereof (including the
introduction of any new law, treaty or governmental rule, regulation or order),
or any determination of a court or governmental authority, in each case that
becomes effective after the date hereof, or compliance by such Lender with any
guideline, request or directive issued or made after the date hereof by any
central bank or other governmental or quasi-governmental authority (whether or
not having the force of law):
(i) subjects such Lender (or its applicable lending office) to any
additional Tax (other than any Tax on the overall net income of such
Lender) with respect to this Agreement or any of its obligations hereunder
or any payments to such Lender (or its applicable lending office) of
principal, interest, fees or any other amount payable hereunder;
(ii) imposes, modifies or holds applicable any reserve (including
any marginal, emergency, supplemental, special or other reserve), special
deposit, compulsory loan, FDIC insurance or similar requirement against
assets held by, or deposits or other liabilities in or for the account of,
or advances or loans by, or other credit extended by, or any other
acquisition of funds by, any office of such Lender (other than any such
reserve or other requirements with respect to Eurodollar Rate Loans that
are reflected in the definition of Adjusted Eurodollar Rate); or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Lender (or its applicable lending office) or
its obligations hereunder or the London interbank market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining its Loan hereunder or to reduce any
amount received or receivable by such
40
<PAGE>
Lender (or its applicable lending office) with respect thereto; then, in any
such case, Company shall promptly pay to such Lender, upon receipt of the
statement referred to in the next sentence, such additional amount or amounts
(in the form of an increased rate of, or a different method of calculating,
interest or otherwise as such Lender in its sole discretion shall determine) as
may be necessary to compensate such Lender for any such increased cost or
reduction in amounts received or receivable hereunder. Such Lender shall deliver
to Company (with a copy to Paying Agent) a written statement, setting forth in
reasonable detail the basis for calculating the additional amounts owed to such
Lender under this subsection 2.7A, which statement shall be conclusive and
binding upon all parties hereto absent manifest error.
B. Withholding of Taxes.
(i) Payments to Be Free and Clear. All sums payable by Company under
this Agreement and the other Loan Documents shall (except to the extent
required by law) be paid free and clear of, and without any deduction or
withholding on account of, any Tax (other than a Tax on the overall net
income of any Lender) imposed, levied, collected, withheld or assessed by
or within the United States of America or any political subdivision in or
of the United States of America or any other jurisdiction from or to which
a payment is made by or on behalf of Company or by any federation or
organization of which the United States of America or any such jurisdiction
is a member at the time of payment.
(ii) Grossing-up of Payments. If Company or any other Person is
required by law to make any deduction or withholding on account of any such
Tax from any sum paid or payable by Company to Paying Agent or any Lender
under any of the Loan Documents:
(a) Company shall notify Paying Agent of any such requirement or
any change in any such requirement as soon as Company becomes aware of
it;
(b) Company shall pay any such Tax before the date on which
penalties attach thereto, such payment to be made (if the liability to
pay is imposed on Company) for its own account or (if that liability
is imposed on Paying Agent or such Lender, as the case may be) on
behalf of and in the name of Paying Agent or such Lender;
(c) the sum payable by Company in respect of which the relevant
deduction, withholding or payment is required shall be increased to
the extent necessary to ensure that, after the making of that
deduction, withholding or payment, Paying Agent or such Lender, as the
case may be, receives on the due date a net sum equal to what it would
have received had no such deduction, withholding or payment been
required or made; and
(d) within 30 days after paying any sum from which it is required
by law to make any deduction or withholding, and within 30 days after
the due date
41
<PAGE>
of payment of any Tax which it is required by clause (b) above to pay,
Company shall deliver to Paying Agent evidence satisfactory to the
other affected parties of such deduction, withholding or payment and
of the remittance thereof to the relevant taxing or other authority;
provided that no such additional amount shall be required to be paid to any
Lender under clause (c) above except to the extent that any change after
the date hereof (in the case of each Lender listed on the signature pages
hereof) or after the date of the Assignment Agreement pursuant to which
such Lender became a Lender (in the case of each other Lender) in any such
requirement for a deduction, withholding or payment as is mentioned therein
shall result in an increase in the rate of such deduction, withholding or
payment from that in effect at the date of this Agreement or at the date of
such Assignment Agreement, as the case may be, in respect of payments to
such Lender.
(iii) Evidence of Exemption from U.S. Withholding Tax.
(a) Each Lender that is organized under the laws of any
jurisdiction other than the United States or any state or other
political subdivision thereof (for purposes of this subsection
2.7B(iii), a "Non-US Lender") shall deliver to Paying Agent for
transmission to Company, on or prior to the Closing Date (in the case
of each Lender listed on the signature pages hereof) or on or prior to
the date of the Assignment Agreement pursuant to which it becomes a
Lender (in the case of each other Lender), and at such other times as
may be necessary in the determination of Company or Paying Agent (each
in the reasonable exercise of its discretion), (1) two original copies
of Internal Revenue Service Form 1001 or 4224 (or any successor
forms), properly completed and duly executed by such Lender, together
with any other certificate or statement of exemption required under
the Internal Revenue Code or the regulations issued thereunder to
establish that such Lender is not subject to deduction or withholding
of United States federal income tax with respect to any payments to
such Lender of principal, interest, fees or other amounts payable
under any of the Loan Documents or (2) if such Lender is not a
"bank" or other Person described in Section 881(c)(3) of the Internal
Revenue Code and cannot deliver either Internal Revenue Service Form
1001 or 4224 pursuant to clause (1) above, a Certificate re Non-Bank
Status together with two original copies of Internal Revenue Service
Form W-8 (or any successor form), properly completed and duly executed
by such Lender, together with any other certificate or statement of
exemption required under the Internal Revenue Code or the regulations
issued thereunder to establish that such Lender is not subject to
deduction or withholding of United States federal income tax with
respect to any payments to such Lender of interest payable under any
of the Loan Documents.
(b) Each Lender required to deliver any forms, certificates or
other evidence with respect to United States federal income tax
withholding matters
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<PAGE>
pursuant to subsection 2.7B(iii)(a) hereby agrees, from time to time
after the initial delivery by such Lender of such forms, certificates
or other evidence, whenever a lapse in time or change in circumstances
renders such forms, certificates or other evidence obsolete or
inaccurate in any material respect, that such Lender shall promptly
(1) deliver to Paying Agent for transmission to Company two new
original copies of Internal Revenue Service Form 1001 or 4224, or a
Certificate re Non-Bank Status and two original copies of Internal
Revenue Service Form W-8, as the case may be, properly completed and
duly executed by such Lender, together with any other certificate or
statement of exemption required in order to confirm or establish that
such Lender is not subject to deduction or withholding of United
States federal income tax with respect to payments to such Lender
under the Loan Documents or (2) notify Paying Agent and Company of its
inability to deliver any such forms, certificates or other evidence.
(c) Company shall not be required to pay any additional amount to
any Non-US Lender under clause (c) of subsection 2.7B(ii) if such
Lender shall have failed to satisfy the requirements of clause (a) or
(b)(1) of this subsection 2.7B(iii); provided that if such Lender
shall have satisfied the requirements of subsection 2.7B(iii)(a) on
the Closing Date (in the case of each Lender listed on the signature
pages hereof) or on the date of the Assignment Agreement pursuant to
which it became a Lender (in the case of each other Lender), nothing
in this subsection 2.7B(iii)(c) shall relieve Company of its
obligation to pay any additional amounts pursuant to clause (c) of
subsection 2.7B(ii) in the event that, as a result of any change in
any applicable law, treaty or governmental rule, regulation or order,
or any change in the interpretation, administration or application
thereof, such Lender is no longer properly entitled to deliver forms,
certificates or other evidence at a subsequent date establishing the
fact that such Lender is not subject to withholding as described in
subsection 2.7B(iii)(a).
C. Capital Adequacy Adjustment. If any Lender shall have determined that
the adoption, effectiveness, phase-in or applicability after the date hereof of
any law, rule or regulation (or any provision thereof) regarding capital
adequacy, or any change therein or in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Lender
(or its applicable lending office) with any guideline, request or directive
regarding capital adequacy (whether or not having the force of law) of any such
governmental authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of, or with reference to,
such Lender's Loan or Commitment or other obligations hereunder to a level below
that which such Lender or such controlling corporation could have achieved but
for such adoption, effectiveness, phase-in, applicability, change or compliance
(taking into consideration the policies of such Lender or such controlling
corporation with regard to capital adequacy), then from time to time, within
five Business Days after receipt by Company from such Lender of the statement
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referred to in the next sentence, Company shall pay to such Lender such
additional amount or amounts as will compensate such Lender or such controlling
corporation on an after-tax basis for such reduction. Such Lender shall deliver
to Company (with a copy to Paying Agent) a written statement, setting forth in
reasonable detail the basis of the calculation of such additional amounts, which
statement shall be conclusive and binding upon all parties hereto absent
manifest error.
2.8 Obligation of Lenders to Mitigate.
----------------------------------
Each Lender agrees that, as promptly as practicable after the officer of
such Lender responsible for administering the Loan of such Lender becomes aware
of the occurrence of an event or the existence of a condition that would cause
such Lender to become an Affected Lender or that would entitle such Lender to
receive payments under subsection 2.7, it will, to the extent not inconsistent
with the internal policies of such Lender and any applicable legal or regulatory
restrictions, use reasonable efforts (i) to make, fund or maintain the
Commitment of such Lender or the Loan of such Lender through another lending
office of such Lender, or (ii) take such other measures as such Lender may deem
reasonable, if as a result thereof the circumstances which would cause such
Lender to be an Affected Lender would cease to exist or the additional amounts
which would otherwise be required to be paid to such Lender pursuant to
subsection 2.7 would be materially reduced and if, as determined by such Lender
in its sole discretion, the making, funding or maintaining of such Commitment or
Loan through such other lending office or in accordance with such other
measures, as the case may be, would not otherwise materially adversely affect
such Commitment or Loan or the interests of such Lender.
2.9 Removal or Replacement of a Lender.
-----------------------------------
A. Anything contained in this Agreement to the contrary notwithstanding,
in the event that:
(i) (a) any Lender (an "Increased-Cost Lender") shall give notice to
Company that such Lender is an Affected Lender or that such Lender is
entitled to receive payments under subsection 2.7, (b) the circumstances
which have caused such Lender to be an Affected Lender or which entitle
such Lender to receive such payments shall remain in effect, and (c) such
Lender shall fail to withdraw such notice within five Business Days after
Company's request for such withdrawal; or
(ii) (a) in connection with any proposed amendment, modification,
termination, waiver or consent with respect to any of the provisions of
this Agreement as contemplated by clauses (i) through (iv) of the first
proviso to subsection 9.5A, the consent of Requisite Lenders shall have
been obtained but the consent of one or more of such other Lenders (each a
"Non-Consenting Lender") whose consent is required shall not have been
obtained, and (b) the failure to obtain Non-Consenting Lenders' consents
does not result solely from the exercise of Non-Consenting Lenders' rights
(and the withholding of any
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required consents by Non-Consenting Lenders) pursuant to the second proviso
to subsection 9.5A;
then, and in each such case, Company shall have the right, at its option, to
remove or replace the applicable Increased-Cost Lender or Non-Consenting Lender
(the "Terminated Lender") to the extent permitted by subsection 2.9B.
B. Company may, by giving written notice to Paying Agent and any
Terminated Lender of its election to do so:
(i) elect to prepay on the date of delivery of such notice by the
Terminated Lender any outstanding Loans made by such Terminated Lender,
together with accrued and unpaid interest thereon and any other amounts
payable to such Terminated Lender hereunder pursuant to subsection 2.6 or
subsection 2.7 or otherwise; provided that Company shall not be required
to pay any prepayment fee pursuant to subsection 2.4B(i)(b) in connection
with any such prepayment; or
(ii) elect to cause such Terminated Lender (and such Terminated Lender
hereby irrevocably agrees) to assign its outstanding Loans in full to one
or more Eligible Assignees (each a "Replacement Lender") in accordance
with the provisions of subsection 9.1B; provided that (a) on the date of
such assignment, Company shall pay any amounts payable to such Terminated
Lender pursuant to subsection 2.6 or subsection 2.7 or otherwise as if it
were a prepayment and (b) in the event such Terminated Lender is a Non-
Consenting Lender, each Replacement Lender shall consent, at the time of
such assignment, to each matter in respect of which such Terminated Lender
was a Non-Consenting Lender.
C. Upon the prepayment of all amounts owing to any Terminated Lender
pursuant to clause (i) of subsection 2.9B, such Terminated Lender shall no
longer constitute a "Lender" for purposes of this Agreement; provided that any
rights of such Terminated Lender to indemnification under this Agreement
(including under subsections 2.6C, 2.7, 9.2 and 9.3) shall survive as to such
Terminated Lender.
SECTION 3.
CONDITIONS TO LOANS
The obligations of Lenders to make the Loans are subject to the prior or
concurrent satisfaction of the following conditions:
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3.1 Company Documents.
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On or before the Closing Date, Company shall deliver or cause to be
delivered to Lenders (or to Administrative Agent for Lenders with sufficient
originally executed copies, where appropriate, for each Lender and its counsel)
the following, each, unless otherwise noted, dated the Closing Date:
(i) Certified copies of its Certificate of Incorporation, together
with a good standing certificate from the Secretary of State of the State
of Delaware and, to the extent generally available, a certificate or other
evidence of good standing as to payment of any applicable franchise or
similar taxes from the appropriate taxing authority of such state, each
dated a recent date prior to the Closing Date;
(ii) Copies of its Bylaws, certified as of the Closing Date by its
corporate secretary or an assistant secretary;
(iii) Resolutions of its Board of Directors approving and authorizing
the execution, delivery and performance of this Agreement and the other
Loan Documents, certified as of the Closing Date by its corporate secretary
or an assistant secretary as being in full force and effect without
modification or amendment;
(iv) Signature and incumbency certificates of its officers executing
this Agreement and the other Loan Documents; and
(v) Executed originals of this Agreement, the Notes (duly executed in
accordance with subsection 2.1E, drawn to the order of each Lender and with
appropriate insertions) and the other Loan Documents.
3.2 Issuance of Fixed Rate Senior Notes.
------------------------------------
On or prior to the Closing Date, Company shall have issued and sold the
Fixed Rate Senior Notes in an aggregate face amount of not less than
$125,000,000. The Fixed Rate Senior Notes shall be unsecured and shall have
terms, including without limitation, maturity, interest rates and covenants
substantially as set forth in the Indenture dated as of November 21, 1997 with
such changes thereto, if any, that have been approved by Arranger and
Administrative Agent. Company shall deliver to Administrative Agent true and
complete copies of all documentation relating to the Fixed Rate Senior Notes,
all of which shall be in form and substance satisfactory to Arranger and
Administrative Agent.
3.3 Issuance of Subordinated Notes.
-------------------------------
On or prior to the Closing Date, Company shall have issued and sold the
Subordinated Notes in an aggregate face amount of not less than $175,000,000.
The Subordinated Notes shall
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be unsecured and shall have terms, including without limitation, maturity,
interest rates, covenants and subordination provisions substantially as set
forth in the Indenture dated as of November 21, 1997 with such changes thereto,
if any, that have been approved by Arranger and Administrative Agent. Company
shall deliver to Administrative Agent true and complete copies of all
documentation relating to the Subordinated Notes, all of which shall be in form
and substance satisfactory to Administrative Agent.
3.4 Purchase of Special Dividend; Redemption of Holdings Zero Coupon Notes.
On or before the Closing Date, Company shall provide Administrative Agent
and Lenders evidence reasonably satisfactory to Administrative Agent that (i)
Company shall have paid a cash dividend to Holdings in an aggregate amount of
not less than $215,000,000 and (ii) Holdings shall have applied not less than
$205,000,000 of such dividend to repurchase or redeem its outstanding Senior
Secured Zero Coupon Notes due 2000, Series A issued pursuant to the Holdings
Note Indenture dated as of May 15, 1993.
3.5 Indentures.
On or before the Closing Date, (i) Administrative Agent and Arranger shall
have received executed or conformed copies of the Fixed Rate Senior Note
Indenture and the Subordinated Note Indenture and any amendments thereto on or
before the Closing Date, the terms and conditions of which shall be in all
respects substantially as described in the Offering Circular, (ii) such
indentures shall be in full force and effect and no term or condition thereof
shall have been amended, modified or waived after the execution thereof, except
as provided in a written amendment thereto delivered to and approved by
Administrative Agent, (iii) neither Company nor any of its Subsidiaries shall
have failed in any material respect to perform any material obligation or
covenant required by such indentures to be performed with or complied with by it
on or before the Closing Date and (iv) Administrative Agent shall have received
an Officers' Certificate from Company in form and substance satisfactory to
Administrative Agent to the effects set forth in clauses (i), (ii) and (iii)
above.
3.6 Legal Opinions.
A. Opinions of Company's Counsel. Lenders shall have received originally
executed copies of one or more favorable written opinions of Mayer Brown &
Platt, counsel for Company in form and substance reasonably satisfactory to
Administrative Agent and its counsel dated the Closing Date and setting forth
substantially the matters in the opinions designated in Exhibit III annexed
hereto.
B. Opinions of Arranger's Counsel. Lenders shall have received originally
executed copies of one or more favorable written opinions of O'Melveny & Myers
LLP, counsel to Administrative Agent, dated as of the Closing Date,
substantially in the form of Exhibit IV
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annexed hereto and as to such other matters as Arranger acting on behalf of
Lenders may reasonably request.
3.7 Fees.
Company shall have paid to Administrative Agent, for distribution (as
appropriate) to Administrative Agent and Paying Agent the fees payable on the
Closing Date referred to in subsection 2.3.
3.8 Notice of Borrowing.
Paying Agent shall have received before the Closing Date, in accordance
with the provisions of subsection 2.1B, an originally executed Notice of
Borrowing signed by the chief executive officer, the chief financial officer or
the treasurer of Company.
3.9 Officers' Certificate Regarding Certain Conditions.
The following conditions shall be satisfied and Company shall have
delivered to Administrative Agent an Officers' Certificate, in form and
substance satisfactory to Administrative Agent, to that effect:
A. Representations and Warranties. The representations and warranties of
Company contained herein and in the other Loan Documents shall be true and
correct in all material respects on and as of the Closing Date to the same
extent as though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date, in which
case such representations and warranties shall have been true and correct in all
material respects on and as of such earlier date.
B. No Event of Default. No event shall have occurred and be continuing
as of the Closing Date, or would result from the consummation of the borrowing
of the Loans thereon, that would constitute an Event of Default or a Potential
Event of Default.
C. Performance of Agreements. Company shall have performed in all
material respects all agreements and satisfied all conditions which this
Agreement provides shall be performed or satisfied by it on or before the
Closing Date.
SECTION 4.
COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to make the
Loans hereunder, Company represents and warrants to each Lender, on the date of
this Agreement and on the Closing Date, that the following statements are true
and correct:
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4.1 Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries.
A. Organization and Powers. Company and each of its Subsidiaries has been
duly incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its organization, with power and authority
(corporate and other) to own its properties and conduct its business as
described in the Offering Circular, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing under the
laws of each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, except where the
failure to be so qualified in any such jurisdiction would not reasonably be
expected to have a Material Adverse Effect.
B. Capitalization. Company has an authorized capitalization as set forth
in the Offering Circular, and all of the issued shares of Capital Stock of
Company have been duly and validly authorized and issued and are fully paid and
non-assessable and are owned beneficially and of record by Holdings; and all of
the issued shares of Capital Stock of each Subsidiary of Company have been duly
and validly authorized and issued, are fully paid and non-assessable and are
owned directly or indirectly by Company, free and clear of all liens,
encumbrances, equities or claims.
4.2 Authorization of Borrowing, etc.
A. Authorization of Borrowing. The execution, delivery and performance of
the Loan Documents have been duly authorized by all necessary corporate action
on the part of Company. Company has full power and authority to execute and
deliver, perform its obligations under, and consummate the transactions
contemplated by, this Agreement, the Fixed Rate Senior Note Indenture, the
Subordinated Note Indenture and the New Notes, including, without limitation'
the corporate power and authority to issue, sell and deliver the Notes and the
New Notes.
B. No Conflicts. The execution, delivery and performance of the Loan
Documents, the issuance of the Notes, the issue and sale of the New Notes and
the compliance by Company with all of the provisions of the Loan Documents, the
New Notes, the Fixed Rate Senior Note Indenture, the Subordinated Note Indenture
and the Purchase Agreement and the and the consummation of the transactions
herein and therein contemplated (i) have been duly authorized by all necessary
corporate action (including any requisite shareholder approval) and (ii) will
not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, sale/leaseback agreement, loan agreement or other similar financing
agreement or instrument or other agreement or instrument to which Company or any
of its Subsidiaries is a party or by which Company or any of its Subsidiaries is
bound or to which any of the property or assets of Company or any of its
Subsidiaries is subject (other than conflicts, breaches, violations or defaults
which in the aggregate would not reasonably be expected to have a Material
Adverse Effect), nor will such action result in any violation of the provisions
of the Certificate of Incorporation or By-laws of Company or any of its
Subsidiaries
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or any statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over Company or any of its Subsidiaries or
any of their properties; and no consent, approval, authorization, order,
registration or qualification of or with any such court or governmental agency
or body is required for the execution, delivery and performance of the Loan
Documents, the issuance of the Notes, the issue and sale of the New Notes and
the compliance by Company with all of the provisions of the Loan Documents, the
New Notes, the Fixed Rate Senior Note Indenture, the Subordinated Note Indenture
and the Purchase Agreement and the and the consummation of the transactions
herein and therein contemplated except (1) such as have been obtained under the
Trust Indenture Act, (2) such consents, approvals, authorizations, registrations
or qualifications as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the New Notes by the
Purchasers, (3) such approvals, registrations and qualifications as may be
required under the Securities Act, the Trust Indenture Act, and state securities
or Blue Sky laws connection with the Exchange Offers contemplated by the
Offering Circular or in connection with the Exchange and Registration Rights
Agreement (as defined in the Purchase Agreement), and (4) such consents,
approvals, authorizations, registrations or qualifications as have been obtained
or made.
C. Binding Obligation. Each of the Loan Documents has been duly executed
and delivered by Company and is the legally valid and binding obligation of
Company, enforce able against Company in accordance with its respective terms,
subject to the effect of bankruptcy, insolvency, reorganization and other laws
of general applicability relating to or affecting creditors' rights and to
general principles of equity (whether considered in a proceeding in equity or at
law);
4.3 Valid Issuance of New Notes.
A. Fixed Rate Senior Notes. The Fixed Rate Senior Notes have been duly
authorized and, when issued and delivered pursuant to the Purchase Agreement and
duly authenticated by the trustee under the Fixed Rate Senior Note Indenture,
under which they are to be issued, will have been duly executed, authenticated,
issued and delivered and will constitute valid and legally binding obligations
of Company entitled to the benefits provided by the Fixed Rate Senior Note
Indenture; the Fixed Rate Senior Note Indenture has been duly authorized and
will be in a form which would meet the requirements for qualification under the
Trust Indenture Act and, when executed and delivered by Company and the trustee
thereunder (assuming the due authorization, execution and delivery by such
trustee), the Fixed Rate Senior Note Indenture will constitute a valid and
legally binding instrument, enforceable in accordance with its terms, subject to
the effect of bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
principles of equity (whether considered in a proceeding in equity or at law);
and the Fixed Rate Senior Notes and the Fixed Rate Senior Note Indenture will
conform to the descriptions thereof in the Offering Circular.
B. Subordinated Notes. The Subordinated Notes have been duly authorized
and, when issued and delivered pursuant to the Purchase Agreement and duly
authenticated by the trustee under the Subordinated Note Indenture under which
they are to be issued mill have been
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duly executed, authenticated, issued arid delivered and will constitute valid
and legally binding obligations of Company entitled to the benefits provided by
the Subordinated Note Indenture; the Subordinated Note Indenture has bean duly
authorized and will be in a form which would meet the requirements for
qualification under the Trust Indenture Act and, when executed and delivered by
Company and the trustee thereunder (assuming the due authorization, execution
and delivery by such trustee), the Subordinated Notes will constitute a valid
and legally binding instillment, enforceable in accordance with its terms,
subject to the effect of bankruptcy, insolvency, reorganization and other laws
of general applicability relating to or affecting creditors' rights and to
general principles of equity (whether considered in a proceeding in equity or at
law); and the Subordinated Notes and the Subordinated Note Indenture will
conform to the descriptions thereof in the Offering Circular.
4.4 No Material Adverse Change.
Company and its Subsidiaries taken as a whole have not sustained since the
date of the latest audited financial statements included in the Offering
Circular any material loss or interference with its business from fire,
explosion, flood or other calamity, covered by insurance, or from any labor
dispute or court or governmental action, order or decree, which in any case
would reasonably be expected to have a Material Adverse Effect, otherwise than
as set forth or contemplated in the Offering Circular; and, since the respective
dates as of which information is given in the Offering Circular, there has not
been any change in the Capital Stock or any increase in the long-term debt of
Company and its Subsidiaries on a consolidated basis, or any adverse change in
or affecting the financial position, stockholders' equity or results of
operations of Company and its Subsidiaries on a consolidated basis which in any
case could reasonably be expected to have a Material Adverse Effect, otherwise
than as set forth or contemplated in the Offering Circular.
4.5 Title to Properties; Liens.
Company and each of its Subsidiaries has good and valid title in fee simple
to all real property and good and valid title to all personal property owned by
it, in each case free and clear of all liens, encumbrances and defects except
such as are described in the Offering Circular or such as would not reasonably
be expected to have a Material Adverse Effect; and any real property and
buildings held under lease by Company or any Subsidiary are held under valid,
subsisting and enforceable leases with such exceptions as would not reasonably
be expected to have a Material Adverse Effect.
4.6 Litigation.
Other than as set forth or contemplated in the Offering Circular, there are
no legal or governmental proceedings pending to which Company or any of its
Subsidiaries is a party or of which any property of Company or any of its
Subsidiaries is the subject which would individually or in the aggregate
reasonably be expected to have a Material Adverse Effect; and, to the best
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knowledge of Company's responsible officers or as otherwise disclosed in the
Offering Circular, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
4.7 Insurance of Properties.
Company and its Subsidiaries maintain (and there is outstanding and duly in
force on the date hereof, and will be outstanding and duly in force at the
Closing Date) insurance covering their properties. operations, personnel and
business which insures against such losses and risks as are adequate in
Company's business judgment to protect Company and its Subsidiaries and their
businesses.
4.8 Performance of Agreements.
None of Company or any of its Subsidiaries is in violation of its
Certificate of Incorporation or By-laws, or in default in the performance or
observance of any obligation, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease or other instrument to which it
is a party or by which it or any of its properties is bound, other than defaults
that, singly or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
4.9 Securities Activities.
A. Company is subject to Section 13 or 15(d) of the Exchange Act.
B. None of the transactions contemplated by this Agreement, the Purchase
Agreement, the Fixed Rate Senior Note Indenture or the Subordinated Note
Indenture (including, without limitation, the use of the proceeds from the sale
of the Notes and the New Notes) will violate or result in a violation of Section
7 of the Exchange Act, or any regulation promulgated thereunder, including,
without limitation, Regulations G, T, U, and X of the Board of Governors of the
Federal Reserve System.
C. Prior to the date hereof, neither Company nor any of its Affiliates has
taken any action which is designed to or which has constituted or which might
have been expected to cause or result in stabilization or manipulation of the
price of any security of Company in connection with the offerings of the New
Notes.
D. Within the preceding six months, neither Company nor any other Person
acting on behalf of Company has offered or sold to any Person any New Notes, or
any securities of the same or a similar class as the New Notes, other than New
Notes to be resold by the Purchasers under the Purchase Agreement.
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E. Company has not issued any securities of the same class (within the
meaning of Rule 144A(d)(3) under the Securities Act) as any of the New Notes
which are listed on a national securities exchange registered under Section 6 of
the Exchange Act or quoted in a U.S. automated inter-dealer quotation system;
(ii) Company is not an "investment company" within the meaning of, or is
registered or otherwise required to be registered under, the United States
Investment Company Act of 1940, as amended; (iii) none of Company or any of its
Subsidiaries or Affiliates or any Person acting on their behalf has sold,
offered for sale, solicited offers to buy or otherwise negotiated in respect of
any security (as defined in the Securities Act) which is or will be integrated
with the sale of any of the New Notes in a manner at would require the
registration, under the Securities Act of any of the New Notes and none of
Company or any of its Subsidiaries or Affiliate or any Person acting on their
behalf (other than the Purchasers, as to whom Company makes no representation,
warranty or agreement) has offered or sold or will offer or sell any New Notes
by means of any general solicitation or general advertising within the meaning
of Rule 502(c) under the Securities Act; and (iv) none of Company or any of it
Subsidiaries or affiliates or any Person acting on its or their behalf (other
than the Purchasers, as to whom Company makes no representation, warranty or
agreement), has engaged or will engage in any directed selling efforts within
the meaning of Regulation S with respect to the New Notes, and Company and its
Subsidiaries and affiliates and all Persons acting on its or their behalf (other
than the Purchasers, as to whom Clark makes no representation, warranty or
agreement) have complied with and will comply with the "offering restriction"
within the meaning of Rule 902.
F. There is no "substantial U.S. market interest" as defined in Rule
902(n) of Regulation S for the New Notes or any security of the same class as
the New Notes.
4.10 Accountants.
Coopers & Lybrand L.L.P., who have certified certain consolidated financial
statements of Company, and Price Waterhouse L.L.P., who are currently serving as
Company's independent public accountants, are each independent public
accountants within the meaning of Rule 101 of the AICPA's Code of Professional
Conduct, and its interpretations and rulings.
4.11 Environmental Protection.
Except as set forth in the Offering Circular, Company and its Subsidiaries
are in compliance with all applicable existing federal, state and local laws and
regulations relating to protection of human health or the environment or
imposing liability or standards of conduct concerning any Hazardous Material,
except for such instances of noncompliance which, either singly or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
4.12 Employee Matters.
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Except as described in the Offering Circular, no labor dispute with the
employees of Company or any of its Subsidiaries exists or, to the knowledge of
Company is imminent that would reasonably be expected to have a Material Adverse
Effect.
4.13 Disclosure.
The Preliminary Offering Circular and the Offering Circular and any
amendments or supplements thereto did not and will not, as of their respective
dates, contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that this representation and warranty shall not apply to any statements or
omissions made in a Preliminary Offering Circular or an Offering Circular in
reliance upon and in conformity with information furnished in writing to Company
by or on behalf of a Purchaser expressly for use therein.
SECTION 5.
COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as the Commitments hereunder
shall remain in effect and until payment in full of all of the Loans and other
Obligations, unless Requisite Lenders shall otherwise give prior written
consent:
5.1 Financial Statements and Other Reports.
A. Provision of Financial Information. So long as any Loans are
outstanding, whether or not Company is required to be subject to Section 13(a)
or 15(d) of the Exchange Act, or any successor provision thereto, Company shall
file with the Commission the annual reports, quarterly reports and other
documents (including a "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and, with respect to the annual
information only, a report thereon by Company's certified independent
accountants) which Company would have been required to file with the Commission
pursuant to such Section 13(a) or 15(d) or any successor provision thereto if
Company were so required, such documents to be filed with the Commission on or
prior to the respective dates (the "Required Filing Dates") by which Company
would have been required so to file such documents if Company were so required.
Company shall also in any event (i) within 15 days of each Required Filing Date
(a) transmit by mail to all Lenders without cost to such Lenders, and (b) file
with the Paying Agent, in each case, copies of the annual reports, quarterly
reports and other documents which Company would have been required to file with
the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act or any
successor provisions thereto if Company were required to be subject to such
Sections and (ii) if filing such documents by Company with the Commission is not
permitted under the Exchange Act, promptly upon written request supply copies of
such documents to any prospective Lender.
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B. Statement by Officers as to Default.
(i) Company shall deliver to the Paying Agent for distribution to
Lenders, within 120 days after the end of each Fiscal Year, an Officers'
Certificate stating that a review of the activities of Company and its
Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing officers with a view to determining whether
Company has kept, observed, performed and fulfilled its obligations under
this Agreement, and further stating, as to each such officer signing such
certificate, that to the best of such officer's knowledge Company has kept,
observed, performed and fulfilled each and every covenant contained in this
Agreement and is not in default in the performance or observance of any of
the terms, provisions and conditions hereof (or, if a Potential Event of
Default or Event of Default shall have occurred, describing all such
Potential Events of Default or Events of Default of which such officer may
have knowledge and what action Company is taking or proposes to take with
respect thereto) and that to the best of such officers' knowledge no event
has occurred and remains in existence by reason of which payments on
account of the principal of (and premium, if any) or interest, if any, on
the Loans are prohibited or if such event has occurred, a description of
the event and what action Company is taking or proposes to take with
respect thereto.
(ii) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the financial
statements delivered pursuant to subsection 5.1A shall be accompanied by a
written statement of Company's independent public accountants (who shall be
a firm of established national reputation reasonably satisfactory to Paying
Agent) that in making the examination necessary for certification of such
financial statements nothing has come to their attention which would lead
them to believe that Company has violated any provisions of subsection 2.4B
or, if any such violation has occurred, specifying the nature and period of
existence thereof, it being understood that such accountants shall not be
liable directly or indirectly to any Person for any failure to obtain
knowledge of any such violation.
(iii) Company shall, so long as any of the Obligations are
outstanding, deliver to the Paying Agent for distribution to Lenders,
forthwith upon any officer becoming aware of (a) any Potential Event of
Default or Event of Default or (b) any event of default under any other
mortgage, indenture or instrument as described in subsection 7.2, an
Officers' Certificate specifying such Potential Event of Default, Event of
Default or event of default and what action Company is taking or proposes
to take with respect thereto.
C. Other Information. Company shall deliver to Paying Agent and Lenders
the information required to be delivered to the trustee and holders under
Section 6.04 of the Fixed Rate Senior Note Indenture as in effect on the date
hereof in the manner and on the terms specified therein.
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5.2 Corporate Existence, etc.
Except as permitted under subsection 6.6, Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect its
existence, rights (charter and statutory) and franchises; provided, however,
that Company shall not be required to preserve any such right or franchise if
the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of Company and that the loss
thereof is not disadvantageous in any material respect to the Lenders.
5.3 Payment of Taxes and Claims; Tax Consolidation.
Company shall, or shall cause its Subsidiaries to, pay or discharge or
cause to be paid or discharged, before the same shall become delinquent, (1) all
taxes, assessments and governmental charges levied or imposed upon Company or
any Subsidiary of Company or upon the income, profits or property of Company or
any Subsidiary of Company, and (2) all lawful claims for labor, materials and
supplies which, if unpaid, might by law become a lien upon the property of
Company or any Subsidiary of Company; provided, however, that Company and its
Subsidiaries 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.
5.4 Maintenance of Properties.
Company shall cause all properties used or useful in the conduct of its
business or the business of any Subsidiary of Company to be maintained and kept
in good condition, repair and working order and supplied with all necessary
equipment and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
Company may be necessary so that the business carried on in connection therewith
may be properly and advantageously conducted at all times; provided, however,
that nothing in this Section shall prevent Company from discontinuing the
operation or maintenance of any of such properties if such discontinuance is, in
the judgment of Company, desirable in the conduct of its business or the
business of any Subsidiary of Company and not disadvantageous in any material
respect to the Lenders.
5.5 Compliance with Laws, etc.
Company shall comply, and shall cause each of its Subsidiaries to comply,
with the requirements of all applicable laws, rules, regulations and orders of
any governmental authority, noncompliance with which would reasonably be
expected to cause, individually or in the aggregate, a material impairment of
the ability of Company and its Subsidiaries, taken as a whole, to (a) make
payments of principal and interest on the Obligations as and when due, or (b)
continue doing business as a going concern.
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SECTION 6.
COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that, so long as the Commitments hereunder
shall remain in effect and until payment in full of all of the Loans and other
Obligations, unless Requisite Lenders shall otherwise give prior written
consent:
6.1 Indebtedness.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, incur any Indebtedness (including Acquired Debt), other
than:
(i) the Obligations;
(ii) the New Notes and Permitted Indebtedness; and
(iii) other Indebtedness; provided that after giving effect to the
incurrence of any such Indebtedness and the receipt and application of the
proceeds therefrom, Company's Consolidated Operating Cash Flow Ratio is
greater than 2 to 1.
Notwithstanding anything in this subsection 6.1 to the contrary, Company's
Unrestricted Subsidiaries may incur Non-Recourse Debt; provided, however, that
if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted
Subsidiary, such event shall be deemed to constitute an incurrence of
Indebtedness by a Restricted Subsidiary of Company and shall be subject to the
other restrictions of this subsection 6.1.
6.2 Prohibition on Liens and Related Matters.
Company shall not directly or indirectly, create, incur, assume or suffer
to exist any Lien (other than Permitted Liens) on any asset now owned or
hereafter acquired, or on any income or profits therefrom, or assign or convey
any right to receive income therefrom to secure any Indebtedness which is pari
passu with or subordinate in right of payment to the Obligations, unless the
Obligations are secured equally and ratably simultaneously with or prior to the
creation, incurrence or assumption of such Lien for so long as such Lien exists;
provided, that in any case involving a Lien securing Indebtedness which is
subordinated in right of payment to the Obligations, such Lien is subordinated
to the Lien securing the Obligations to the same extent that such subordinated
debt is subordinated to the Obligations.
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6.3 Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries of Company.
Company shall not, and shall not permit any Restricted Subsidiary of
Company (other than a Securitization Special Purpose Entity) to, create or
otherwise cause or suffer to exist or become effective, any consensual
encumbrance or restriction which, by its terms, restricts the ability of any
Restricted Subsidiary of Company (other than a Securitization Special Purpose
Entity) to (i) pay dividends or make any other distributions on any such
Restricted Subsidiary's Capital Stock or pay any Indebtedness owed to Company or
any Restricted Subsidiary of Company, (ii) make any loans or advances to Company
or any Restricted Subsidiary of Company, or (iii) transfer any of its property
or assets to Company or any Restricted Subsidiary of Company, except for, in the
case of clauses (i), (ii) and (iii) above, any restrictions (a) existing
hereunder and any restrictions existing or created on the Closing Date pursuant
to any agreement relating to Existing Indebtedness of Company or any Restricted
Subsidiary, (b) pursuant to an agreement relating to Indebtedness incurred by
such Restricted Subsidiary prior to the date on which such Restricted Subsidiary
was acquired by Company and outstanding on such date and not incurred in
anticipation of becoming a Restricted Subsidiary, (c) imposed by virtue of
applicable corporate law or regulation and relating solely to the payment of
dividends or distributions to stockholders, (d) with respect to restrictions of
the nature described in clause (iii) above, included in a contract entered into
in the ordinary course of business and consistent with past practices that
contains provisions restricting the assignment of such contract, (e) pursuant to
an agreement effecting a renewal, extension, refinancing, refunding or
replacement of Indebtedness referred to in (a) or (b) above; provided, however,
that the provisions contained in such renewal, extension, refinancing, refunding
or replacement agreement relating to such encumbrance or restriction, taken as a
whole, are not materially more restrictive than the provisions contained in the
agreement the subject thereof, as determined in good faith by the board of
directors of Company, or (f) which shall not in the aggregate cause Company not
to have the funds necessary to pay the principal of, premium, if any, or
interest, on the Obligations as they mature.
6.4 Restrictions on Guaranties.
Company shall not permit any Restricted Subsidiary, directly or indirectly,
to guarantee or secure the payment of any Indebtedness of Company unless such
Restricted Subsidiary simultaneously executes and delivers to Administrative
Agent and Lenders such guarantees, security agreements and other documents or
instruments providing for the guarantee or security of the payment of the
Obligations by such Restricted Subsidiary (other than the grant of security
interests in cash and cash equivalents, receivables and product inventories to
secure obligations under the Existing Credit Agreement). If the Indebtedness to
be guaranteed is subordinated to the Obligations, then the guarantee or security
of such Indebtedness shall be subordinated to the guarantee or security of the
Obligations to the same extent as the Indebtedness to be guaranteed is
subordinated to the Obligations under this Agreement. Notwithstanding the
foregoing, any such guarantee or security by a Restricted Subsidiary of the
Obligations shall provide by its terms that it shall be automatically and
unconditionally released and discharged upon either (i) the release
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or discharge of such guarantee or security of payment of such other
Indebtedness, except a discharge by or as a result of payment under such
guarantee or security, or (ii) any sale, exchange or transfer, to any Person not
an Affiliate of Company, of all of Company's Capital Stock in, or all or
substantially all the assets of, such Restricted Subsidiary, which sale,
exchange or transfer is made in compliance with the provisions of this
Agreement.
6.5 Limitations on Restricted Payments.
Company shall not, and shall not permit any of its Restricted Subsidiaries
to, directly or indirectly, make any Restricted Payment, unless (i) at the time
of and immediately after giving effect to the proposed Restricted Payment, no
Potential Event of Default or Event of Default shall have occurred and be
continuing, or would occur as a consequence thereof, (ii) either Company would
(a) at the time of such Restricted Payment and after giving pro forma effect
thereto, have a Consolidated Adjusted Net Worth exceeding $200,000,000 or (b) be
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Operating Cash Flow Ratio test set forth in subsection 6.1(iii),
and (iii) at the time of and immediately after giving effect to the proposed
Restricted Payment (the value of any such payment if other than cash, as
determined in good faith by the board of directors of Company and evidenced by a
Board Resolution), the aggregate amount of all Restricted Payments (including
Restricted Payments permitted by clauses (b), (j), (l) and (m) of the next
succeeding paragraph and excluding the other Restricted Payments permitted by
such paragraph) declared or made subsequent to the Closing Date shall not exceed
the sum of (a) 50% of the aggregate Consolidated Net Operating Income (or, if
such aggregate Consolidated Net Operating Income is a deficit, minus 100% of
such deficit) of Company for the period (taken as one accounting period) from
the first day of the Fiscal Quarter that begins after the Closing Date to the
end of Company's most recently ended Fiscal Quarter for which internal financial
statements are available at the time of such Restricted Payment plus (b) 100% of
the aggregate net proceeds, including cash and the fair market value of property
other than cash (as determined in good faith by the board of directors of
Company and evidenced by a Board Resolution), received by Company since the
Closing Date, from any Person other than a Subsidiary of Company as a result of
the issuance of Capital Stock (other than any Disqualified Capital Stock) of
Company including such Capital Stock issued upon conversion of Indebtedness or
upon exercise of warrants and any contributions to the capital of Company (other
than Excluded Contributions) received by Company from any such Person plus (c)
to the extent that any Restricted Investment that was made after the Closing
Date is sold for cash or otherwise liquidated or repaid for cash, the cash
return of capital with respect to such Restricted Investment (less the cost of
disposition, if any). For purposes of any calculation pursuant to the preceding
sentence which is required to be made within 60 days after the declaration of a
dividend by Company, such dividend shall be deemed to be paid at the date of
declaration.
The foregoing provisions of this subsection 6.5 shall not be violated by
reason of (a) the payment of any dividends or distributions payable solely in
shares of Company's Capital Stock (other than Disqualified Capital Stock) or in
options, warrants or other rights to acquire Company's Capital Stock (other than
Disqualified Capital Stock), (b) the payment of any dividend
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within 60 days after the date of declaration thereof if, at such date of
declaration, such payment complied with the provisions described above, (c) the
payment of cash dividends or the making of loans or advances to Holdings after
October 1, 2002, in an amount sufficient to enable Holdings to make cash
payments of interest or dividends required to be made in respect of the
Exchangeable Preferred Stock or the Exchange Debentures in accordance with the
payment terms thereof in effect on the date hereof, (d) the payment of cash
dividends or the making of loans or advances in an amount sufficient to enable
Holdings to make payments required to be made in respect of the 10-7/8% Notes in
accordance with the payment terms thereof in effect on the date hereof, (e) the
retirement of any shares of Company's Capital Stock in exchange for, or out of
the proceeds of, the substantially concurrent sale (other than to a Subsidiary
of Company) of, other shares of its Capital Stock (other than Disqualified
Capital Stock) or options, warrants or other rights to purchase Company Capital
Stock (other than Disqualified Capital Stock) and the declaration and payment of
dividends on such new Capital Stock in an aggregate amount no greater than the
amount of dividends declarable and payable on such retired Capital Stock
immediately prior to such retirement, (f) the Chevron Payment, (g) the AOC
Payment, (h) the Gulf Payments, (i) other Restricted Payments in an aggregate
amount not to exceed $50,000,000, (j) the making of any payment in redemption of
Capital Stock of Company or Holdings or options to purchase such Capital Stock
granted to officers or employees of Company or Holdings pursuant to any stock
option, stock purchase or other stock plan approved by the board of directors of
Company or Holdings in connection with the severance or termination of officers
or employees not to exceed $8,000,000 per annum or the payment of cash dividends
or the making of loans or advances to Holdings to permit it to make such
payments, (k) the declaration and payment of dividends to holders of any class
or series of preferred stock of Company and its Restricted Subsidiaries issued
in accordance with the provisions of subsection 6.1, (l) the payment of
dividends on Company's common stock, following the first public offering of
Company's common stock or Holdings's common stock after the Closing Date, of up
to 6% per annum of the net proceeds received by Company in such public offering
or the payment of funds to Holdings in amounts necessary to permit Holdings to
make such payments to the extent the proceeds of such offering were contributed
to the equity capital of Company, (m) so long as no Potential Event of Default
or Event of Default shall have occurred and be continuing (or would result
therefrom), the payment to Holdings (in the form of dividends, loans, advances
or otherwise) of 100% of the proceeds of Indebtedness incurred pursuant to
clause (xv) of the definition of ``Permitted Indebtedness'' to redeem,
repurchase, defease or otherwise acquire or retire for value the 10-7/8% Notes;
provided, however, that at the time of such redemption, repurchase, defeasance
or other acquisition or retirement for value, the Consolidated Operating Cash
Flow Ratio of Company, after giving effect to the incurrence of Indebtedness in
connection therewith, would be greater than 1.75 to 1.0, (n) the payment of
dividends or the making of loans or advances by Company to Holdings in an amount
not to exceed $2,000,000 in any Fiscal Year for costs and expenses incurred by
Holdings in its capacity as a holding company or for services rendered to
Company; (o) Restricted Investments not to exceed at any one time an aggregate
of $75,000,000, and (p) Restricted Investments made with Excluded Contributions.
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The board of directors of Company may designate any Restricted Subsidiary
to be an Unrestricted Subsidiary if such designation would not cause a Potential
Event of Default or Event of Default; provided that, in no event shall the
business currently operated by Company or Holdings be transferred to or held by
an Unrestricted Subsidiary, unless after giving pro forma effect to such
transfer Company could have incurred an additional $1.00 of Indebtedness
pursuant to the Consolidated Operating Cash Flow Ratio test set forth in
subsection 6.1(iii). For purposes of making such determination, all outstanding
Investments by Company and its Restricted Subsidiaries (except to the extent
repaid in cash) in the Subsidiary so designated shall be deemed to be Restricted
Payments at the time of such designation and shall reduce the amount available
for Restricted Payments under the first paragraph of this subsection 6.5. All
such outstanding Investments shall be deemed to constitute Investments in an
amount equal to the greatest of (x) the net book value of such Investments at
the time of such designation, (y) the fair market value of such Investments at
the time of such designation, and (z) the original fair market value of such
Investments at the time they were made. Such designation shall only be permitted
if such Restricted Payment would be permitted at such time and if such
Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary.
6.6 Limitation on Merger, Consolidation, Sales of Assets.
A. Company may Consolidate only on Certain Terms. Company shall not
consolidate or merge with or into (whether or not Company is the Surviving
Person), or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets in one or more related
transactions to another Person unless (i) the Surviving Person is a corporation
organized and existing under the laws of the United States, any state thereof or
the District of Columbia, (ii) the Surviving Person (if other than Company)
assumes all of the obligations of Company under the this Agreement, the Notes
and the other Loan Documents pursuant to documentation in form reasonably
satisfactory to Administrative Agent, (iii) at the time of and immediately after
such transaction, no Potential Event of Default or Event of Default shall have
occurred and be continuing, (iv) except with respect to a merger of Company with
or into Holdings that does not result in a Rating Decline, after giving pro
forma effect to the transaction, either (a) the Surviving Person would be
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Operating Cash Flow Ratio test set forth in subsection 6.1(iii) or
(b) the Consolidated Operating Cash Flow Ratio of the Surviving Person would be
no less than such ratio for Company immediately prior to such transaction and
(v) Company has delivered to Agents and Lenders an Officers' Certificate and an
Opinion of Counsel, each stating that such consolidation, merger, conveyance,
transfer or lease, and, if an amendment or waiver hereto is required in
connection with such transaction, such amendment or waiver complies with this
subsection 6.6 and that all conditions precedent herein provided for relating to
such transaction have been complied with.
B. Successor Substituted. Upon any consolidation of Company with, or
merger of Company into, any other Person or any conveyance, transfer, lease or
other disposition of the properties and assets of Company substantially as an
entirety in accordance with subsection 6.6,
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the successor Person formed by such consolidation or into which Company is
merged or to which such conveyance, transfer, lease or other disposition is made
shall succeed to, and be substituted for, and may exercise every right and power
of, Company under this Agreement and the other Loan Documents with the same
effect as if such successor Person had been named as Company herein, and
thereafter, except in the case of a lease, the predecessor Person shall be
relieved of all obligations and covenants under this Agreement and the other
Loan Documents; provided, however, that the predecessor Company shall not be
relieved from the obligation to pay principal of and interest on the Loans,
except in the case of a transfer, conveyance, sale or other disposition
(excluding by lease) of all of Company's assets that meets the requirements of
subsection 6.6A.
6.7 Limitation on Certain Asset Dispositions.
Company shall not, and shall not permit any Restricted Subsidiary of
Company to, make any Asset Disposition unless (i) Company or such Restricted
Subsidiary receives consideration at the time of such disposition (or in the
case of a lease, over the term of such lease) at least equal to the fair market
value of the shares or assets disposed of (which shall be as determined in good
faith by Company), and (ii) at least 75% of the consideration for such
disposition consists of cash or Cash Equivalents; provided that the following
shall be deemed to be cash for purposes of this covenant: (1 ) the amount of any
liabilities (as shown on Company's or such Restricted Subsidiary's most recent
balance sheet or in the notes thereto) of Company or such Restricted Subsidiary
(other than liabilities that are by their terms subordinated to the Loans) that
are assumed by the transferee of any such assets, and (2) any notes or other
obligations received by Company or such Restricted Subsidiary from a transferee
that are converted by Company or such Restricted Subsidiary into cash within 180
days after such Asset Disposition; provided, further, that the 75% limitation
referred to above in clause (ii) shall not apply to (x) any disposition of
assets in which the cash portion of such consideration received therefor on an
after-tax basis, determined in accordance with the foregoing proviso, is equal
to or greater than what the after-tax net proceeds would have been had such
transaction complied with the aforementioned 75% limitation, (y) any disposition
of assets (other than the Port Arthur Refinery) in exchange for assets of
comparable fair market value related to the Principal Business of Company,
provided that in any such exchange of assets of Company or a Restricted
Subsidiary with a fair market value in excess of $20,000,000 occurring when
Blackstone fails to hold, directly or indirectly, 30% or more of the total
voting power of all classes of Capital Stock of Company, Company shall obtain an
opinion or report from a nationally recognized investment banking firm,
valuation expert or accounting firm confirming that the assets received by
Company and such Restricted Subsidiary in such exchange have a fair market value
at least equal to the assets so exchanged or (z) any disposition of
Securitization Program Assets to any Securitization Special Purpose Entity in
exchange for Indebtedness of, procurement of letters of credit and similar
instruments by, or equity or other interests in, such Securitization Special
Purpose Entity.
Within 360 days of the later of (a) the receipt of the Net Available
Proceeds and (b) the date of such applicable Asset Disposition, Company may
elect to (i) apply the Net Available Proceeds from such Asset Disposition to
permanently redeem or repay Indebtedness of Company
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or any Restricted Subsidiary, other than Indebtedness of Company which is
subordinated to the Obligations, or (ii) apply the Net Available Proceeds from
such Asset Disposition to invest in assets related to the Principal Business of
Company or Capital Stock of any Person primarily engaged in the Principal
Business if, as a result of such acquisition, such Person becomes a Restricted
Subsidiary. Pending the final application of any such Net Available Proceeds,
Company may temporarily invest such Net Available Proceeds in any manner
permitted by this Agreement. Any Net Available Proceeds from an Asset
Disposition not applied or invested as provided in the first sentence of this
paragraph shall be deemed to constitute ``Excess Proceeds''.
As soon as practical, but in no event later than ten Business Days after
any date (an ``Asset Disposition Trigger Date'') that the aggregate amount of
Excess Proceeds exceeds $25,000,000, Company shall offer to prepay the Loans
pursuant to subsection 2.4B(ii)(a) by commencing an offer pursuant to subsection
2.4B(iii)(d) to prepay the maximum amount of Loans and to purchase the maximum
amount of other Indebtedness of Company or Holdings having similar rights to be
so prepaid or purchased out of Excess Proceeds, in each case at an offer price
in cash in an amount equal to 100% of the principal amount thereof, plus accrued
and unpaid interest to the date of prepayment or purchase, as applicable. To
the extent that any Excess Proceeds remain after completion of such offer,
Company may use the remaining amount for general corporate purposes. Upon any
completion of any such offer pursuant to subsection 2.4B(iii)(d), the amount of
Excess Proceeds shall be reset to zero.
6.8 Transactions with Shareholders and Affiliates.
Company shall not, and shall not permit any Restricted Subsidiary of
Company to, directly or indirectly, conduct any business or enter into any
transaction or series of similar transactions (including, without limitation,
the purchase, sale, transfer, lease or exchange of any property or the rendering
of any service) with (i) any direct or indirect holder of more than 5% of any
class of Capital Stock of Company or of any Restricted Subsidiary of Company
(other than transactions between or among Company and/or its Restricted
Subsidiaries except for Restricted Subsidiaries owned in any part by the
Principal Shareholders), or (ii) any Affiliate of Company (other than
transactions between or among Company and/or its Restricted Subsidiaries except
for Restricted Subsidiaries owned in any part by the Principal Shareholders)
(each of the foregoing, a ``Shareholder/Affiliate Transaction'') unless the
terms of such business, transaction or series of transactions (a) are set forth
in writing and (b) are as favorable to Company or such Restricted Subsidiary in
all material respects as terms that would be obtainable at the time for a
comparable transaction or series of similar transactions in arm's-length
dealings with a Person which is not such a stockholder or Affiliate and, if such
transaction or series of transactions involves payment for services of such a
stockholder or Affiliate, (x) for amounts greater than $10,000,000 and less than
$25,000,000 per annum, Company shall deliver an Officers' Certificate to the
Administrative Agent certifying that such Shareholder/Affiliate Transaction
complies with clause (b) above or (y) for amounts equal to or greater than
$25,000,000 per annum, then (A) a majority of the disinterested members of the
board of directors shall in good faith determine that such payments are fair
consideration for the services performed or to be performed (evidenced by a
Board
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Resolution) or (B) Company must receive a favorable opinion from a nationally
recognized investment banking firm chosen by Company or, if no such investment
banking firm is in a position to provide such opinion, a similar firm chosen by
Company (having expertise in the specific area which is the subject of the
opinion), that such payments are fair consideration for the services performed
or to be performed (a copy of which shall be delivered to the Administrative
Agent); provided that the foregoing requirements of this subsection 6.8 shall
not apply to:
(i) Shareholder/Affiliate Transactions involving the purchase or sale
of crude oil in the ordinary course of Company's business, so long as such
transactions are priced in line with the market price of a crude benchmark
and the pricing of such transactions is equivalent to the pricing of
comparable transactions with unrelated third parties; and provided further
that the Gulf Payments shall not be deemed a Shareholder/Affiliate
Transaction,
(ii) Restricted Payments permitted by the provisions of subsection
6.5;
(iii) payments made in connection with the Blackstone Transaction,
including fees to Blackstone;
(iv) payment of annual management, consulting, monitoring and advisory
fees and related expenses to Blackstone and its Affiliates;
(v) payment of reasonable and customary fees paid to, and indemnity
provided on behalf of, officers, directors, employees or consultants of
Company or any Restricted Subsidiary;
(vi) payments by Company or any of its Restricted Subsidiaries to
Blackstone and its Affiliates made for any financial advisory, financing,
underwriting or placement services or in respect of other investment
banking activities, including, without limitation, in connection with
acquisitions or divestitures which payments are approved by a majority of
the board of directors of Company in good faith;
(vii) payments or loans to employees or consultants which are approved
by a majority of the board of directors of Company in good faith;
(viii) any agreement in effect on the Closing Date and any amendment
thereto (so long as any such amendment is not disadvantageous to the
Lenders in any material respect) or any transaction contemplated thereby;
or
(ix) any stockholder agreement or registration rights agreement to
which Company is a party on the Closing Date and any similar agreements
which it may enter into thereafter; provided that the performance by
Company or any of its Restricted Subsidiaries of obligations under any
future amendment or under such a similar agreement entered into
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after the Closing Date shall only be permitted by this clause (ix) to the
extent that the terms of any such amendment or new agreement are not
disadvantageous to the Lenders in any material respect.
6.9 Restrictions on Secured Indebtedness.
From and after the occurrence of an Investment Grade Rating Event, if
Company shall incur, issue, assume or guarantee any Indebtedness secured by a
Lien on any Principal Property of Company or on any share of stock or
Indebtedness of any Restricted Subsidiary (other than a Securitization Special
Purpose Entity), Company shall secure the Obligations equally and ratably with
(or, at Company's option, prior to) such secured Indebtedness so long as such
Indebtedness shall be so secured, unless the aggregate amount of all such
secured Indebtedness, together with all Attributable Indebtedness of Company
with respect to any Sale and Leaseback Transactions involving Principal
Properties (with the exception of such transactions which are excluded as
described in clauses (i) through (v) under subsection 6.10), would not exceed
10% of Consolidated Net Tangible Assets. The above restriction does not apply
to, and there will be excluded from secured Indebtedness in any computation
under such restriction, Indebtedness secured by: (i) Liens on property of, or on
any share of stock or Indebtedness of, any corporation existing at the time such
corporation becomes a Restricted Subsidiary and Liens on any property acquired
from a corporation which is merged with or into Company or a Subsidiary, (ii)
Liens in favor of Company; (iii) Liens in favor of governmental bodies to secure
progress, advance or other payments; (iv) Liens upon any property acquired after
the date of this Agreement, securing the purchase price thereof or created or
incurred simultaneously with (or within 270 days after) such acquisition to
finance the acquisition of such property or existing on such property at the
time of such acquisition, or Liens on improvements after such date, in each case
subject to certain conditions and provided that the principal amount of the
obligation or Indebtedness secured by such Lien shall not exceed 100% of the
cost or fair value (as determined in good faith by Company), whichever shall be
lower, of the property at the time of the acquisition, construction or
improvement thereof; (v) Liens securing industrial revenue or pollution control
bonds, (vi) Liens arising out of any final judgment for the payment of money
aggregating not in excess of $25,000,000 which remains unstayed, in effect and
unpaid for a period of 60 consecutive days or Liens arising out of any judgments
which are being contested in good faith, (vii) Permitted Liens in existence on
the date of the Investment Grade Rating Event, (viii) Liens to secure
obligations arising from time to time under the Existing Credit Agreement
including Guaranties thereof, or (ix) any extension, renewal, or replacement of
any Lien referred to in the foregoing clauses (i) through (viii) inclusive.
6.10 Restrictions on Sales and Leasebacks.
From and after the occurrence of an Investment Grade Rating Event, Company
shall not enter into any Sale and Leaseback Transaction involving any Principal
Property, unless the aggregate amount of all Attributable Indebtedness of
Company with respect to such transaction plus all secured Indebtedness (with the
exception of secured Indebtedness which is excluded as
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described in clauses (i) through (ix) under subsection 6.9) would not exceed 10%
of Consolidated Net Tangible Assets. This restriction does not apply to, and
there shall be excluded from Attributable Indebtedness in any computation under
such restriction, any Sale and Leaseback Transaction if: (i) the lease is for a
period, including renewal rights, not in excess of three years; (ii) the sale of
the Principal Property is made within 270 days after its acquisition,
construction or improvements; (iii) the lease secures or relates to industrial
revenue or pollution control bonds; (iv) the transaction is between Company and
a Restricted Subsidiary; or (v) Company, within 270 days after the sale is
completed, applies to the retirement of Indebtedness of Company or a Restricted
Subsidiary, or to the purchase of other property which will constitute a
Principal Property, an amount not less than the greater of (1) the net proceeds
of the sale of the Principal Property leased or (2) the fair market value (as
determined by Company in good faith) of the Principal Property leased. The
amount to be applied to the retirement of Indebtedness shall be reduced by (x)
the principal amount of any debentures or notes (including the New Notes) of
Company or a Restricted Subsidiary surrendered within 270 days after such sale
to the applicable trustee for retirement and cancellation, (y) the principal
amount of Indebtedness, other than the items referred to in the preceding clause
(x), voluntarily retired by Company or a Restricted Subsidiary within 270 days
after such sale and (z) associated transaction expenses.
6.11 Other Agreements.
Company shall not, and shall not permit any Subsidiary of Company to, enter
into or become a party (including as an assignee or successor) to any agreement
(including a refinancing or refunding of the Existing Credit Agreement) that
would conflict with this Agreement or the other Loan Documents.
6.12 Effect of Investment Grade Rating.
Notwithstanding the foregoing, upon the occurrence of any Investment Grade
Rating Event, subsections 6.1, 6.2, 6.3, 6.5, 6.6A(iv), 6.6A(v), 6.7 and 6.8
shall be of no further force or effect and shall cease to apply to Company and,
in lieu thereof, subsections 6.9 and 6.10 shall take effect.
SECTION 7.
EVENTS OF DEFAULT
If any of the following conditions or events (``Events of Default'') shall
occur:
7.1 Failure to Make Payments When Due.
Failure by Company to pay any installment of principal of any Loan or any
prepayment fee under subsection 2.4B(i)(b) or 2.4B(ii)(c) when due, whether at
stated maturity, by
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acceleration, by notice of voluntary prepayment, by mandatory prepayment or
otherwise; or failure by Company to pay any interest on any Loan within 30 days
after the date due; or
7.2 Default in Other Agreements.
A default occurs under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by Company or any Restricted Subsidiary of
Company (or the payment of which is guaranteed by Company or a Restricted
Subsidiary of Company), whether such Indebtedness or guarantee now exists or
shall be created hereafter, if (a) either (i) such default results from the
failure to pay principal (and premium, if any) upon the expressed maturity of
such Indebtedness (after the expiration of any applicable grace period) or (ii)
as a result of such default the maturity of such Indebtedness has been
accelerated prior to its expressed maturity and (b) the principal amount of such
Indebtedness, together with the principal amount of any other such Indebtedness
with respect to which the principal amount unpaid upon its expressed maturity
(after the expiration of any applicable grace period), or the maturity of which
has been so accelerated, exceeds $25,000,000; or
7.3 Breach of Certain Covenants.
Failure of Company to observe or perform any covenant, condition on the
part of Company to be performed or observed pursuant to Section 6.6 hereof; or
7.4 Other Defaults Under Loan Documents.
Company shall default in the performance, or breach, of any covenant of
Company in this Agreement or any other Loan Document (other than a covenant a
default in whose performance or whose breach is elsewhere in this Section 7
specifically dealt with), and continuance of such default or breach for a period
of 30 days after there has been given, by registered or certified mail, to
Company by Paying Agent or to Company and Paying Agent by Lenders having or
holding at least 25% of the aggregate Loan Exposure of all Lenders a written
notice specifying such default or breach and requiring it to be remedied and
stating that such notice is a ``Notice of Default'' hereunder; or
7.5 Involuntary Bankruptcy; Appointment of Receiver, etc.
The entry by a court having jurisdiction in the premises of (A) a decree or
order for relief in respect of Company or any Subsidiary of Company in an
involuntary case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or (B) a decree or order
adjudging Company or any Subsidiary of Company a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of Company or any Subsidiary of
Company under any applicable Federal or State law, or appointing a custodian,
receiver, liquidator, assignee, trustee,
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sequestrator or other similar official of Company or any Subsidiary of Company
or of any substantial part of the property of Company or any Subsidiary of
Company, or ordering the winding up or liquidation of the affairs of Company or
any Subsidiary of Company, 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
7.6 Voluntary Bankruptcy; Appointment of Receiver, etc.
The commencement by Company or any Subsidiary of Company of a voluntary
case or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent by Company or any Subsidiary
of Company to the entry of a decree or order for relief in respect of Company or
any Subsidiary of Company 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 Company or any Subsidiary of Company, or the filing by
Company or any Subsidiary of Company of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or State law, or the
consent by Company or any Subsidiary of Company to the filing of such petition
or to the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of Company
or any Subsidiary of Company or of any substantial part of their respective
property, or the making by Company or any Subsidiary of Company of an assignment
for the benefit of creditors, or the admission by either Company or any
Subsidiary of Company in writing of an inability to pay debts generally as they
become due, or the taking of corporate action by Company or any Subsidiary of
Company in furtherance of any such action; or
7.7 Judgments and Attachments.
A final judgment or final judgments (not subject to appeal) for the payment
of money are entered by a court or courts of competent jurisdiction against
Company or any Subsidiary of Company and such judgment or judgments remain
unstayed, in effect and unpaid for a period of 60 consecutive days; provided
that the aggregate of all such judgments (to the extent not paid or to be paid
by insurance) exceeds $50,000,000; or
7.8 Breach of Warranty.
Any representation, warranty, certification or other statement made by
Company or any of its Subsidiaries in any Loan Document on the Closing Date or
in any statement or certificate given by Company or any of its Subsidiaries in
writing on the Closing Date pursuant hereto or thereto or in connection herewith
or therewith shall be false in any material respect on the date as of which
made;
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THEN (i) upon the occurrence of any Event of Default described in subsection 7.5
or 7.6, each of (a) the unpaid principal amount of and accrued interest on the
Loans and (b) all other Obligations shall automatically become immediately due
and payable, without presentment, demand, protest or other requirements of any
kind, all of which are hereby expressly waived by Company, and the obligation of
each Lender to make any Loan shall thereupon terminate, and (ii) upon the
occurrence and during the continuation of any other Event of Default, Paying
Agent shall, upon the written request or with the written consent of Lenders
having or holding not less than 25% of the aggregate Loan Exposure of all
Lenders, by written notice to Company, declare all or any portion of the amounts
described in clauses (a) and (b) above to be, and the same shall forthwith
become, immediately due and payable, and the obligation of each Lender to make
any Loan shall thereupon terminate.
In the event of a declaration of acceleration because an Event of Default
specified in subsection 7.2 has occurred and is continuing, such declaration of
acceleration shall be automatically annulled if the holders of the Indebtedness
which is the subject of such Event of Default have rescinded their declaration
of acceleration in respect of such Indebtedness within 90 days thereof and the
Paying Agent has received written notice of such cure, waiver or rescission and
no other Event of Default has occurred during such 90 day period which has not
been cured or waived.
At any time after a declaration of acceleration with respect to the
Obligations has been made and before a judgment or decree for payment of the
money due has been obtained by Paying Agent and Lenders, Requisite Lenders, by
written notice to Company and Paying Agent, may rescind and annul such
declaration and its consequences if:
(1) Company has paid,
(A) all overdue interest on the Loans,
(B) the principal of (and premium, if any, on) any Loans which
have become due otherwise than by such declaration of acceleration
(including any Loans required to have been prepaid on the Optional Purchase
Date pursuant to an offer by Company to prepay Loans pursuant to subsection
2.4B(iii)(d)) and any interest thereon at the rate or rates prescribed
hereunder in respect of such Loans,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest, and principal (and premium, if any) at the
rate otherwise payable hereunder with respect to the applicable Loans;
(D) all sums paid or advanced by the Lenders hereunder and the
reasonable compensation, expenses, disbursements and advances of Agents and
their counsel; and
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(2) all Events of Default other than the non-payment of the principal
of Loans which have become due solely by such declaration of acceleration,
have been cured or waived.
The provisions of this paragraph are intended merely to bind Lenders to a
decision which may be made at the election of Requisite Lenders and are not
intended, directly or indirectly, to benefit Company, and such provisions shall
not at any time be construed so as to grant Company the right to require Lenders
to rescind or annul any acceleration hereunder or to preclude any Agent or
Lenders from exercising any of the rights or remedies available to them under
any of the Loan Documents, even if the conditions set forth in this paragraph
are met.
SECTION 8.
AGENTS
8.1 Appointment.
GSCP is hereby appointed Arranger and Syndication Agent hereunder, and each
Lender hereby authorizes Arranger and Syndication Agent to act as its agent in
accordance with the terms of this Agreement and the other Loan Documents. GSCP
is hereby appointed Administrative Agent hereunder and under the other Loan
Documents and each Lender hereby authorizes Administrative Agent to act as its
agent in accordance with the terms of this Agreement and the other Loan
Documents. State Street is hereby appointed Paying Agent hereunder and under the
other Loan Documents and each Lender hereby authorizes Paying Agent to act as
its agent in accordance with the terms of this Agreement and the other Loan
Documents. Each Agent hereby agrees to act upon the express conditions contained
in this Agreement and the other Loan Documents, as applicable. Except as
expressly provided in subsections 8.5 and 8.6, the provisions of this Section 8
are solely for the benefit of Agents and Lenders and Company shall have no
rights as a third party beneficiary of any of the provisions thereof. In
performing its functions and duties under this Agreement, each Agent shall act
solely as an agent of Lenders and does not assume and shall not be deemed to
have assumed any obligation towards or relationship of agency or trust with or
for Company or any of its Subsidiaries. Each of Arranger and Syndication Agent,
without consent of or notice to any party hereto, may assign any and all of its
rights or obligations hereunder to any of its Affiliates. As of the Closing
Date, all obligations of Arranger and Syndication Agent hereunder shall
terminate.
8.2 Powers and Duties; General Immunity.
A. Powers; Duties Specified. Each Lender irrevocably authorizes each
Agent to take such action on such Lender's behalf and to exercise such powers,
rights and remedies hereunder and under the other Loan Documents as are
specifically delegated or granted to such Agent by the terms hereof and thereof,
together with such powers, rights and remedies as are reasonably incidental
thereto. Each Agent shall have only those duties and responsi bilities that are
expressly
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specified in this Agreement and the other Loan Documents. Each Agent may
exercise such powers, rights and remedies and perform such duties by or through
its agents or employees. No Agent shall have, by reason of this Agreement or any
of the other Loan Documents, a fiduciary relationship in respect of any Lender;
and nothing in this Agreement or any of the other Loan Documents, expressed or
implied, is intended to or shall be so construed as to impose upon any Agent any
obligations in respect of this Agreement or any of the other Loan Documents
except as expressly set forth herein or therein.
B. No Responsibility for Certain Matters. No Agent shall be responsible
to any Lender for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any other
Loan Document or for any representations, warranties, recitals or statements
made herein or therein or made in any written or oral statements or in any
financial or other statements, instruments, reports or certificates or any other
documents furnished or made by any of Agent to Lenders or by or on behalf of
Company to any Agent or any Lender in connection with the Loan Documents and the
transactions contemplated thereby or for the financial condition or business
affairs of Company or any other Person liable for the payment of any
Obligations, nor shall any Agent be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions, covenants
or agreements contained in any of the Loan Documents or as to the use of the
proceeds of the Loans or as to the existence or possible existence of any Event
of Default or Potential Event of Default. Anything contained in this Agreement
to the contrary notwithstanding, neither Paying Agent nor Administrative Agent
shall have any liability arising from confirmations of the amount of outstanding
Loans.
C. Exculpatory Provisions. None of Agents nor any of their respective
officers, partners, directors, employees or agents shall be liable to Lenders
for any action taken or omitted by any Agent under or in connection with any of
the Loan Documents except to the extent caused by such Agent's gross negligence
or willful misconduct. Each Agent shall be entitled to refrain from any act or
the taking of any action (including the failure to take an action) in connection
with this Agreement or any of the other Loan Documents or from the exercise of
any power, discretion or authority vested in it hereunder or thereunder unless
and until such Agent shall have received instructions in respect thereof from
Requisite Lenders (or such other Lenders as may be required to give such
instructions under subsection 9.5) and, upon receipt of such instructions from
Requisite Lenders (or such other Lenders, as the case may be), such Agent shall
be entitled to act or (where so instructed) refrain from acting, or to exercise
such power, discretion or authority, in accordance with such instructions.
Without prejudice to the generality of the foregoing, (i) each Agent shall be
entitled to rely, and shall be fully protected in relying, upon any
communication, instrument or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons, and shall be
entitled to rely and shall be protected in relying on opinions and judgments of
attorneys (who may be attorneys for Company and its Subsidiaries), accountants,
experts and other professional advisors selected by it; and (ii) no Lender shall
have any right of action whatsoever against any Agent as a result of such Agent
acting or (where so instructed) refraining from acting under this Agreement or
any of the other Loan Documents in accordance with the instructions of Requisite
Lenders (or such other Lenders
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as may be required to give such instructions under subsection 9.5). Without
limiting the generality of the foregoing and the applicability thereof to the
Paying Agent, the Paying Agent shall not be charged with notice or knowledge of
any matter unless actually known to an officer working in its corporate trust
group or unless written notice thereof has been received by it in accordance
with the provisions of this Agreement. Unless otherwise expressly provided, the
Paying Agent shall not have any responsibility with respect to reports, notices,
certificates or other documents filed with it hereunder except to make them
available for inspection at reasonable times by the Lenders.
D. Agent Entitled to Act as Lender. The agency hereby created shall in no
way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, any Agent in its individual capacity as a Lender hereunder.
With respect to its participation in the Loans, each 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 and functions delegated to it
hereunder, and the term "Lender" or "Lenders" or any similar term shall,
unless the context clearly otherwise indicates, include each Agent (other than
the Paying Agent) in its individual capacity. Any Agent and its Affiliates may
accept deposits from, lend money to and generally engage in any kind of banking,
trust, financial advisory or other business with Company or any of its
Affiliates as if it were not performing the duties specified herein, and may
accept fees and other consideration from Company for services in connection with
this Agreement and otherwise without having to account for the same to Lenders.
8.3 Representations and Warranties; No Responsibility For Appraisal of Credit
worthiness.
Each Lender represents and warrants that it has made its own independent
investigation of the financial condition and affairs of Company and its
Subsidiaries in connection with the making of the Loans hereunder and that it
has made and shall continue to make its own appraisal of the creditworthiness of
Company and its Subsidiaries. No Agent shall have any duty or responsibility,
either initially or on a continuing basis, to make any such investigation or any
such appraisal on behalf of Lenders or to provide any Lender with any credit or
other information with respect thereto, whether coming into its possession
before the making of the Loans or at any time or times thereafter, and no Agent
shall have any responsibility with respect to the accuracy of or the
completeness of any information provided to Lenders.
8.4 Right to Indemnity.
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify each Agent, to the extent that such Agent shall not have been
reimbursed by Company, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including counsel fees and disbursements) or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against such
Agent in exercising its powers, rights and remedies or performing its duties
hereunder or under the other Loan
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Documents or otherwise in its capacity as such Agent in any way relating to or
arising out of this Agreement or the other Loan Documents; provided that no
Lender shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from such Agent's gross negligence or willful misconduct. If any
indemnity furnished to any Agent for any purpose shall, in the opinion of such
Agent, be insufficient or become impaired, such Agent may call for additional
indemnity and cease, or not commence, to do the acts indem nified against until
such additional indemnity is furnished.
8.5 Successor Administrative Agent.
Administrative Agent may resign at any time by giving 30 days' prior
written notice thereof to Lenders and Company, and Administrative Agent may be
removed at any time with or without cause by an instrument or concurrent
instruments in writing delivered to Company and Administrative Agent and signed
by Requisite Lenders. Upon any such notice of resignation or any such removal,
Requisite Lenders shall have the right, upon ten Business Days' notice to
Company, to appoint a successor Administrative Agent reasonably acceptable to
Company; provided that such acceptance of Company shall not be required so long
as any Potential Event of Default or Event of Default has occurred continuing.
Upon the acceptance of any appointment as Administrative Agent hereunder by a
successor Administrative Agent, that successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring or removed Administrative Agent and the retiring or
removed Administrative Agent shall be discharged from its duties and obligations
under this Agreement. After any retiring or removed Administrative Agent's
resignation or removal hereunder as Administrative Agent, the provisions of this
Section 8 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Administrative Agent under this Agreement.
8.6 Successor Paying Agent.
Paying Agent may resign at any time by giving 30 days' prior written notice
thereof to Lenders and Company, and Paying Agent may be removed at any time with
or without cause upon 30 days' prior written notice by Administrative Agent in
an instrument in writing delivered to Company and Paying Agent. Upon any such
notice of resignation or any such removal, Administrative Agent shall have the
right, upon ten Business Days' notice to Company, to appoint a successor Paying
Agent reasonably acceptable to Company; provided that such acceptance of Company
shall not be required, so long as any Potential Event of Default or Event of
Default has occurred and is continuing. Upon the acceptance of any appointment
as Paying Agent hereunder by a successor Paying Agent, that successor Paying
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring or removed Paying Agent and the retiring
or removed Paying Agent shall be discharged from its duties and obligations
under this Agreement. After any retiring or removed Paying Agent's resignation
or removal hereunder as Paying Agent, the provisions of this Section 8 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Paying Agent under this Agreement.
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SECTION 9.
MISCELLANEOUS
9.1 Assignments and Participations in Loans.
A. General. Subject to subsection 9.1B, each Lender shall have the right
at any time to (i) sell, assign or transfer to any Eligible Assignee, or (ii)
sell participations to any Person in, all or any part of its Commitment or the
Loan made by it or any other interest herein or in any other Obligations owed to
it; provided that no such sale, assignment, transfer or participation shall,
without the consent of Company, require Company to file a registration statement
with the Securities and Exchange Commission or apply to qualify such sale,
assignment, transfer or participation under the securities laws of any state;
and provided, further that no such sale, assignment or transfer described in
clause (i) above shall be effective unless and until an Assignment Agreement
effecting such sale, assignment or transfer shall have been delivered to Paying
Agent and Company and recorded in the Register as provided in subsection
9.1B(ii). Except as otherwise expressly provided in this subsection 9.1, no
Lender shall, as between Company and such Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment or transfer of, or any
granting of participations in, all or any part of its Commitment or the Loan or
other Obligations owed to such Lender.
B. Assignments.
(i) Amounts and Terms of Assignments. Each Commitment, Loan or other
Obligation may (a) be assigned in any amount to another Lender, or to an
Affiliate of the assigning Lender or another Lender, with the giving of
notice to Company and Paying Agent or (b) be assigned in an aggregate
amount of not less than $1,000,000 (or such lesser amount as shall
constitute the aggregate amount of the Commitment, Loan and other
Obligations of the assigning Lender) to any other Eligible Assignee
(treating any two or more investment funds that invest in commercial loans
and that are managed or advised by the same investment advisor or by an
Affiliate of such investment advisor as a single Eligible Assignee). To the
extent of any such assignment in accordance with either clause (a) or (b)
above, the assigning Lender shall be relieved of its obligations with
respect to its Commitment, Loan or other Obligations or the portion thereof
so assigned. The parties to each such assignment shall execute and deliver
to Paying Agent, for its acceptance and recording in the Register and
delivery of a copy thereof to Company, an Assignment Agreement and such
forms, certificates or other evidence, if any, with respect to United
States federal income tax withholding matters as the assignee under such
Assignment Agreement may be required to deliver to Paying Agent pursuant to
subsection 2.7B(iii)(a). Upon such execution, delivery, acceptance and
recordation, from and after the effective date specified in such Assignment
Agreement, (y) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it
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pursuant to such Assignment Agreement, shall have the rights and
obligations of a Lender hereunder and (z) the assigning Lender thereunder
shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment Agreement, relinquish its rights
(other than any rights which survive the termination of this Agreement
under subsection 9.7B) and be released from its obligations under this
Agreement (and, in the case of an Assignment Agreement covering all or the
remaining portion of an assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto). The
Commitments hereunder shall be modified to reflect the Commitment of such
assignee and any remaining Commitment of such assigning Lender and, if any
such assignment occurs after the issuance of the Notes hereunder, the
assigning Lender shall, upon the effectiveness of such assignment or as
promptly thereafter as practicable, surrender its Note to Paying Agent for
cancellation, and thereupon new Notes shall be issued to the assignee and
to the assigning Lender, substantially in the form of Exhibit II annexed
hereto with appropriate insertions, to reflect the outstanding Loans of the
assignee and/or the assigning Lender.
(ii) Acceptance by Paying Agent; Recordation in Register. Upon its
receipt of an Assignment Agreement executed by an assigning Lender and an
assignee representing that it is an Eligible Assignee, together with any
forms, certificates or other evidence with respect to United States federal
income tax withholding matters that such assignee may be required to
deliver to Paying Agent pursuant to subsection 2.7B(iii)(a), Paying Agent
shall (a) accept such Assignment Agreement by executing a counterpart
thereof as provided therein, (b) record the information contained therein
in the Register, and (c) give prompt notice thereof to Company. Paying
Agent shall maintain a copy of each Assignment Agreement delivered to and
accepted by it as provided in this subsection 9.1B(ii).
(iii) Representation of Lenders. Each Lender initially party to this
Agreement hereby represents, and each Person that becomes a Lender pursuant
to an assignment permitted by this subsection 9.1B upon its becoming a
Lender under this Agreement shall be deemed to represent, that it is a
commercial lender, other financial institution or other "accredited
investor" (as defined in Regulation D under the Securities Act) which
makes loans in the ordinary course of its business and is acquiring the
Loans without a view to distribution of the Loans within the meaning of the
federal securities laws, and that it will make or acquire Loans for its own
account in the ordinary course of such business; provided that, subject to
the provisions of this subsection 9.1, the disposition of any promissory
notes or other evidences of or interests in Indebtedness held by such
Lender shall at all times be within its exclusive control.
C. Participations. The holder of any participation, other than an
Affiliate of the Lender granting such participation, shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
directly affecting (i) the extension of the regularly scheduled maturity of any
portion of the principal amount of or interest on any Loan allocated to such
participation or (ii) a reduction of the principal amount of or the rate of
interest payable on
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any Loan allocated to such participation, and all amounts payable by Company
hereunder (including amounts payable to such Lender pursuant to subsections 2.6C
and 2.7) shall be determined as if such Lender had not sold such participation.
Company and each Lender hereby acknowledge and agree that, solely for purposes
of subsection 9.4, (a) any participation will give rise to a direct obligation
of Company to the participant and (b) the participant shall be considered to be
a "Lender".
D. Assignments to Federal Reserve Banks. In addition to the assignments
and participations permitted under the foregoing provisions of this subsection
9.1, any Lender may assign and pledge all or any portion of its Loan, the other
Obligations owed to such Lender, and its Note to any Federal Reserve Bank 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
Bank, and with the consent of Company and Administrative Agent any Lender which
is an investment fund may pledge all or any portion of its Notes or Loans to its
trustee in support of its obligations to such trustee; provided that (i) no
Lender shall, as between Company and such Lender, be relieved of any of its
obligations hereunder as a result of any such assignment and pledge and (ii) in
no event shall such Federal Reserve Bank or trustee be considered to be a
"Lender" or be entitled to require the assigning Lender to take or omit to take
any action hereunder.
E. Information. Each Lender may furnish any information concerning
Company and its Subsidiaries in the possession of that Lender from time to time
to assignees and participants (including prospective assignees and
participants), subject to subsection 9.17.
F. Representations of Lenders. Each Lender listed on the signature pages
hereof hereby represents and warrants (i) that it is an Eligible Assignee
described in clause (A) of the definition thereof; (ii) that it has experience
and expertise in the making of loans such as the Loans; and (iii) that it will
make its Loan for its own account in the ordinary course of its business and
without a view to distribution of such Loan within the meaning of the Securities
Act or the Exchange Act or other federal securities laws (it being understood
that, subject to the provisions of this subsection 9.1, the disposition of such
Loan or any interests therein shall at all times remain within its exclusive
control). Each Lender that becomes a party hereto pursuant to an Assignment
Agreement shall be deemed to agree that the representations and warranties of
such Lender contained in Section 2(c) of such Assignment Agreement are
incorporated herein by this reference. Each Lender hereby acknowledges that the
Notes, Loans and other obligations hereunder as are commercial loans and not
securities.
9.2 Expenses.
Company agrees to pay promptly (i) the reasonable fees and reasonable
out-of-pocket expenses and disbursements of counsel to Arranger and counsel to
Paying Agent (in each case including allocated costs of internal counsel) in
connection with any consents, amendments, waivers or other modifications thereto
and any other documents or matters requested by Company;
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(ii) all other actual and reasonable costs and expenses incurred by Arranger or
Paying Agent in connection with the negotiation, preparation and execution of
any consents, amendments, waivers or other modifications to the Loan Documents
and the transactions contemplated thereby; and (iii) after the occurrence of an
Event of Default, all costs and expenses, including reasonable attorneys' fees
(including allocated costs of internal counsel), incurred by Agents and Lenders
in enforcing any Obligations of or in collecting any payments due from Company
hereunder or under the other Loan Documents by reason of such Event of Default
or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a ``work-out'' or
pursuant to any insolvency or bankruptcy proceedings.
9.3 Indemnity.
---------
In addition to the payment of expenses pursuant to subsection 9.2, whether
or not the transactions contemplated hereby shall be consummated, Company agrees
to defend (by counsel selected by Company and reasonably acceptable to Agent),
indemnify, pay and hold harmless Agents and Lenders, and the officers, partners,
directors, employees, agents and affiliates of Agents and Lenders (collectively
called the ``Indemnitees''), from and against any and all Indemnified
Liabilities (as hereinafter defined); provided that Company shall not have any
obligation to any Indemnitee hereunder with respect to any Indemnified
Liabilities to the extent such Indemnified Liabilities arise primarily from the
gross negligence or willful misconduct of that Indemnitee.
As used herein, ``Indemnified Liabilities'' means, collectively, any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including the reasonable fees and disbursements of counsel for
Indemnitees (subject to any restrictions in the preceding paragraph) in
connection with any investigative, administrative or judicial proceeding
commenced or threatened by any Person, whether or not any such Indemnitee shall
be designated as a party or a potential party thereto, and any reasonable fees
or expenses incurred by Indemnitees in enforcing this indemnity), whether
direct, indirect or consequential and whether based on any federal, state or
foreign laws, statutes, rules or regulations, on common law or equitable cause
or on contract or otherwise, that may be imposed on, incurred by, or asserted
against any such Indemnitee, in any manner relating to or arising out of (i)
this Agreement or the other Loan Documents or the transactions contemplated
hereby or thereby (including Lenders' agreement to make the Loans hereunder or
the use or intended use of the proceeds thereof, or any enforcement of any of
the Loan Documents) or (ii) any commitment letter delivered by Arranger to
Company in connection with the credit facilities established hereunder.
To the extent that the undertakings to defend, indemnify, pay and hold
harmless set forth in this subsection 9.3 are applicable by their terms but may
be unenforceable in whole or in part because they are violative of any law or
public policy, Company shall contribute the maximum portion that it is permitted
to pay and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by Indemnitees or any of them.
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9.4 Ratable Sharing.
Lenders hereby agree among themselves that if any of them shall, whether by
voluntary payment (other than a voluntary prepayment of Loans made and applied
in accordance with the terms of this Agreement), by realization upon security,
by counterclaim or cross action or by the enforcement of any right under the
Loan Documents or otherwise, or as adequate protection of a deposit treated as
cash collateral under the Bankruptcy Code, receive payment or reduction of a
proportion of the aggregate amount of principal, interest, fees and other
amounts then due and owing to that Lender hereunder or under the other Loan
Documents (collectively, the ``Aggregate Amounts Due'' to such Lender) which is
greater than the proportion received by any other Lender in respect of the
Aggregate Amounts Due to such other Lender, then the Lender receiving such
proportionately greater payment shall (i) notify Administrative Agent and each
other Lender of the receipt of such payment and (ii) apply a portion of such
payment to purchase participations (which it shall be deemed to have purchased
from each seller of a participation simultaneously upon the receipt by such
seller of its portion of such payment) in the Aggregate Amounts Due to the other
Lenders so that all such recoveries of Aggregate Amounts Due shall be shared by
all Lenders in proportion to the Aggregate Amounts Due to them; provided that if
all or part of such proportionately greater payment received by such purchasing
Lender is thereafter recovered from such Lender upon the bankruptcy or
reorganization of Company or otherwise, those purchases shall be rescinded and
the purchase prices paid for such participations shall be returned to such
purchasing Lender ratably to the extent of such recovery, but without interest.
Company expressly consents to the foregoing arrangement and agrees that any
holder of a participation so purchased may exercise any and all rights of
banker's lien, set-off or counterclaim with respect to any and all monies owing
by Company to that holder with respect thereto as fully as if that holder were
owed the amount of the participation held by that holder.
9.5 Amendments and Waivers.
A. No amendment, modification, termination or waiver of any provision of
the Loan Documents, or consent to any departure by Company therefrom, shall in
any event be effective without the written concurrence of Requisite Lenders;
provided that no such amendment, modification, termination, waiver or consent
shall, without the consent of each Lender (with Obligations directly affected in
the case of the following clause (i)): (i) extend the scheduled final maturity
of any Loan or Note, or waive, reduce or postpone any scheduled repayment set
forth in subsection 2.4A, or reduce the rate of interest on any Loan or extend
the time for payment of any such interest, or reduce the principal amount of any
Loan or the amount of any prepayment fees payable hereunder, (ii) amend, modify,
terminate or waive any provision of this subsection 9.5, or (iii) reduce the
percentage specified in the definition of ``Requisite Lenders'' or the
percentage of Lenders required in respect of any action under Section 7, or (iv)
impair the right to institute suit for the enforcement of any payment on or with
respect to any Obligations; provided, further that no such amendment,
modification, termination or waiver shall (1) increase the Commitments of any
Lender over the amount thereof then in effect without the consent of such Lender
(it being understood that no amendment, modification or waiver of any condition
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precedent, covenant, Potential Event of Default or Event of Default shall
constitute an increase in the Commitment of any Lender, and that no increase in
the available portion of any Commitment of any Lender shall constitute an
increase in such Commitment of such Lender); or (2) amend, modify, terminate or
waive any provision of Section 8 or subsection 2.3 as the same applies to each
Agent, or any other provision of this Agreement as the same applies to the
rights or obligations of any Agent, in each case without the consent of such
Agent.
B. Paying Agent may, but shall have no obligation to, with the concurrence
of any Lender, execute amendments, modifications, waivers or consents on behalf
of that Lender. Any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given. No notice to or
demand on Company in any case shall entitle Company to any other or further
notice or demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this subsection 9.5
shall be binding upon each Lender at the time outstanding, each future Lender
and, if signed by Company, on Company.
9.6 Notices.
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile, or three Business
Days after depositing it in the United States mail with postage prepaid and
properly addressed; provided that notices to any Agent shall not be effective
until received. For the purposes hereof, the address of each party hereto shall
be as set forth under such party's name on the signature pages hereof or (i) as
to Company and any Agent, such other address as shall be designated by such
Person in a written notice delivered to the other parties hereto and (ii) as to
each other party, such other address as shall be designated by such party in a
written notice delivered to Paying Agent and Company.
9.7 Survival of Representations, Warranties and Agreements.
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the Loans
hereunder.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Company set forth in subsections 2.3, 2.6C, 2.7, 9.2
and 9.3 and the agreements of Lenders set forth in subsections 8.2C, 8.4 and 9.4
shall survive the payment of the Loans and the termination of this Agreement.
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9.8 Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of Agents or any Lender in the exercise of
any power, right or privilege hereunder or under any other Loan Document shall
impair such power, right or privilege or be construed to be a waiver of any
default or acquiescence therein, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other power, right or privilege. All rights and remedies existing under this
Agreement and the other Loan Documents are cumulative to, and not exclusive of,
any rights or remedies otherwise available.
9.9 Marshalling; Payments Set Aside.
No Agent nor any Lender shall be under any obligation to marshal any assets
in favor of Company or any other party or against or in payment of any or all of
the Obligations. To the extent that Company makes a payment or payments to any
Agent or Lenders (or to any Agent for the benefit of Lenders), and such payment
or payments or the proceeds of such enforcement or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, any other state or federal law, common law or any equitable
cause, then, to the extent of such recovery, the obligation or part thereof
originally intended to be satisfied, and all Liens, rights and remedies therefor
or related thereto, shall be revived and continued in full force and effect as
if such payment or payments had not been made or such enforcement or setoff had
not occurred.
9.10 Severability.
In case any provision in or obligation under this Agreement or the Notes
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
9.11 Obligations Several; Independent Nature of Lenders' Rights.
The obligations of Lenders hereunder are several and no Lender shall be
responsible for the obligations or Commitments of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.
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9.12 Headings.
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
9.13 Applicable Law.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES.
9.14 Successors and Assigns.
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of Lenders (it being understood that
Lenders' rights of assignment are subject to subsection 9.1). Neither Company's
rights or obligations hereunder nor any interest therein may be assigned or
delegated by Company without the prior written consent of all Lenders.
9.15 Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS THEREUNDER, MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY
OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH PARTY HERETO, FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN
ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO SUCH PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH
SUBSECTION 9.6;
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(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH PARTY IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST COMPANY IN
THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 9.15 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND EN-FORCEABLE TO THE FULLEST
EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR
OTHERWISE.
9.16 Waiver of Jury Trial.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN
THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver
is intended to be all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
contract claims, tort claims, breach of duty claims and all other common law and
statutory claims. Each party hereto acknowledges that this waiver is a material
inducement to enter into a business relationship, that each has already relied
on this waiver in entering into this Agreement, and that each will continue to
rely on this waiver in their related future dealings. Each party hereto further
warrants and represents that it has reviewed this waiver with its legal counsel
and that it knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN
WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION 9.16 AND EXECUTED BY EACH OF
THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS
MADE HEREUNDER. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
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9.17 Confidentiality.
Each Lender shall hold as confidential all non-public information obtained
pursuant to the requirements of this Agreement which has been identified as
confidential by Company in accordance with such Lender's customary procedures
for handling confidential information of this nature and in accordance with
prudent lending or investing practices, it being understood and agreed by
Company that in any event a Lender may make disclosures to (a) Affiliates of
such Lender or disclosures reasonably required by any bona fide assignee,
transferee or participant in connection with the contemplated assignment or
transfer by such Lender of its Loan or any participations therein, (b) to such
of its respective officers, directors, employees, agents, affiliates and
representatives as need to know such information, (c) to the extent requested by
any regulatory authority, (d) to the extent otherwise required by applicable
laws and regulations or by any subpoena or similar legal process or disclosures
required by the National Association of Insurance Commissioners, (e) in
connection with any suit, action or proceeding relating to the enforcement of
its rights hereunder or under the other Loan Documents or (f) to the extent such
information (i) is publicly available other than as a result of a breach of this
subsection 9.17 or (ii) becomes available to any Agent or any Lender on a
nonconfidential basis from a source other than Company.
9.18 Counterparts; Effectiveness.
This Agreement and any amendments, waivers, consents or supplements hereto
or in connection herewith may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by Company and
Administrative Agent and Paying Agent of written or telephonic notification of
such execution and authorization of delivery thereof.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first written above.
COMPANY:
CLARK REFINING & MARKETING, INC.
By:______________________________
Name:
Title:
Notice Address:
Clark Refining & Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 63105
Attention: President
Telephone: (314) 854-9696
Facsimile: (314) 854-1570
S-1
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AGENTS AND LENDERS: GOLDMAN SACHS CREDIT PARTNERS L.P.,
individually, and as Arranger, Syndication Agent and
Administrative Agent
By:_________________________
Authorized Signatory
Notice Address:
Goldman Sachs Credit Partners L.P.
85 Broad Street
New York, New York 10004
Attention: Lisa Laura Mays
Telephone: (212) 902-2886
Facsimile: (212) 902-3757
with a copy to:
Goldman Sachs Credit Partners L.P.
85 Broad Street
New York, New York 10004
Attention: Lola Small
Telephone: (212) 902-2391
Facsimile: (212) 902-3000
STATE STREET BANK AND TRUST COMPANY OF MISSOURI, N.A.,
as Paying Agent
By:_________________________
Name: Robert A. Clasquin
Title: Assistant Vice President
Notice Address:
State Street Bank and Trust Company of Missouri, N.A.
1 Metropolitan Square, 39th Floor
211 North Broadway
St. Louis, Missouri 63107
Attention: Robert A. Clasquin
Telephone: (314) 206-3016
S-2
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Facsimile: (314) 206-3055
S-3
<PAGE>
EXECUTION
================================================================================
CREDIT AGREEMENT
DATED AS OF NOVEMBER 21, 1997
AMONG
CLARK REFINING & MARKETING, INC.,
as Borrower,
THE LENDERS LISTED HEREIN,
as Lenders,
GOLDMAN SACHS CREDIT PARTNERS L.P.,
as Arranger,
GOLDMAN SACHS CREDIT PARTNERS L.P.,
as Syndication Agent,
STATE STREET BANK AND TRUST COMPANY OF MISSOURI, N.A.,
as Paying Agent
AND
GOLDMAN SACHS CREDIT PARTNERS L.P.,
as Administrative Agent
===================================
CO-MANAGERS:
BT ALEX BROWN INCORPORATED
BEAR, STEARNS & CO. INC.
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
LEHMAN BROTHERS INC.
================================================================================
<PAGE>
CLARK REFINING & MARKETING, INC.
CREDIT AGREEMENT
TABLE OF CONTENTS
-----------------
<TABLE>
<C> <S> <C>
Page
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SECTION 1.
DEFINITIONS........................................................................ 1
1.1 Certain Defined Terms.......................................................................................... 1
1.2 Accounting Terms............................................................................................... 27
1.3 Other Definitional Provisions and Rules of Construction........................................................ 27
1.4 Compliance Certificates and Opinions........................................................................... 27
1.5 Form of Documents Delivered to Agents.......................................................................... 28
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS..................................................................... 28
2.1 Commitments; Making of Loans; the Register; Notes.............................................................. 28
2.2 Interest on the Loans.......................................................................................... 31
2.3 Fees........................................................................................................... 32
2.4 Repayments and Prepayments; General Provisions Regarding Payments.............................................. 32
2.5 Use of Proceeds................................................................................................ 37
2.6 Special Provisions Governing Eurodollar Rate Loans............................................................. 37
2.7 Increased Costs; Taxes; Capital Adequacy....................................................................... 40
2.8 Obligation of Lenders to Mitigate.............................................................................. 44
2.9 Removal or Replacement of a Lender............................................................................. 44
SECTION 3.
CONDITIONS TO LOANS..................................................................... 45
3.1 Company Documents.............................................................................................. 45
3.2 Issuance of Fixed Rate Senior Notes............................................................................ 46
3.3 Issuance of Subordinated Notes................................................................................. 46
3.4 Purchase of Special Dividend; Redemption of Holdings Zero Coupon Notes........................................ 46
3.5 Indentures..................................................................................................... 47
3.6 Legal Opinions................................................................................................. 47
3.7 Fees........................................................................................................... 47
3.8 Notice of Borrowing............................................................................................ 47
3.9 Officers' Certificate Regarding Certain Conditions............................................................. 48
SECTION 4.
COMPANY'S REPRESENTATIONS AND WARRANTIES....................................................................... 48
4.1 Organization, Powers, Qualification, Good Standing, Business and Subsidiaries.................................. 48
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
Page
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<C> <S> <C>
4.2 Authorization of Borrowing, etc................................................................................ 49
4.3 Valid Issuance of New Notes.................................................................................... 50
4.4 No Material Adverse Change..................................................................................... 51
4.5 Title to Properties; Liens..................................................................................... 51
4.6 Litigation..................................................................................................... 51
4.7 Insurance of Properties........................................................................................ 51
4.8 Performance of Agreements...................................................................................... 52
4.9 Securities Activities.......................................................................................... 52
4.10 Accountants.................................................................................................... 53
4.11 Environmental Protection....................................................................................... 53
4.12 Employee Matters............................................................................................... 53
4.13 Disclosure..................................................................................................... 53
SECTION 5.
COMPANY'S AFFIRMATIVE COVENANTS............................................................... 54
5.1 Financial Statements and Other Reports......................................................................... 54
5.2 Corporate Existence, etc....................................................................................... 55
5.3 Payment of Taxes and Claims; Tax Consolidation................................................................. 55
5.4 Maintenance of Properties...................................................................................... 56
5.5 Compliance with Laws, etc...................................................................................... 56
SECTION 6.
COMPANY'S NEGATIVE COVENANTS................................................................. 56
6.1 Indebtedness................................................................................................... 56
6.2 Prohibition on Liens and Related Matters....................................................................... 57
6.3 Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries of Company............. 57
6.4 Restrictions on Guaranties..................................................................................... 58
6.5 Limitations on Restricted Payments............................................................................. 58
6.6 Limitation on Merger, Consolidation, Sales of Assets........................................................... 61
6.7 Limitation on Certain Asset Dispositions....................................................................... 62
6.8 Transactions with Shareholders and Affiliates.................................................................. 63
6.9 Restrictions on Secured Indebtedness........................................................................... 64
6.10 Restrictions on Sales and Leasebacks........................................................................... 65
6.11 Other Agreements............................................................................................... 66
6.12 Effect of Investment Grade Rating.............................................................................. 66
SECTION 7.
EVENTS OF DEFAULT...................................................................... 66
7.1 Failure to Make Payments When Due.............................................................................. 66
7.2 Default in Other Agreements.................................................................................... 66
7.3 Breach of Certain Covenants.................................................................................... 67
</TABLE>
(ii)
<PAGE>
<TABLE>
Page
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<C> <S> <C>
7.4 Other Defaults Under Loan Documents................................................................................ 67
7.5 Involuntary Bankruptcy; Appointment of Receiver, etc............................................................... 67
7.6 Voluntary Bankruptcy; Appointment of Receiver, etc................................................................. 67
7.7 Judgments and Attachments.......................................................................................... 68
7.8 Breach of Warranty................................................................................................. 68
SECTION 8.
AGENTS................................................................................ 70
8.1 Appointment......................................................................................................... 70
8.2 Powers and Duties; General Immunity................................................................................. 70
8.3 Representations and Warranties; No Responsibility For Appraisal of Creditworthiness................................. 72
8.4 Right to Indemnity.................................................................................................. 72
8.5 Successor Administrative Agent...................................................................................... 73
8.6 Successor Paying Agent.............................................................................................. 73
SECTION 9.
MISCELLANEOUS............................................................................ 73
9.1 Assignments and Participations in Loans............................................................................ 73
9.2 Expenses........................................................................................................... 76
9.3 Indemnity.......................................................................................................... 77
9.4 Ratable Sharing.................................................................................................... 77
9.5 Amendments and Waivers............................................................................................. 78
9.6 Notices............................................................................................................ 79
9.7 Survival of Representations, Warranties and Agreements............................................................. 79
9.8 Failure or Indulgence Not Waiver; Remedies Cumulative.............................................................. 79
9.9 Marshalling; Payments Set Aside.................................................................................... 80
9.10 Severability....................................................................................................... 80
9.11 Obligations Several; Independent Nature of Lenders' Rights......................................................... 80
9.12 Headings........................................................................................................... 80
9.13 Applicable Law..................................................................................................... 80
9.14 Successors and Assigns............................................................................................. 81
9.15 Consent to Jurisdiction and Service of Process..................................................................... 81
9.16 Waiver of Jury Trial............................................................................................... 82
9.17 Confidentiality.................................................................................................... 82
9.18 Counterparts; Effectiveness........................................................................................ 83
Signature pages.................................................................................................... S-1
</TABLE>
(iii)
<PAGE>
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTE
III FORM OF OPINION OF MAYER BROWN & PLATT
IV FORM OF OPINION OF O'MELVENY & MYERS LLP
V FORM OF ASSIGNMENT AGREEMENT
VI FORM OF CERTIFICATE RE NON-BANK STATUS
SCHEDULES
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
(iv)
<PAGE>
Exhibit 10.23
MEMORANDUM OF AGREEMENT
made as of the 8th day of July, 1997
(hereinafter referred to as the "Agreement Date")
B E T W E E N:
CLARK REFINING AND MARKETING, INC.,
a corporation incorporated
under the laws of Delaware
(hereinafter referred to as the "Corporation"),
OF THE FIRST PART
- and -
Bradley D. Aldrich
of Chesterfield, Missouri
(hereinafter referred to as the "Executive"),
OF THE SECOND PART.
WHEREAS the Corporation is a wholly-owned subsidiary of Clark USA, Inc.
(hereinafter referred to as "Clark USA");
AND WHEREAS the Corporation recognizes the valuable services that the
Executive has provided and is continuing to provide to the Corporation, Clark
USA, and their affiliates, considers the establishment and maintenance of a
sound and vital management to be essential to protecting and enhancing the best
interests of the Corporation, Clark USA, and its shareholders, and wishes to
continue the Executive's employment in accordance with the terms of this
Agreement;
AND WHEREAS the Board has determined that it would be in the best interests
of Clark USA and the Corporation to induce the
-1-
<PAGE>
Executive to remain in the employ of Clark USA, the Corporation and the
Subsidiaries, by entering into this Agreement relating to the terms of the
Executive's continuing employment, and by indicating that in the event of a
Change in Control, the Executive would have certain automatic and guaranteed
rights;
AND WHEREAS both the Corporation and the Executive wish formally to agree
as to the terms and conditions which will govern the Executive's continuing
employment, and the terms and conditions which will govern the termination or
modification of the employment of the Executive following a Change in Control;
NOW THEREFORE, in consideration of the premises hereof and of the mutual
covenants and agreements hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties, the parties agree as follows:
ARTICLE II
Recitals
--------
II.1 The parties agree, and represent and warrant to each other, that the
above recitals are true and accurate.
ARTICLE III
Interpretation
--------------
III.1 Unless elsewhere herein otherwise expressly provided or unless the
context otherwise requires, words importing the singular include the plural and
vice versa and words importing the masculine gender include the feminine and
neuter genders.
III.2 The headings of the Articles, sections, subsections, paragraphs, and
clauses herein are inserted for convenience of reference only and shall not
affect the meaning or construction hereof.
III.3 This Agreement shall be construed in accordance with the laws of the
State of Missouri, without regard to the conflict of law provisions of any
state. All disputes shall be litigated in St. Louis, Missouri.
III.4 If any term or other provision of this Agreement is
-2-
<PAGE>
invalid, illegal or incapable of being enforced by any rule of Law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party hereto. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties hereto as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
III.5 In this Agreement, unless the context otherwise requires, the
following terms shall have the following meanings, respectively:
(a) "Affiliate" means (i) any corporation, partnership, joint venture or other
entity during any period in which it beneficially owns at least thirty
percent of the voting power of all classes of stock of the Corporation
entitled to vote; and (ii) any corporation, partnership, joint venture or
other entity during any period in which at least a fifty percent voting or
profits interest is beneficially owned by the Corporation or by any entity
that is an Affiliate by reason of clause (i) next above.
(b) "Basic Compensation" means the sum of:
(i) the annual salary of the Executive based upon the greater of (A) the
salary paid by or on behalf of Clark USA and the Corporation for the
calendar year ended immediately preceding the Date of Termination
and (B) the salary which would have been payable by or on behalf of
Clark USA and the Corporation to the Executive (based upon the
salary rate in effect immediately preceding the Date of Termination)
for the 12 months immediately following the Date of Termination; and
(ii) an amount equal to the greater of:
(A) the agreed yearly minimum bonus which is payable to the
Executive under the compensation terms in effect immediately
prior to the date of the Date
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of Termination; or
(B) the average of the yearly bonus amounts paid to the Executive
by Clark USA and the Corporation over the last two fiscal years
of the Corporation ended immediately preceding the date of the
Date of Termination.
(c) "beneficial ownership" shall be determined in accordance with Rule 13d-3
issued under the U.S. Securities Exchange Act of 1934.
(d) "Board" means the board of directors of the Corporation.
(e) "Cause" means a determination by the Board, after permitting the Executive
a reasonable opportunity to be heard, that any of the following has
occurred:
(i) wilful and continued failure by the Executive to substantially
perform the Executive's duties with the Corporation (other than any
such failure resulting from his incapacity due to physical or mental
illness) after a demand for substantial performance improvement has
been delivered in writing to the Executive by the Chairman, Chief
Executive Officer or the President of the Corporation, the person
performing the function of the Chairman, Chief Executive Officer or
President of the Corporation, or the person to whom the Executive
reports, which identifies the manner in which such officer or person
believes that the Executive has not substantially performed his
duties;
(ii) wilful engaging by the Executive in misconduct which is materially
injurious to Clark USA, the Corporation, or the Affiliates,
monetarily or otherwise; or
(iii) the conviction of the Executive of a criminal offense involving
dishonesty or other moral turpitude;
provided that no act, or failure to act, on the Executive's part shall be
considered "wilful" unless the Board determines that such act or failure to
act by the Executive
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was in bad faith and was without reasonable belief by the Executive that
such act or failure to act was in the best interests of Clark USA, the
Corporation, or the Affiliates. For purposes of paragraph (i) above, the
phrase "wilful and continued failure by the Executive to substantially
perform the Executive's duties with the Corporation" shall include, without
limitation, any violation of paragraph V.2(a).
(f) "Change in Control" means the first date upon which (I) a TrizecHahn
Corporation Change in Control shall have occurred, if on such date Tiger
shall beneficially own less than 20% of the number of shares of capital
stock of Clark USA held by it as of the Agreement Date; or (II) a Clark
Change in Control shall have occurred.
(g) "TrizecHahn Corporation Change in Control" means the occurrence of any of
the following events described in paragraph (i) through (vi) below:
(i) TrizecHahn Corporation - Voting/Board Control.
---------------------------------------------
The date upon which the following three conditions shall have been
satisfied:
(A) the MVS shall have been converted into SVS in accordance with
their terms (the "Conversion");
(B) a person or group (other than Mr. Peter Munk) holds shares
and/or other securities which, directly or after conversion,
exercise or exchange thereof, would entitle the holders thereof
to cast 20% or more of the votes attached to the outstanding
Voting Shares; and
(C) a change in the composition of the TrizecHahn Corporation Board
within two years after the date of Conversion such that the
directors of TrizecHahn Corporation in office immediately
before the date of Conversion and the directors recommended for
election or elected to succeed such directors by a majority of
such directors cease to constitute a majority of the TrizecHahn
Corporation Board;
provided, however, that a TrizecHahn Corporation
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Change in Control will be deemed to have occurred under this
paragraph (i) only if, on the date on which such TrizecHahn
Corporation Change in Control would otherwise have occurred,
TrizecHahn Corporation is a Substantial Owner of Clark USA.
(ii) TrizecHahn Corporation - Voting.
-------------------------------
The date upon which the following two conditions shall have been
satisfied:
(A) the Conversion shall have occurred; and
(B) a person or group (other than Mr. Peter Munk) holds shares
and/or other securities which, directly or after conversion,
exercise or exchange thereof, would entitle the holders thereof
to cast 35% or more of the votes attached to the outstanding
Voting Shares;
provided, however, that a TrizecHahn Corporation Change in Control
will be deemed to have occurred under this paragraph (ii) only if,
on the date on which such TrizecHahn Corporation Change in Control
would otherwise have occurred, TrizecHahn Corporation is a
Substantial Owner of Clark USA.
(iii) TrizecHahn Corporation - MVS/Board.
----------------------------------
The date upon which the following two conditions shall have been
satisfied:
(A) a majority of the MVS are beneficially owned, or control or
direction is exercised over a majority of the MVS, by any
person or group, other than Mr. Peter Munk or a member of his
immediate family who is a Canadian within the meaning of the
Investment Canada Act ("Change in Ownership"); and
(B) there is a change in the composition of the TrizecHahn
Corporation Board within two years after the date of the Change
in Ownership and the directors recommended for election or
elected to succeed such directors by a majority
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of such directors such that the directors in office immediately
before the date of the Change in Ownership cease to constitute
a majority of the TrizecHahn Corporation Board;
provided, however, that a TrizecHahn Corporation Change in Control
will be deemed to have occurred under this paragraph (iii) only if,
on the date on which such TrizecHahn Corporation Change in Control
would otherwise have occurred, TrizecHahn Corporation is a
Substantial Owner of Clark USA.
(iv) TrizecHahn Corporation - Merger/Board.
The date upon which the following two conditions shall have been
satisfied:
(A) the shareholders of TrizecHahn Corporation shall have approved
(I) an amalgamation, merger, or any other business combination
or consolidation of TrizecHahn Corporation with any other
corporation (other than a TrizecHahn Corporation Successor,
TrizecHahn Corporation Subsidiary, Clark USA, the Corporation,
or one or more of the Subsidiaries), (II) a plan for the
liquidation of TrizecHahn Corporation, (III) an agreement for
the sale or disposition of all or substantially all of the
assets of TrizecHahn Corporation; and
(B) within two years following a transaction referred to in
paragraph (iv)(A) above, a majority of the Board of the
amalgamated or merged entity or successor entity into which
TrizecHahn Corporation was liquidated or which acquired
substantially all of the assets of TrizecHahn Corporation is
not comprised of individuals who were directors of TrizecHahn
Corporation immediately before the event referred to in
paragraph (iv)(A) above, or directors recommended for election
or elected to succeed such directors by a majority of such
directors;
provided, however, that a TrizecHahn Corporation
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Change in Control will be deemed to have occurred under this
paragraph (iv) only if, on the date on which such TrizecHahn
Corporation Change in Control would otherwise have occurred,
TrizecHahn Corporation is a Substantial Owner of Clark USA.
(v) Increase in Ownership/Board Change.
The date upon which the following two conditions have been
satisfied:
(A) any Person (excluding TrizecHahn Corporation, any TrizecHahn
Corporation Subsidiary, and any person who satisfies the
requirements set forth in Rule 13d-1(b)(i) and (ii) issued under the
U.S. Securities Exchange Act of 1934 (relating to certain persons
acquiring securities in the ordinary course of business and not with
the purpose or effect of changing or influencing the control of the
issuer)) has beneficial ownership of the Voting Power of Clark USA
that is in excess of the greater of:
(I) 20% of the Voting Power of Clark USA; or
(II) the Voting Power of Clark USA then held by TrizecHahn
Corporation;
(B) more than 50% of the Board of Directors of Clark USA is
comprised of persons who are neither executive officers of
TrizecHahn Corporation or any TrizecHahn Corporation Subsidiary, nor
members of the board of directors of TrizecHahn Corporation.
(vi) Increase in Ownership.
The date upon which any Person (excluding TrizecHahn Corporation and
any TrizecHahn Corporation Subsidiary) has beneficial ownership of
the Voting Power of Clark USA that is in excess of the greater of:
(I) 35% of the Voting Power of Clark USA; or
(II) the Voting Power of Clark USA then held by TrizecHahn
Corporation.
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(h) "Clark Change in Control" means the occurrence of any of the events
described in paragraphs (i) through (iii) below:
(i) Merger of Clark USA.
The date of approval by the shareholders of Clark USA of a
reorganization, merger or consolidation of Clark USA, in each case,
with respect to which all or substantially all of the individuals
and entities who were the respective beneficial owners of the common
stock and voting securities of Clark USA immediately prior to such
reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation (or following a series of
prearranged related transactions), beneficially own more than 50%
of, respectively, the then outstanding shares of common stock or the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such reorganization,
merger or consolidation.
(ii) Liquidation of Clark USA.
The date of approval by the shareholders of Clark USA of the sale or
other disposition of all or substantially all of the assets of Clark
USA; in each case, with respect to which all or substantially all of
the individuals and entities who were the respective beneficial
owners of the common stock and voting securities of Clark USA
immediately prior to such sale or disposition do not, following such
sale or disposition (or following a series of prearranged related
transactions), beneficially own more than 50% of, respectively, the
then outstanding shares of common stock or the combined voting power
of the then outstanding voting securities entitled to vote generally
in the election of directors, as the case may be, of the entity or
entities acquiring all or substantially all of the assets of Clark
USA.
(iii) Disposition of the Corporation.
The first date on which Clark USA does not beneficially own more
than 50% of the total voting
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power of the outstanding capital stock of the Corporation.
(i) "Clark USA" means Clark USA, Inc. and includes any corporation,
partnership, joint venture or other entity that succeeds to the interests
of Clark USA, Inc.
(j) "Corporation" means Clark Refining and Marketing, Inc. and includes any
corporation, partnership, joint venture or other entity that succeeds to
the interests of Clark Refining and Marketing, Inc.
(k) "Date of Termination" means the first date on which the Executive is
employed by neither Clark USA, the Corporation, nor any Subsidiary.
(l) "Disability" means the physical or mental illness of the Executive
resulting in the Executive's absence from his full time duties with the
Corporation for more than nine consecutive months and failure by the
Executive to return to full time performance of his duties within thirty
days after written demand by the Corporation to do so given at any time
after such nine-month period.
(m) "Good Reason" means the occurrence of any of the following events without
the Executive's written consent:
(i) the assignment to the Executive of any duties inconsistent in any
respect with the Executive's position (including substantial status,
offices, titles and reporting requirements), authority, duties or
responsibilities, or any other action by the Corporation, in each
case which results in a substantial diminution in such position,
authority, duties or responsibilities, in the salary amount, or in
the amount of the potential bonus opportunity, previously provided to
the Executive;
(ii) the Corporation requiring the Executive to be based at any office or
location other than in the Greater St. Louis Area; or
(iii) any other action by the Executive's employer purporting to result in
a Date of Termination other than for Cause, Disability or death.
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(h) "Greater St. Louis Area" means any location within 30 miles (traveling by
automobile) of 8182 Maryland Avenue, St. Louis, Missouri.
(i) "group" means any person or company acting jointly or in concert with any
other person or company and for such purposes "acting jointly or in
concert" shall be interpreted in accordance with subsection 91(a) of the
Securities Act (Ontario).
(j) "TrizecHahn Corporation" means TrizecHahn Corporation, a corporation
incorporated under the laws of the Province of Ontario, and any TrizecHahn
Corporation Successor.
(k) "TrizecHahn Corporation Board" means the board of directors of TrizecHahn
Corporation.
(l) "TrizecHahn Corporation Subsidiary" means any corporation, partnership,
joint venture or other entity during any period in which at least a fifty
percent voting or profits interest is beneficially owned by TrizecHahn
Corporation.
(m) "TrizecHahn Corporation Successor" means any corporation, partnership,
joint venture or other entity which satisfies either (or both of) clause
(i) and (ii):
(i) Mr. Peter Munk has beneficial ownership that is in excess of the
greater of:
(A) 40% of the total voting power of the outstanding capital stock
of the entity; or
(B) the percentage of the total voting power of the outstanding
capital stock of the entity that is then held by any other
Person;
(ii) the entity succeeds to the interests of TrizecHahn Corporation;
but including only an entity which, immediately after the succession:
(A) is beneficially owned by all or substantially all of the
individuals and entities who were the respective beneficial owners of
TrizecHahn Corporation immediately prior to such succession, in
substantially the same proportions as the proportions
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beneficially owned immediately prior to such succession; or (B) for a
period of two years following the succession, a majority of the Board
of the successor entity is comprised of individuals who were directors
of TrizecHahn Corporation immediately before the succession.
(n) "MVS" means the outstanding Multiple Voting Shares in the capital of
TrizecHahn Corporation at any time.
(o) The term "Person", when capitalized, shall mean any person, and shall also
include two or more persons acting as a partnership, limited partnership,
syndicate, or other group for the purpose or with the effect of changing or
influencing the control of Clark USA. The provisions of this paragraph (u)
shall be interpreted based on the interpretations of the comparable
provisions of Sections 13 and 14 of the U.S. Securities Exchange Act of
1934 and the rules thereunder.
(p) "Subsidiary" means any corporation, partnership, joint venture or other
entity during any period in which at least a fifty percent voting or
profits interest is beneficially owned by the Clark USA.
(q) TrizecHahn Corporation shall be a "substantial owner" of Clark USA for the
period in which it beneficially owns at least 25% of the Voting Power of
Clark USA, and no other shareholder of Clark USA beneficially owns more
Voting Power of Clark USA than does TrizecHahn Corporation.
(r) "SVS" means the outstanding Subordinate Voting Shares in the capital of
TrizecHahn Corporation at any time.
(s) "Tiger" shall mean, collectively, The Jaguar Fund N.V., Tiger (a limited
partnership), Puma (a limited partnership) and any other Person managed by
Tiger Management Corporation which at any time holds any shares of capital
stock of Clark USA.
(t) "Voting Power of Clark USA" shall mean the total voting power of the
outstanding capital stock of Clark USA.
(u) "Voting Shares" means any security of TrizecHahn Corporation carrying a
right to vote for the election of directors of TrizecHahn Corporation under
all circumstances or under
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circumstances that have occurred and are continuing.
ARTICLE IV
Agreement Term
IV.1 Subject to the automatic extension discussed below in this Article
IV.1, the "Agreement Term" shall be the period beginning on the Agreement Date,
and ending on the fifth anniversary of the Agreement Date. On the fifth
anniversary of the Agreement Date and on each anniversary date thereafter
(including the period during which this Agreement is extended), the Agreement
Term shall automatically be extended by one additional year unless, not less
than 90 days prior to any such anniversary, either the Corporation or the
Executive shall have given written notice to the Executive or the Corporation,
as applicable, that the Agreement Term will not be extended.
IV.2 If a Change in Control occurs during the Agreement Term, and at the
time the Change in Control, less than two years remains in the Agreement Term,
the Agreement Term shall be automatically extended to the second anniversary of
the Agreement Term.
ARTICLE V
Continuation of Employment
V.1 During the Agreement Term, the Corporation agrees to continue the
Executive in its employ, in accordance with the terms and provisions of this
Agreement, in accordance with the following:
(a) The Executive shall be employed by the Corporation as its EVP and COO,
Refining, and shall not be assigned tasks that would be substantially
inconsistent with that position.
(b) The Executive shall receive, while employed, for each 12-consecutive
month period beginning on the Effective Date and each anniversary thereof, in
substantially equal monthly or more frequent installments, an annual base salary
of not less than $260,000.00 (the "Salary").
(c) The Executive is authorized to incur reasonable expenses for
entertainment, traveling, meals, lodging and similar
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items in promoting the Corporation's business. Subject to the reimbursement
applicable to the Corporation's senior management employees as in effect from
time to time, the Corporation will reimburse the Executive for all reasonable
expenses so incurred.
(d) The Executive shall be provided with the welfare benefits and other
fringe benefits to the same extent and on the same terms as those benefits are
provided by the Corporation from time to time to the Corporation's other senior
management employees.
V.2 (a) During the Agreement Term, while the Executive is employed by the
Corporation, the Executive shall not solicit, initiate or encourage proposals or
offers from, or provide information relating to Clark USA, the Corporation or
any of the Affiliates to, any person, entity or group in connection with or
relating to any acquisition or disposition of all or any material part of Clark
USA's issued and outstanding shares, or any amalgamation, merger, sale of all or
any material part of the assets of Clark USA, the Corporation or any Subsidiary,
take-over bid, re-organization, re-capitalization, liquidation, winding-up of,
or other business combination or any similar transaction involving Clark USA,
the Corporation or any Subsidiary, without in each case the explicit approval of
the Board, the Chairman of the Board, the Chief Executive Officer of the
Corporation or the person performing the function of the Chairman of the Board
or Chief Executive Officer of the Corporation.
(b) The provisions of paragraph V.2(a) shall not apply to the sale by the
Executive of any shares of Clark USA owned by him.
ARTICLE VI
Obligations Upon Termination
VI.1 If, at any time during the Agreement Term, the Executive's Date of
Termination occurs as a result the Executive's employment being terminated by
the Executive's employer (other than for Cause, Disability, or death), or as a
result of the Executive's employment being terminated by the Executive for Good
Reason:
(a) The Corporation shall pay to or to the order of the Executive in cash or
certified cheque within ten days after the Date of Termination, the
aggregate of the following
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amounts (less any statutory deductions):
(i) if not theretofore paid, the amount of the Executive's unpaid Basic
Compensation for the then current fiscal year of the Corporation for
the period to and including the Date of Termination, plus any other
compensation and benefit amounts that are accrued and unpaid as of
the Date of Termination; and
(ii) as partial compensation for the Executive's loss of employment, an
amount equal to three (3) times the Basic Compensation.
(b) If the Executive holds any options, rights, warrants or other entitlements
for the purchase or acquisition of securities in the capital of Clark USA,
the Corporation or any Affiliate granted by Clark USA or the Corporation
(collectively, "Rights"), regardless of whether such Rights are then
exercisable, notwithstanding the terms and conditions of such Rights or of
any plan or other document affecting such Rights, shall be deemed to be
immediately exercisable for a term that is the lesser of five years after
the Date of Termination or the remaining term to expiry for such Rights.
(c) The Corporation, at its expense, shall provide the Executive with the
reasonable job relocation counselling services of a firm chosen from time
to time by the Executive, for a period not to exceed 18 months after the
Date of Termination.
(d) The Corporation shall maintain in full force and effect, for the
Executive's continued benefit, until the earlier of:
(i) one year after the Date of Termination; and
(ii) the Executive's commencement of full time employment with a new
employer;
all life insurance, medical, dental, health and accident and disability
plans, programs or arrangements in which the Executive was entitled to
participate immediately prior to the Date of Termination at a cost to the
Executive no greater than the Executive paid while employed, provided that
the Executive's continued participation is possible under the general terms
and provisions of such plans and
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programs. In the event that the Executive's participation is barred, the
Corporation shall arrange to provide the Executive, at the Corporation's
expense, with benefits substantially similar to those which the Executive
is entitled to receive under such plans, programs or arrangements or pay
cash in an amount after tax sufficient to enable the Executive to purchase
substantially similar coverage for a one year period on an individual basis
at a cost to the Executive no greater than the Executive paid while
employed. In the case of the Executive's commencement of full time
employment with a new employer within the one year period, the Corporation
agrees to make up any differential in benefits between what the Executive
would have received from the Corporation in the one year period and what
the Executive receives from his new employer, so that the Executive is
ensured of receiving the same benefits which he would have been entitled to
receive from the Corporation had his employment with the Corporation
continued for the one year period at a cost to the Executive no greater
than the Executive paid while employed.
(e) Except as otherwise expressly provided in this Agreement, the Executive's
entitlement to benefits under the employee benefit plans and benefit
arrangements maintained by Clark USA, the Corporation, and the Affiliates,
shall be determined under the terms of the respective plans as in effect
from time to time, with such entitlement based on the fact that the
Executive's employment with Clark USA, the Corporation and the Affiliates
ceased on the Executive's Date of Termination.
Except as may be otherwise specifically provided in an amendment of this
subsection VI.1 adopted in accordance with subsection V11.8, payments under this
subsection VI.1 shall be in lieu of all benefits that may be otherwise payable
to or on behalf of the Executive pursuant to the terms of any severance pay
arrangement of Clark USA, the Corporation or any Affiliate or any other, similar
arrangement of Clark USA, the Corporation or any Affiliate providing benefits
upon involuntary termination of employment.
VI.2 If, at any time during the Agreement Term, the Executive's Date of
Termination occurs as a result the Executive's employment being terminated by
the Executive's voluntary resignation (other than for Good Reason), or is
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terminated by the employer for Cause, or if the Executive's Date of Termination
occurs as a result the Executive's employment being terminated by the
Executive's death or Disability:
(a) The Corporation shall pay to or to the order of the Executive in cash or
certified cheque within ten days after the Date of Termination, the
aggregate of the following amounts (less any statutory deductions), if not
theretofore paid, the amount of the Executive's unpaid Basic Compensation
for the then current fiscal year of the Corporation for the period to and
including the Date of Termination; and shall provide any other compensation
and benefit amounts that are accrued and unpaid as of the Date of
Termination; provided, however, that the Executive's entitlement to the
bonus amounts for the year shall be determined in accordance with the
provisions of the applicable bonus program.
(b) Except as otherwise expressly provided in this Agreement, the Executive's
entitlement to benefits under the employee benefit plans and benefit
arrangements maintained by Clark USA and the Corporation, shall be
determined under the terms of the respective plans as in effect from time
to time, with such entitlement based on the fact that the Executive's
employment with Clark USA and the Corporation ceased on the Executive's
Date of Termination.
VI.3 The Corporation shall pay to the Executive all reasonable legal and
professional fees and expenses incurred by the Executive in seeking to obtain or
enforce any right or benefit provided by this Agreement, if the Executive is
successful in obtaining such right or benefit.
VI.4 (a) In the event it shall be determined that any payment, benefit or
distribution (or combination thereof) by the Corporation, or by any other member
of the same affiliated group with the Corporation (as determined under Code
Section 280G(d)(5)) for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement, or
otherwise) (a "Payment") would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended from time to time (the
"Code"), or any interest or penalties are incurred by the Executive with respect
to such excise tax (other than interest or penalties incurred as a result of the
failure of the Executive to file any tax return,
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or pay any tax (except any such failure to pay tax in accordance with the terms
hereof), required by applicable law or to be filed or paid by the Executive)
(such excise tax together with any such interest and penalties, hereinafter
collectively referred to as the "Excise Tax"), the Executive shall be entitled
to receive an additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes, other than interest or penalties imposed as
a result of the failure of the Executive to file any tax return or pay any tax
(except any such failure to pay tax in accordance with the terms hereof),
required by applicable law to be filed or paid by the Executive), including,
without limitation, any income taxes (and any interest and penalties imposed
with respect thereto, other than interest or penalties imposed as a result of
the failure of the Executive to file any tax return or pay any tax (except any
such failure to pay tax in accordance with the terms hereof), required by
applicable law to be filed or paid by the Executive) and the Excise Tax imposed
upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of subsection VI.5(c), all
determinations required to be made under this subsection VI.5, including whether
and when a Gross-Up Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such determination, shall be
made by such nationally recognized certified public accounting firm as may be
designated by the Executive (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Corporation and the Executive within fifteen
(15) business days of the receipt of notice from the Executive that there has
been a Payment, or such earlier time as is requested by the Corporation. All
fees and expenses of the Accounting Firm shall be borne solely by the
Corporation. Any Gross-Up Payment, as determined pursuant to this Section VI.5
shall be paid by the Corporation to the Executive within five (5) days after the
receipt of the Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it shall so indicate
to the Executive in writing. Any determination by the Accounting Firm shall be
binding upon the Corporation and by the Executive. As a result of this
uncertainty in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by
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the Corporation should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the Corporation
exhausts its remedies pursuant to subsection VI.5(c) and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Corporation to or for the benefit of
the Executive.
(c) The Executive shall notify the Corporation in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Corporation of the Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten (10) business days after the
Executive is informed in writing of such claim and shall apprise the Corporation
of the nature of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the expiration of the
thirty (30) day period following the date on which it gives such notice to the
Corporation (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Corporation notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:
(1) give the Corporation any information requested by the Corporation
relating to such claim;
(2) take such action in connection with contesting such claim as the
Corporation shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Corporation;
(3) cooperate with the Corporation in good faith in order to effectively
contest such claim; and
(4) permit the Corporation to participate in any proceedings relating to
such claim;
provided, however, that the Corporation shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis,
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for any Excise Tax or income tax (including interest and penalties with respect
thereto, other than interest or penalties imposed as a result of the failure of
the Executive to file any tax return or pay any tax (except any such failure to
pay tax in accordance with the terms hereof), required by applicable law to be
filed or paid by the Executive) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this subsection 5.5(c), the Corporation shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Corporation
shall determine; provided, however, that if the Corporation directs the
Executive to pay such claim and sue for a refund, the Corporation shall advance
the amount of such payment to the Executive, on an interest-free basis, and
shall indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto,
other than interest or penalties imposed as a result of the failure of the
Executive to file any tax return or pay any tax (except any such failure to pay
tax in accordance with the terms hereof), required by applicable law to be filed
or paid by the Executive) imposed with respect to such advance or with respect
to any imputed income with respect to such advance; and provided, further, that
if the Executive is required to extend the statute of limitations to enable the
Corporation to contest such claim, the Executive may limit this extension solely
to such contested amount. The Corporation's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by
the Corporation pursuant to subsection VI.5(c), the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall (subject
to the Corporation's complying with the requirements of subsection VI.5(c)
promptly pay to the Corporation the amount of such refund
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(together with any interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by the Executive of an amount advanced by the
Corporation pursuant to subsection VI.5(c), a determination is made that the
Executive shall not be entitled to any refund with respect to such claim and the
Corporation does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of thirty (30) days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
ARTICLE VII
General
VII.1 If the Executive's Date of Termination occurs for any reason,
subject to subsection VII.3 the Executive shall not be prohibited or restricted
in any manner whatsoever from obtaining employment with or otherwise forming or
participating in a business competitive to the business of Clark USA, the
Corporation or Subsidiary.
VII.2 If the Executive's Date of Termination occurs for any reason, the
Executive shall not be subject to any duty or obligation to seek alternate
employment or other sources of income or benefits, or to mitigate his damages,
or to any similar duty or obligation, and, except as specifically provided with
respect to benefits in paragraph VI.1(d), all payment and other obligations of
the Corporation under this Agreement shall not be subject to any rights of set-
off, duty to mitigate or other reduction, and shall be paid and performed in
full notwithstanding any alternate employment or other sources of income or
benefits obtained or received or receivable by the Executive.
VII.3 The Executive agrees that he shall maintain the confidentiality of
any confidential or proprietary information concerning Clark USA, the
Corporation or any Subsidiary until the date, if any, upon which: (i) the
relevant information becomes available to the public or is made available to the
Executive from a source which is not bound by an obligation of confidentiality
to Clark USA, the Corporation or the relevant Subsidiary; or (ii) the Executive
is required to disclose such
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information by any court or governmental or regulatory authority of competent
jurisdiction (in which case the Executive shall notify the Corporation and,
after such notification, shall be entitled to disclose or make use of such
information only to the extent he is so required).
VII.4 Any notice required or permitted to be given under this Agreement
shall be in writing and shall be properly given if delivered by hand or mailed
by prepaid registered mail addressed as follows:
(a) in the case of the Corporation, to:
Clark Refining and Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 63105
Attention: Chief Executive Officer of the Corporation
with a copy to:
Clark Refining and Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 63105
Attention: Chairman of the Board of the Corporation
(b) in the case of the Executive, to:
Bradley D. Aldrich
16443 Andreas Drive
Chesterfield, Missouri 63005
or the last address of the Executive in the records of the
Corporation
or to such other address as the parties may from time to time specify by notice
given in accordance herewith. Any notice so given shall be conclusively deemed
to have been given or made on the day of delivery, if delivered, or if mailed by
registered mail, upon the date shown on the postal return receipt as the date
upon which the envelope containing such notice was actually received by the
addressee.
VII.5 This Agreement shall enure to the benefit of and be
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binding upon the Executive and his heirs, executors, administrators and other
legal personal representatives and upon the Corporation and its successors and
assigns.
VII.6 As a condition of receipt of the benefits described in paragraphs
VI.1(a) through VI.1(e), the Executive will be required to enter into a full and
complete release of the Corporation from any and all claims which the Executive
may then have for whatever reason or cause in connection with the Executive's
employment and the termination of it (including, without limitation, any rights
under an employment agreement which may then be in effect), other than those
obligations specifically set out in this Agreement, and other than obligations
of Clark USA, the Corporation and the Subsidiaries to the extent that the
documents providing for such obligations specifically provide that the
obligations are in addition to obligations under this Agreement. In agreeing to
the terms set out in this Agreement, the Executive specifically agrees to
execute a formal release document to that effect and will deliver upon request
appropriate resignations from all offices and positions with Clark USA, the
Corporation and any Subsidiaries and Affiliates if, as, and when requested by
the Board upon the termination of employment within the circumstances
contemplated by this Agreement. To avoid future uncertainty as to the
interpretation of this Agreement, the parties hereto expressly agree that if
Paul Melnuk ceases to be President and Chief Executive Officer of the
Corporation, and no events constituting Good Reason have occurred, then nothing
in this Agreement shall adversely affect the rights of the Executive which may
arise by reason of such cessation under any other agreement or arrangement
between the Executive and the Corporation.
VII.7 Each of the Corporation and the Executive agrees to execute all such
documents and to do all such acts and things, in any case at the Corporation's
expense, as the other party may reasonably request and as may be lawful and
within its powers to do or to cause to be done in order to carry out and/or
implement the provisions of intent of this Agreement, including, without
limitation, seeking all such governmental, regulatory and other third party
approvals as may be necessary or desirable. Without limiting the generality of
the foregoing, the Corporation agrees to execute all such documents and to do
all such acts and things as the Executive may reasonably request and as may be
lawful and within the power of the Corporation to do or cause to be done in
order to minimize any tax consequences to the Executive or his
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legal personal representatives in respect of the payment or performance by the
Corporation of the obligations of the Corporation upon termination arising under
Article V or in respect of other payments or actions required to be made or
taken by or on behalf of the Corporation in the event of termination of the
Executive's employment hereunder; provided that the Corporation shall in no
material way be prejudiced thereby.
VII.8 This Agreement may be amended only by an instrument in writing
signed by both parties.
VII.9 Neither party may waive or shall be deemed to have waived any right
it has under this Agreement (including under this subsection VII.9 except to the
extent that such waiver is in writing.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto.
CLARK REFINING AND MARKETING, INC.
By /s/ Paul D. Melnuk
--------------------------------
PRESIDENT/CEO
SIGNED, SEALED AND DELIVERED )
in the presence of )
)
)
/s/ Linda G. Schwent )
- --------------------------------) /s/ Bradley D. Aldrich
) --------------------------------
LINDA G. SCHWENT ) EXECUTIVE
- --------------------------------)
NOTARY PUBLIC, STATE OF MISSOURI
MY COMMISSION EXPIRES 11/22/99
ST. CHARLES COUNTY
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Exhibit 10.24
MEMORANDUM OF AGREEMENT
made as of the 8th day of July, 1997
(hereinafter referred to as the "Agreement Date")
B E T W E E N:
CLARK REFINING AND MARKETING, INC.,
a corporation incorporated
under the laws of Delaware
(hereinafter referred to as the "Corporation"),
OF THE FIRST PART
- and -
Brandon K. Barnholt
of St. Louis, Missouri
(hereinafter referred to as the "Executive"),
OF THE SECOND PART.
WHEREAS the Corporation is a wholly-owned subsidiary of Clark USA, Inc.
(hereinafter referred to as "Clark USA");
AND WHEREAS the Corporation recognizes the valuable services that the
Executive has provided and is continuing to provide to the Corporation, Clark
USA, and their affiliates, considers the establishment and maintenance of a
sound and vital management to be essential to protecting and enhancing the best
interests of the Corporation, Clark USA, and its shareholders, and wishes to
continue the Executive's employment in accordance with the terms of this
Agreement;
AND WHEREAS the Board has determined that it would be in the
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best interests of Clark USA and the Corporation to induce the Executive to
remain in the employ of Clark USA, the Corporation and the Subsidiaries, by
entering into this Agreement relating to the terms of the Executive's continuing
employment, and by indicating that in the event of a Change in Control, the
Executive would have certain automatic and guaranteed rights;
AND WHEREAS both the Corporation and the Executive wish formally to agree
as to the terms and conditions which will govern the Executive's continuing
employment, and the terms and conditions which will govern the termination or
modification of the employment of the Executive following a Change in Control;
NOW THEREFORE, in consideration of the premises hereof and of the mutual
covenants and agreements hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties, the parties agree as follows:
ARTICLE II
Recitals
--------
II.1 The parties agree, and represent and warrant to each other, that the
above recitals are true and accurate.
ARTICLE III
Interpretation
--------------
III.1 Unless elsewhere herein otherwise expressly provided or unless the
context otherwise requires, words importing the singular include the plural and
vice versa and words importing the masculine gender include the feminine and
neuter genders.
III.2 The headings of the Articles, sections, subsections, paragraphs, and
clauses herein are inserted for convenience of reference only and shall not
affect the meaning or construction hereof.
III.3 This Agreement shall be construed in accordance with the laws of the
State of Missouri, without regard to the conflict
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of law provisions of any state. All disputes shall be litigated in St. Louis,
Missouri.
III.4 If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of Law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party hereto. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties hereto as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
III.5 In this Agreement, unless the context otherwise requires, the
following terms shall have the following meanings, respectively:
(a) "Affiliate" means (i) any corporation, partnership, joint venture or other
entity during any period in which it beneficially owns at least thirty
percent of the voting power of all classes of stock of the Corporation
entitled to vote; and (ii) any corporation, partnership, joint venture or
other entity during any period in which at least a fifty percent voting or
profits interest is beneficially owned by the Corporation or by any entity
that is an Affiliate by reason of clause (i) next above.
(b) "Basic Compensation" means the sum of:
(i) the annual salary of the Executive based upon the greater of (A) the
salary paid by or on behalf of Clark USA and the Corporation for the
calendar year ended immediately preceding the Date of Termination
and (B) the salary which would have been payable by or on behalf of
Clark USA and the Corporation to the Executive (based upon the
salary rate in effect immediately preceding the Date of Termination)
for the 12 months immediately following the Date of Termination; and
(ii) an amount equal to the greater of:
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(A) the agreed yearly minimum bonus which is payable to the
Executive under the compensation terms in effect immediately
prior to the date of the Date of Termination; or
(B) the average of the yearly bonus amounts paid to the Executive
by Clark USA and the Corporation over the last two fiscal years
of the Corporation ended immediately preceding the date of the
Date of Termination.
(c) "beneficial ownership" shall be determined in accordance with Rule 13d-3
issued under the U.S. Securities Exchange Act of 1934.
(d) "Board" means the board of directors of the Corporation.
(e) "Cause" means a determination by the Board, after permitting the Executive
a reasonable opportunity to be heard, that any of the following has
occurred:
(i) wilful and continued failure by the Executive to substantially
perform the Executive's duties with the Corporation (other than any
such failure resulting from his incapacity due to physical or mental
illness) after a demand for substantial performance improvement has
been delivered in writing to the Executive by the Chairman, Chief
Executive Officer or the President of the Corporation, the person
performing the function of the Chairman, Chief Executive Officer or
President of the Corporation, or the person to whom the Executive
reports, which identifies the manner in which such officer or person
believes that the Executive has not substantially performed his
duties;
(ii) wilful engaging by the Executive in misconduct which is materially
injurious to Clark USA, the Corporation, or the Affiliates,
monetarily or otherwise; or
(iii) the conviction of the Executive of a criminal offense involving
dishonesty or other moral turpitude;
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provided that no act, or failure to act, on the Executive's part shall be
considered "wilful" unless the Board determines that such act or failure to
act by the Executive was in bad faith and was without reasonable belief by
the Executive that such act or failure to act was in the best interests of
Clark USA, the Corporation, or the Affiliates. For purposes of paragraph
(i) above, the phrase "wilful and continued failure by the Executive to
substantially perform the Executive's duties with the Corporation" shall
include, without limitation, any violation of paragraph V.2(a).
(f) "Change in Control" means the first date upon which (I) a TrizecHahn
Corporation Change in Control shall have occurred, if on such date Tiger
shall beneficially own less than 20% of the number of shares of capital
stock of Clark USA held by it as of the Agreement Date; or (II) a Clark
Change in Control shall have occurred.
(g) "TrizecHahn Corporation Change in Control" means the occurrence of any of
the following events described in paragraph (i) through (vi) below:
(i) TrizecHahn Corporation - Voting/Board Control.
The date upon which the following three conditions shall have been
satisfied:
(A) the MVS shall have been converted into SVS in accordance with
their terms (the "Conversion");
(B) a person or group (other than Mr. Peter Munk) holds shares
and/or other securities which, directly or after conversion,
exercise or exchange thereof, would entitle the holders thereof
to cast 20% or more of the votes attached to the outstanding
Voting Shares; and
(C) a change in the composition of the TrizecHahn Corporation Board
within two years after the date of Conversion such that the
directors of TrizecHahn Corporation in office immediately
before the date of Conversion and the directors recommended for
election or elected to succeed such directors by a majority of
such directors
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cease to constitute a majority of the TrizecHahn Corporation
Board;
provided, however, that a TrizecHahn Corporation Change in Control
will be deemed to have occurred under this paragraph (i) only if, on
the date on which such TrizecHahn Corporation Change in Control
would otherwise have occurred, TrizecHahn Corporation is a
Substantial Owner of Clark USA.
(ii) TrizecHahn Corporation - Voting.
-------------------------------
The date upon which the following two conditions shall have been
satisfied:
(A) the Conversion shall have occurred; and
(B) a person or group (other than Mr. Peter Munk) holds shares
and/or other securities which, directly or after conversion,
exercise or exchange thereof, would entitle the holders thereof
to cast 35% or more of the votes attached to the outstanding
Voting Shares;
provided, however, that a TrizecHahn Corporation Change in Control
will be deemed to have occurred under this paragraph (ii) only if,
on the date on which such TrizecHahn Corporation Change in Control
would otherwise have occurred, TrizecHahn Corporation is a
Substantial Owner of Clark USA.
(iii) TrizecHahn Corporation - MVS/Board.
----------------------------------
The date upon which the following two conditions shall have been
satisfied:
(A) a majority of the MVS are beneficially owned, or control or
direction is exercised over a majority of the MVS, by any
person or group, other than Mr. Peter Munk or a member of his
immediate family who is a Canadian within the meaning of the
Investment Canada Act ("Change in Ownership"); and
(B) there is a change in the composition of the
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TrizecHahn Corporation Board within two years after the date of
the Change in Ownership and the directors recommended for
election or elected to succeed such directors by a majority of
such directors such that the directors in office immediately
before the date of the Change in Ownership cease to constitute
a majority of the TrizecHahn Corporation Board;
provided, however, that a TrizecHahn Corporation Change in Control
will be deemed to have occurred under this paragraph (iii) only if,
on the date on which such TrizecHahn Corporation Change in Control
would otherwise have occurred, TrizecHahn Corporation is a
Substantial Owner of Clark USA.
(iv) TrizecHahn Corporation - Merger/Board.
The date upon which the following two conditions shall have been
satisfied:
(A) the shareholders of TrizecHahn Corporation shall have approved
(I) an amalgamation, merger, or any other business combination
or consolidation of TrizecHahn Corporation with any other
corporation (other than a TrizecHahn Corporation Successor,
TrizecHahn Corporation Subsidiary, Clark USA, the Corporation,
or one or more of the Subsidiaries), (II) a plan for the
liquidation of TrizecHahn Corporation, (III) an agreement for
the sale or disposition of all or substantially all of the
assets of TrizecHahn Corporation; and
(B) within two years following a transaction referred to in
paragraph (iv)(A) above, a majority of the Board of the
amalgamated or merged entity or successor entity into which
TrizecHahn Corporation was liquidated or which acquired
substantially all of the assets of TrizecHahn Corporation is
not comprised of individuals who were directors of TrizecHahn
Corporation immediately before the event referred to in
paragraph (iv)(A) above, or directors recommended for election
or elected to
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succeed such directors by a majority of such directors;
provided, however, that a TrizecHahn Corporation Change in Control
will be deemed to have occurred under this paragraph (iv) only if,
on the date on which such TrizecHahn Corporation Change in Control
would otherwise have occurred, TrizecHahn Corporation is a
Substantial Owner of Clark USA.
(v) Increase in Ownership/Board Change.
The date upon which the following two conditions have been
satisfied:
(A) any Person (excluding TrizecHahn Corporation, any TrizecHahn
Corporation Subsidiary, and any person who satisfies the
requirements set forth in Rule 13d-1(b)(i) and (ii) issued under the
U.S. Securities Exchange Act of 1934 (relating to certain persons
acquiring securities in the ordinary course of business and not with
the purpose or effect of changing or influencing the control of the
issuer)) has beneficial ownership of the Voting Power of Clark USA
that is in excess of the greater of:
(I) 20% of the Voting Power of Clark USA; or
(II) the Voting Power of Clark USA then held by TrizecHahn
Corporation;
(B) more than 50% of the Board of Directors of Clark USA is
comprised of persons who are neither executive officers of
TrizecHahn Corporation or any TrizecHahn Corporation Subsidiary, nor
members of the board of directors of TrizecHahn Corporation.
(vi) Increase in Ownership.
The date upon which any Person (excluding TrizecHahn Corporation and
any TrizecHahn Corporation Subsidiary) has beneficial ownership of
the Voting Power of Clark USA that is in excess of the greater of:
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(I) 35% of the Voting Power of Clark USA; or
(II) the Voting Power of Clark USA then held by TrizecHahn
Corporation.
(h) "Clark Change in Control" means the occurrence of any of the events
described in paragraphs (i) through (iii) below:
(i) Merger of Clark USA.
The date of approval by the shareholders of Clark USA of a
reorganization, merger or consolidation of Clark USA, in each case,
with respect to which all or substantially all of the individuals
and entities who were the respective beneficial owners of the common
stock and voting securities of Clark USA immediately prior to such
reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation (or following a series of
prearranged related transactions), beneficially own more than 50%
of, respectively, the then outstanding shares of common stock or the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such reorganization,
merger or consolidation.
(ii) Liquidation of Clark USA.
The date of approval by the shareholders of Clark USA of the sale or
other disposition of all or substantially all of the assets of Clark
USA; in each case, with respect to which all or substantially all of
the individuals and entities who were the respective beneficial
owners of the common stock and voting securities of Clark USA
immediately prior to such sale or disposition do not, following such
sale or disposition (or following a series of prearranged related
transactions), beneficially own more than 50% of, respectively, the
then outstanding shares of common stock or the combined voting power
of the then outstanding voting securities entitled to vote generally
in the election of directors, as the case may be, of the entity or
entities acquiring all or substantially all of the assets of Clark
USA.
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(iii) Disposition of the Corporation.
The first date on which Clark USA does not beneficially own more
than 50% of the total voting power of the outstanding capital stock
of the Corporation.
(i) "Clark USA" means Clark USA, Inc. and includes any corporation,
partnership, joint venture or other entity that succeeds to the interests
of Clark USA, Inc.
(j) "Corporation" means Clark Refining and Marketing, Inc. and includes any
corporation, partnership, joint venture or other entity that succeeds to
the interests of Clark Refining and Marketing, Inc.
(k) "Date of Termination" means the first date on which the Executive is
employed by neither Clark USA, the Corporation, nor any Subsidiary.
(l) "Disability" means the physical or mental illness of the Executive
resulting in the Executive's absence from his full time duties with the
Corporation for more than nine consecutive months and failure by the
Executive to return to full time performance of his duties within thirty
days after written demand by the Corporation to do so given at any time
after such nine-month period.
(m) "Good Reason" means the occurrence of any of the following events without
the Executive's written consent:
(i) the assignment to the Executive of any duties inconsistent in any
respect with the Executive's position (including substantial status,
offices, titles and reporting requirements), authority, duties or
responsibilities, or any other action by the Corporation, in each
case which results in a substantial diminution in such position,
authority, duties or responsibilities, in the salary amount, or in
the amount of the potential bonus opportunity, previously provided
to the Executive;
(ii) the Corporation requiring the Executive to be based at any office or
location other than in the Greater St. Louis Area; or
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(iii) any other action by the Executive's employer purporting to result in
a Date of Termination other than for Cause, Disability or death.
(h) "Greater St. Louis Area" means any location within 30 miles (traveling by
automobile) of 8182 Maryland Avenue, St. Louis, Missouri.
(i) "group" means any person or company acting jointly or in concert with any
other person or company and for such purposes "acting jointly or in
concert" shall be interpreted in accordance with subsection 91(a) of the
Securities Act (Ontario).
(j) "TrizecHahn Corporation" means TrizecHahn Corporation Corporation, a
corporation incorporated under the laws of the Province of Ontario, and any
TrizecHahn Corporation Successor.
(k) "TrizecHahn Corporation Board" means the board of directors of TrizecHahn
Corporation.
(l) "TrizecHahn Corporation Subsidiary" means any corporation, partnership,
joint venture or other entity during any period in which at least a fifty
percent voting or profits interest is beneficially owned by TrizecHahn
Corporation.
(m) "TrizecHahn Corporation Successor" means any corporation, partnership,
joint venture or other entity which satisfies either (or both of) clause
(i) and (ii):
(i) Mr. Peter Munk has beneficial ownership that is in excess of the
greater of:
(A) 40% of the total voting power of the outstanding capital stock
of the entity; or
(B) the percentage of the total voting power of the outstanding
capital stock of the entity that is then held by any other
Person;
(ii) the entity succeeds to the interests of TrizecHahn Corporation
Corporation; but including only an entity which, immediately after
the succession: (A) is beneficially owned by all or substantially
all of the
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individuals and entities who were the respective beneficial owners
of TrizecHahn Corporation immediately prior to such succession, in
substantially the same proportions as the proportions beneficially
owned immediately prior to such succession; or (B) for a period of
two years following the succession, a majority of the Board of the
successor entity is comprised of individuals who were directors of
TrizecHahn Corporation immediately before the succession.
(n) "MVS" means the outstanding Multiple Voting Shares in the capital of
TrizecHahn Corporation at any time.
(o) The term "Person", when capitalized, shall mean any person, and shall also
include two or more persons acting as a partnership, limited partnership,
syndicate, or other group for the purpose or with the effect of changing or
influencing the control of Clark USA. The provisions of this paragraph (u)
shall be interpreted based on the interpretations of the comparable
provisions of Sections 13 and 14 of the U.S. Securities Exchange Act of
1934 and the rules thereunder.
(p) "Subsidiary" means any corporation, partnership, joint venture or other
entity during any period in which at least a fifty percent voting or
profits interest is beneficially owned by the Clark USA.
(q) TrizecHahn Corporation shall be a "substantial owner" of Clark USA for the
period in which it beneficially owns at least 25% of the Voting Power of
Clark USA, and no other shareholder of Clark USA beneficially owns more
Voting Power of Clark USA than does TrizecHahn Corporation.
(r) "SVS" means the outstanding Subordinate Voting Shares in the capital of
TrizecHahn Corporation at any time.
(s) "Tiger" shall mean, collectively, The Jaguar Fund N.V., Tiger (a limited
partnership), Puma (a limited partnership) and any other Person managed by
Tiger Management Corporation which at any time holds any shares of capital
stock of Clark USA.
(t) "Voting Power of Clark USA" shall mean the total voting power of the
outstanding capital stock of Clark USA.
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(u) "Voting Shares" means any security of TrizecHahn Corporation carrying a
right to vote for the election of directors of TrizecHahn Corporation under
all circumstances or under circumstances that have occurred and are
continuing.
ARTICLE IV
Agreement Term
--------------
IV.1 Subject to the automatic extension discussed below in this Article
IV.1, the "Agreement Term" shall be the period beginning on the Agreement Date,
and ending on the fifth anniversary of the Agreement Date. On the fifth
anniversary of the Agreement Date and on each anniversary date thereafter
(including the period during which this Agreement is extended), the Agreement
Term shall automatically be extended by one additional year unless, not less
than 90 days prior to any such anniversary, either the Corporation or the
Executive shall have given written notice to the Executive or the Corporation,
as applicable, that the Agreement Term will not be extended.
IV.2 If a Change in Control occurs during the Agreement Term, and at the
time the Change in Control, less than two years remains in the Agreement Term,
the Agreement Term shall be automatically extended to the second anniversary of
the Agreement Term.
ARTICLE V
Continuation of Employment
--------------------------
V.1 During the Agreement Term, the Corporation agrees to continue the
Executive in its employ, in accordance with the terms and provisions of this
Agreement, in accordance with the following:
(a) The Executive shall be employed by the Corporation as its EVP and COO,
Marketing, and shall not be assigned tasks that would be substantially
inconsistent with that position.
(b) The Executive shall receive, while employed, for each 12-consecutive
month period beginning on the Effective Date and each anniversary thereof, in
substantially equal monthly or more frequent installments, an annual base salary
of not less than $212,500.00 (the "Salary").
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(c) The Executive is authorized to incur reasonable expenses for
entertainment, traveling, meals, lodging and similar items in promoting the
Corporation's business. Subject to the reimbursement applicable to the
Corporation's senior management employees as in effect from time to time, the
Corporation will reimburse the Executive for all reasonable expenses so
incurred.
(d) The Executive shall be provided with the welfare benefits and other
fringe benefits to the same extent and on the same terms as those benefits are
provided by the Corporation from time to time to the Corporation's other senior
management employees.
V.2 (a) During the Agreement Term, while the Executive is employed by the
Corporation, the Executive shall not solicit, initiate or encourage proposals or
offers from, or provide information relating to Clark USA, the Corporation or
any of the Affiliates to, any person, entity or group in connection with or
relating to any acquisition or disposition of all or any material part of Clark
USA's issued and outstanding shares, or any amalgamation, merger, sale of all or
any material part of the assets of Clark USA, the Corporation or any Subsidiary,
take-over bid, re-organization, re-capitalization, liquidation, winding-up of,
or other business combination or any similar transaction involving Clark USA,
the Corporation or any Subsidiary, without in each case the explicit approval of
the Board, the Chairman of the Board, the Chief Executive Officer of the
Corporation or the person performing the function of the Chairman of the Board
or Chief Executive Officer of the Corporation.
(b) The provisions of paragraph V.2(a) shall not apply to the sale by the
Executive of any shares of Clark USA owned by him.
ARTICLE VI
Obligations Upon Termination
----------------------------
VI.1 If, at any time during the Agreement Term, the Executive's Date of
Termination occurs as a result the Executive's employment being terminated by
the Executive's employer (other than for Cause, Disability, or death), or as a
result of the Executive's employment being terminated by the Executive for Good
Reason:
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(a) The Corporation shall pay to or to the order of the Executive in cash or
certified cheque within ten days after the Date of Termination, the
aggregate of the following amounts (less any statutory deductions):
(i) if not theretofore paid, the amount of the Executive's unpaid Basic
Compensation for the then current fiscal year of the Corporation for
the period to and including the Date of Termination, plus any other
compensation and benefit amounts that are accrued and unpaid as of
the Date of Termination; and
(ii) as partial compensation for the Executive's loss of employment, an
amount equal to three (3) times the Basic Compensation.
(b) If the Executive holds any options, rights, warrants or other entitlements
for the purchase or acquisition of securities in the capital of Clark USA,
the Corporation or any Affiliate granted by Clark USA or the Corporation
(collectively, "Rights"), regardless of whether such Rights are then
exercisable, notwithstanding the terms and conditions of such Rights or of
any plan or other document affecting such Rights, shall be deemed to be
immediately exercisable for a term that is the lesser of five years after
the Date of Termination or the remaining term to expiry for such Rights.
(c) The Corporation, at its expense, shall provide the Executive with the
reasonable job relocation counselling services of a firm chosen from time
to time by the Executive, for a period not to exceed 18 months after the
Date of Termination.
(d) The Corporation shall maintain in full force and effect, for the
Executive's continued benefit, until the earlier of:
(i) one year after the Date of Termination; and
(ii) the Executive's commencement of full time employment with a new
employer;
all life insurance, medical, dental, health and accident and disability
plans, programs or arrangements in which the Executive was entitled to
participate immediately prior to
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the Date of Termination at a cost to the Executive no greater than the
Executive paid while employed, provided that the Executive's continued
participation is possible under the general terms and provisions of such
plans and programs. In the event that the Executive's participation is
barred, the Corporation shall arrange to provide the Executive, at the
Corporation's expense, with benefits substantially similar to those which
the Executive is entitled to receive under such plans, programs or
arrangements or pay cash in an amount after tax sufficient to enable the
Executive to purchase substantially similar coverage for a one year period
on an individual basis at a cost to the Executive no greater than the
Executive paid while employed. In the case of the Executive's commencement
of full time employment with a new employer within the one year period, the
Corporation agrees to make up any differential in benefits between what the
Executive would have received from the Corporation in the one year period
and what the Executive receives from his new employer, so that the
Executive is ensured of receiving the same benefits which he would have
been entitled to receive from the Corporation had his employment with the
Corporation continued for the one year period at a cost to the Executive no
greater than the Executive paid while employed.
(e) Except as otherwise expressly provided in this Agreement, the Executive's
entitlement to benefits under the employee benefit plans and benefit
arrangements maintained by Clark USA, the Corporation, and the Affiliates,
shall be determined under the terms of the respective plans as in effect
from time to time, with such entitlement based on the fact that the
Executive's employment with Clark USA, the Corporation and the Affiliates
ceased on the Executive's Date of Termination.
Except as may be otherwise specifically provided in an amendment of this
subsection VI.1 adopted in accordance with subsection V11.8, payments under this
subsection VI.1 shall be in lieu of all benefits that may be otherwise payable
to or on behalf of the Executive pursuant to the terms of any severance pay
arrangement of Clark USA, the Corporation or any Affiliate or any other, similar
arrangement of Clark USA, the Corporation or any Affiliate providing benefits
upon involuntary termination of employment.
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VI.2 If, at any time during the Agreement Term, the Executive's Date of
Termination occurs as a result the Executive's employment being terminated by
the Executive's voluntary resignation (other than for Good Reason), or is
terminated by the employer for Cause, or if the Executive's Date of Termination
occurs as a result the Executive's employment being terminated by the
Executive's death or Disability:
(a) The Corporation shall pay to or to the order of the Executive in cash or
certified cheque within ten days after the Date of Termination, the
aggregate of the following amounts (less any statutory deductions), if not
theretofore paid, the amount of the Executive's unpaid Basic Compensation
for the then current fiscal year of the Corporation for the period to and
including the Date of Termination; and shall provide any other compensation
and benefit amounts that are accrued and unpaid as of the Date of
Termination; provided, however, that the Executive's entitlement to the
bonus amounts for the year shall be determined in accordance with the
provisions of the applicable bonus program.
(b) Except as otherwise expressly provided in this Agreement, the Executive's
entitlement to benefits under the employee benefit plans and benefit
arrangements maintained by Clark USA and the Corporation, shall be
determined under the terms of the respective plans as in effect from time
to time, with such entitlement based on the fact that the Executive's
employment with Clark USA and the Corporation ceased on the Executive's
Date of Termination.
VI.3 The Corporation shall pay to the Executive all reasonable legal and
professional fees and expenses incurred by the Executive in seeking to obtain or
enforce any right or benefit provided by this Agreement, if the Executive is
successful in obtaining such right or benefit.
VI.4 (a) In the event it shall be determined that any payment, benefit or
distribution (or combination thereof) by the Corporation, or by any other member
of the same affiliated group with the Corporation (as determined under Code
Section 280G(d)(5)) for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement, or
otherwise) (a "Payment") would be subject to the excise tax imposed by Section
4999 of the Internal Revenue
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Code of 1986, as amended from time to time (the "Code"), or any interest or
penalties are incurred by the Executive with respect to such excise tax (other
than interest or penalties incurred as a result of the failure of the Executive
to file any tax return, or pay any tax (except any such failure to pay tax in
accordance with the terms hereof), required by applicable law or to be filed or
paid by the Executive) (such excise tax together with any such interest and
penalties, hereinafter collectively referred to as the "Excise Tax"), the
Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes, other
than interest or penalties imposed as a result of the failure of the Executive
to file any tax return or pay any tax (except any such failure to pay tax in
accordance with the terms hereof), required by applicable law to be filed or
paid by the Executive), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto, other than interest or
penalties imposed as a result of the failure of the Executive to file any tax
return or pay any tax (except any such failure to pay tax in accordance with the
terms hereof), required by applicable law to be filed or paid by the Executive)
and the Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of subsection VI.5(c), all
determinations required to be made under this subsection VI.5, including whether
and when a Gross-Up Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such determination, shall be
made by such nationally recognized certified public accounting firm as may be
designated by the Executive (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Corporation and the Executive within fifteen
(15) business days of the receipt of notice from the Executive that there has
been a Payment, or such earlier time as is requested by the Corporation. All
fees and expenses of the Accounting Firm shall be borne solely by the
Corporation. Any Gross-Up Payment, as determined pursuant to this Section VI.5
shall be paid by the Corporation to the Executive within five (5) days after the
receipt of the Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it shall so indicate
to the Executive in writing. Any determination by the Accounting Firm shall be
binding upon the Corporation and
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by the Executive. As a result of this uncertainty in the application of Section
4999 of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by the Corporation should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the Corporation
exhausts its remedies pursuant to subsection VI.5(c) and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Corporation to or for the benefit of
the Executive.
(c) The Executive shall notify the Corporation in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Corporation of the Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten (10) business days after the
Executive is informed in writing of such claim and shall apprise the Corporation
of the nature of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the expiration of the
thirty (30) day period following the date on which it gives such notice to the
Corporation (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Corporation notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:
(1) give the Corporation any information requested by the Corporation
relating to such claim;
(2) take such action in connection with contesting such claim as the
Corporation shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Corporation;
(3) cooperate with the Corporation in good faith in order to effectively
contest such claim; and
(4) permit the Corporation to participate in any proceedings relating to
such claim;
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provided, however, that the Corporation shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto, other than interest or penalties
imposed as a result of the failure of the Executive to file any tax return or
pay any tax (except any such failure to pay tax in accordance with the terms
hereof), required by applicable law to be filed or paid by the Executive)
imposed as a result of such representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this subsection 5.5(c), the
Corporation shall control all proceedings taken in connection with such contest
and, at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the Executive
to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Corporation shall
determine; provided, however, that if the Corporation directs the Executive to
pay such claim and sue for a refund, the Corporation shall advance the amount of
such payment to the Executive, on an interest-free basis, and shall indemnify
and hold the Executive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect thereto, other than
interest or penalties imposed as a result of the failure of the Executive to
file any tax return or pay any tax (except any such failure to pay tax in
accordance with the terms hereof), required by applicable law to be filed or
paid by the Executive) imposed with respect to such advance or with respect to
any imputed income with respect to such advance; and provided, further, that if
the Executive is required to extend the statute of limitations to enable the
Corporation to contest such claim, the Executive may limit this extension solely
to such contested amount. The Corporation's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by
the Corporation pursuant to subsection
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VI.5(c), the Executive becomes entitled to receive any refund with respect to
such claim, the Executive shall (subject to the Corporation's complying with the
requirements of subsection VI.5(c) promptly pay to the Corporation the amount of
such refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Corporation pursuant to subsection VI.5(c), a determination is
made that the Executive shall not be entitled to any refund with respect to such
claim and the Corporation does not notify the Executive in writing of its intent
to contest such denial of refund prior to the expiration of thirty (30) days
after such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.
ARTICLE VII
General
-------
VII.1 If the Executive's Date of Termination occurs for any reason,
subject to subsection VII.3 the Executive shall not be prohibited or restricted
in any manner whatsoever from obtaining employment with or otherwise forming or
participating in a business competitive to the business of Clark USA, the
Corporation or Subsidiary.
VII.2 If the Executive's Date of Termination occurs for any reason, the
Executive shall not be subject to any duty or obligation to seek alternate
employment or other sources of income or benefits, or to mitigate his damages,
or to any similar duty or obligation, and, except as specifically provided with
respect to benefits in paragraph VI.1(d), all payment and other obligations of
the Corporation under this Agreement shall not be subject to any rights of set-
off, duty to mitigate or other reduction, and shall be paid and performed in
full notwithstanding any alternate employment or other sources of income or
benefits obtained or received or receivable by the Executive.
VII.3 The Executive agrees that he shall maintain the confidentiality of
any confidential or proprietary information concerning Clark USA, the
Corporation or any Subsidiary until the date, if any, upon which: (i) the
relevant information becomes
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available to the public or is made available to the Executive from a source
which is not bound by an obligation of confidentiality to Clark USA, the
Corporation or the relevant Subsidiary; or (ii) the Executive is required to
disclose such information by any court or governmental or regulatory authority
of competent jurisdiction (in which case the Executive shall notify the
Corporation and, after such notification, shall be entitled to disclose or make
use of such information only to the extent he is so required).
VII.4 Any notice required or permitted to be given under this Agreement
shall be in writing and shall be properly given if delivered by hand or mailed
by prepaid registered mail addressed as follows:
(a) in the case of the Corporation, to:
Clark Refining and Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 63105
Attention: Chief Executive Officer of the Corporation
with a copy to:
Clark Refining and Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 63105
Attention: Chairman of the Board of the Corporation
(b) in the case of the Executive, to:
Brandon K. Barnholt
2301 Leland Ridge Walk
St. Louis, Missouri 63131
or the last address of the Executive in the records of the
Corporation
or to such other address as the parties may from time to time specify by notice
given in accordance herewith. Any notice so given shall be conclusively deemed
to have been given or made on the day of delivery, if delivered, or if mailed by
registered
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Exhibit 10.25
MEMORANDUM OF AGREEMENT
made as of the 8th day of July, 1997
(hereinafter referred to as the "Agreement Date")
B E T W E E N:
CLARK REFINING AND MARKETING, INC.,
a corporation incorporated
under the laws of Delaware
(hereinafter referred to as the "Corporation"),
OF THE FIRST PART
- and -
Maura J. Clark
of St. Louis, Missouri
(hereinafter referred to as the "Executive"),
OF THE SECOND PART.
WHEREAS the Corporation is a wholly-owned subsidiary of Clark USA, Inc.
(hereinafter referred to as "Clark USA");
AND WHEREAS the Corporation recognizes the valuable services that the
Executive has provided and is continuing to provide to the Corporation, Clark
USA, and their affiliates, considers the establishment and maintenance of a
sound and vital management to be essential to protecting and enhancing the best
interests of the Corporation, Clark USA, and its shareholders, and wishes to
continue the Executive's employment in accordance with the terms of this
Agreement;
AND WHEREAS the Board has determined that it would be in the
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best interests of Clark USA and the Corporation to induce the Executive to
remain in the employ of Clark USA, the Corporation and the Subsidiaries, by
entering into this Agreement relating to the terms of the Executive's continuing
employment, and by indicating that in the event of a Change in Control, the
Executive would have certain automatic and guaranteed rights;
AND WHEREAS both the Corporation and the Executive wish formally to agree
as to the terms and conditions which will govern the Executive's continuing
employment, and the terms and conditions which will govern the termination or
modification of the employment of the Executive following a Change in Control;
NOW THEREFORE, in consideration of the premises hereof and of the mutual
covenants and agreements hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties, the parties agree as follows:
ARTICLE II
Recitals
--------
II.1 The parties agree, and represent and warrant to each other, that the
above recitals are true and accurate.
ARTICLE III
Interpretation
--------------
III.1 Unless elsewhere herein otherwise expressly provided or unless the
context otherwise requires, words importing the singular include the plural and
vice versa and words importing the masculine gender include the feminine and
neuter genders.
III.2 The headings of the Articles, sections, subsections, paragraphs, and
clauses herein are inserted for convenience of reference only and shall not
affect the meaning or construction hereof.
III.3 This Agreement shall be construed in accordance with the laws of the
State of Missouri, without regard to the conflict of law provisions of any
state. All disputes shall be litigated in St. Louis, Missouri.
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III.4 If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of Law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party hereto. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties hereto as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
III.5 In this Agreement, unless the context otherwise requires, the
following terms shall have the following meanings, respectively:
(a) "Affiliate" means (i) any corporation, partnership, joint venture or other
entity during any period in which it beneficially owns at least thirty
percent of the voting power of all classes of stock of the Corporation
entitled to vote; and (ii) any corporation, partnership, joint venture or
other entity during any period in which at least a fifty percent voting or
profits interest is beneficially owned by the Corporation or by any entity
that is an Affiliate by reason of clause (i) next above.
(b) "Basic Compensation" means the sum of:
(i) the annual salary of the Executive based upon the greater of (A) the
salary paid by or on behalf of Clark USA and the Corporation for the
calendar year ended immediately preceding the Date of Termination
and (B) the salary which would have been payable by or on behalf of
Clark USA and the Corporation to the Executive (based upon the
salary rate in effect immediately preceding the Date of Termination)
for the 12 months immediately following the Date of Termination; and
(ii) an amount equal to the greater of:
(A) the agreed yearly minimum bonus which is payable
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to the Executive under the compensation terms in effect
immediately prior to the date of the Date of Termination; or
(B) the average of the yearly bonus amounts paid to the Executive
by Clark USA and the Corporation over the last two fiscal years
of the Corporation ended immediately preceding the date of the
Date of Termination.
(c) "beneficial ownership" shall be determined in accordance with Rule 13d-3
issued under the U.S. Securities Exchange Act of 1934.
(d) "Board" means the board of directors of the Corporation.
(e) "Cause" means a determination by the Board, after permitting the Executive
a reasonable opportunity to be heard, that any of the following has
occurred:
(i) wilful and continued failure by the Executive to substantially
perform the Executive's duties with the Corporation (other than any
such failure resulting from his incapacity due to physical or mental
illness) after a demand for substantial performance improvement has
been delivered in writing to the Executive by the Chairman, Chief
Executive Officer or the President of the Corporation, the person
performing the function of the Chairman, Chief Executive Officer or
President of the Corporation, or the person to whom the Executive
reports, which identifies the manner in which such officer or person
believes that the Executive has not substantially performed his
duties;
(ii) wilful engaging by the Executive in misconduct which is materially
injurious to Clark USA, the Corporation, or the Affiliates,
monetarily or otherwise; or
(iii) the conviction of the Executive of a criminal offense involving
dishonesty or other moral turpitude;
provided that no act, or failure to act, on the Executive's
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part shall be considered "wilful" unless the Board determines that such act
or failure to act by the Executive was in bad faith and was without
reasonable belief by the Executive that such act or failure to act was in
the best interests of Clark USA, the Corporation, or the Affiliates. For
purposes of paragraph (i) above, the phrase "wilful and continued failure
by the Executive to substantially perform the Executive's duties with the
Corporation" shall include, without limitation, any violation of paragraph
V.2(a).
(f) "Change in Control" means the first date upon which (I) a TrizecHahn
Corporation Change in Control shall have occurred, if on such date Tiger
shall beneficially own less than 20% of the number of shares of capital
stock of Clark USA held by it as of the Agreement Date; or (II) a Clark
Change in Control shall have occurred.
(g) "TrizecHahn Corporation Change in Control" means the occurrence of any of
the following events described in paragraph (i) through (vi) below:
(i) TrizecHahn Corporation - Voting/Board Control.
The date upon which the following three conditions shall have been
satisfied:
(A) the MVS shall have been converted into SVS in accordance with
their terms (the "Conversion");
(B) a person or group (other than Mr. Peter Munk) holds shares
and/or other securities which, directly or after conversion,
exercise or exchange thereof, would entitle the holders thereof
to cast 20% or more of the votes attached to the outstanding
Voting Shares; and
(C) a change in the composition of the TrizecHahn Corporation Board
within two years after the date of Conversion such that the
directors of TrizecHahn Corporation in office immediately
before the date of Conversion and the directors recommended for
election or elected to succeed such directors by a majority of
such directors cease to constitute a majority of the TrizecHahn
Corporation Board;
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provided, however, that a TrizecHahn Corporation Change in Control
will be deemed to have occurred under this paragraph (i) only if, on
the date on which such TrizecHahn Corporation Change in Control
would otherwise have occurred, TrizecHahn Corporation is a
Substantial Owner of Clark USA.
(ii) TrizecHahn Corporation - Voting.
The date upon which the following two conditions shall have been
satisfied:
(A) the Conversion shall have occurred; and
(B) a person or group (other than Mr. Peter Munk) holds shares
and/or other securities which, directly or after conversion,
exercise or exchange thereof, would entitle the holders thereof
to cast 35% or more of the votes attached to the outstanding
Voting Shares;
provided, however, that a TrizecHahn Corporation Change in Control
will be deemed to have occurred under this paragraph (ii) only if,
on the date on which such TrizecHahn Corporation Change in Control
would otherwise have occurred, TrizecHahn Corporation is a
Substantial Owner of Clark USA.
(iii) TrizecHahn Corporation - MVS/Board.
The date upon which the following two conditions shall have been
satisfied:
(A) a majority of the MVS are beneficially owned, or control or
direction is exercised over a majority of the MVS, by any
person or group, other than Mr. Peter Munk or a member of his
immediate family who is a Canadian within the meaning of the
Investment Canada Act ("Change in Ownership"); and
(B) there is a change in the composition of the TrizecHahn
Corporation Board within two years after the date of the Change
in Ownership and
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the directors recommended for election or elected to succeed
such directors by a majority of such directors such that the
directors in office immediately before the date of the Change
in Ownership cease to constitute a majority of the TrizecHahn
Corporation Board;
provided, however, that a TrizecHahn Corporation Change in Control
will be deemed to have occurred under this paragraph (iii) only if,
on the date on which such TrizecHahn Corporation Change in Control
would otherwise have occurred, TrizecHahn Corporation is a
Substantial Owner of Clark USA.
(iv) TrizecHahn Corporation - Merger/Board.
The date upon which the following two conditions shall have been
satisfied:
(A) the shareholders of TrizecHahn Corporation shall have approved
(I) an amalgamation, merger, or any other business combination
or consolidation of TrizecHahn Corporation with any other
corporation (other than a TrizecHahn Corporation Successor,
TrizecHahn Corporation Subsidiary, Clark USA, the Corporation,
or one or more of the Subsidiaries), (II) a plan for the
liquidation of TrizecHahn Corporation, (III) an agreement for
the sale or disposition of all or substantially all of the
assets of TrizecHahn Corporation; and
(B) within two years following a transaction referred to in
paragraph (iv)(A) above, a majority of the Board of the
amalgamated or merged entity or successor entity into which
TrizecHahn Corporation was liquidated or which acquired
substantially all of the assets of TrizecHahn Corporation is
not comprised of individuals who were directors of TrizecHahn
Corporation immediately before the event referred to in
paragraph (iv)(A) above, or directors recommended for election
or elected to succeed such directors by a majority of such
directors;
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provided, however, that a TrizecHahn Corporation Change in Control
will be deemed to have occurred under this paragraph (iv) only if,
on the date on which such TrizecHahn Corporation Change in Control
would otherwise have occurred, TrizecHahn Corporation is a
Substantial Owner of Clark USA.
(v) Increase in Ownership/Board Change.
The date upon which the following two conditions have been
satisfied:
(A) any Person (excluding TrizecHahn Corporation, any TrizecHahn
Corporation Subsidiary, and any person who satisfies the
requirements set forth in Rule 13d-1(b)(i) and (ii) issued under the
U.S. Securities Exchange Act of 1934 (relating to certain persons
acquiring securities in the ordinary course of business and not with
the purpose or effect of changing or influencing the control of the
issuer)) has beneficial ownership of the Voting Power of Clark USA
that is in excess of the greater of:
(I) 20% of the Voting Power of Clark USA; or
(II) the Voting Power of Clark USA then held by TrizecHahn
Corporation;
(B) more than 50% of the Board of Directors of Clark USA is
comprised of persons who are neither executive officers of
TrizecHahn Corporation or any TrizecHahn Corporation Subsidiary, nor
members of the board of directors of TrizecHahn Corporation.
(vi) Increase in Ownership.
The date upon which any Person (excluding TrizecHahn Corporation and
any TrizecHahn Corporation Subsidiary) has beneficial ownership of
the Voting Power of Clark USA that is in excess of the greater of:
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(I) 35% of the Voting Power of Clark USA; or
(II) the Voting Power of Clark USA then held by TrizecHahn
Corporation.
(h) "Clark Change in Control" means the occurrence of any of the events
described in paragraphs (i) through (iii) below:
(i) Merger of Clark USA.
The date of approval by the shareholders of Clark USA of a
reorganization, merger or consolidation of Clark USA, in each case,
with respect to which all or substantially all of the individuals
and entities who were the respective beneficial owners of the common
stock and voting securities of Clark USA immediately prior to such
reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation (or following a series of
prearranged related transactions), beneficially own more than 50%
of, respectively, the then outstanding shares of common stock or the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such reorganization,
merger or consolidation.
(ii) Liquidation of Clark USA.
The date of approval by the shareholders of Clark USA of the sale or
other disposition of all or substantially all of the assets of Clark
USA; in each case, with respect to which all or substantially all of
the individuals and entities who were the respective beneficial
owners of the common stock and voting securities of Clark USA
immediately prior to such sale or disposition do not, following such
sale or disposition (or following a series of prearranged related
transactions), beneficially own more than 50% of, respectively, the
then outstanding shares of common stock or the combined voting power
of the then outstanding voting securities entitled to vote generally
in the election of directors, as the case may be, of the entity or
entities acquiring all or substantially all of the assets of Clark
USA.
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(iii) Disposition of the Corporation.
The first date on which Clark USA does not beneficially own more
than 50% of the total voting power of the outstanding capital stock
of the Corporation.
(i) "Clark USA" means Clark USA, Inc. and includes any corporation,
partnership, joint venture or other entity that succeeds to the interests
of Clark USA, Inc.
(j) "Corporation" means Clark Refining and Marketing, Inc. and includes any
corporation, partnership, joint venture or other entity that succeeds to
the interests of Clark Refining and Marketing, Inc.
(k) "Date of Termination" means the first date on which the Executive is
employed by neither Clark USA, the Corporation, nor any Subsidiary.
(l) "Disability" means the physical or mental illness of the Executive
resulting in the Executive's absence from his full time duties with the
Corporation for more than nine consecutive months and failure by the
Executive to return to full time performance of his duties within thirty
days after written demand by the Corporation to do so given at any time
after such nine-month period.
(m) "Good Reason" means the occurrence of any of the following events without
the Executive's written consent:
(i) the assignment to the Executive of any duties inconsistent in any
respect with the Executive's position (including substantial status,
offices, titles and reporting requirements), authority, duties or
responsibilities, or any other action by the Corporation, in each
case which results in a substantial diminution in such position,
authority, duties or responsibilities, in the salary amount, or in
the amount of the potential bonus opportunity, previously provided
to the Executive;
(ii) the Corporation requiring the Executive to be based at any office or
location other than in the Greater St. Louis Area; or
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(iii) any other action by the Executive's employer purporting to result in
a Date of Termination other than for Cause, Disability or death.
(h) "Greater St. Louis Area" means any location within 30 miles (traveling by
automobile) of 8182 Maryland Avenue, St. Louis, Missouri.
(i) "group" means any person or company acting jointly or in concert with any
other person or company and for such purposes "acting jointly or in
concert" shall be interpreted in accordance with subsection 91(a) of the
Securities Act (Ontario).
(j) "TrizecHahn Corporation" means TrizecHahn Corporation Corporation, a
corporation incorporated under the laws of the Province of Ontario, and any
TrizecHahn Corporation Successor.
(k) "TrizecHahn Corporation Board" means the board of directors of TrizecHahn
Corporation.
(l) "TrizecHahn Corporation Subsidiary" means any corporation, partnership,
joint venture or other entity during any period in which at least a fifty
percent voting or profits interest is beneficially owned by TrizecHahn
Corporation.
(m) "TrizecHahn Corporation Successor" means any corporation, partnership,
joint venture or other entity which satisfies either (or both of) clause
(i) and (ii):
(i) Mr. Peter Munk has beneficial ownership that is in excess of the
greater of:
(A) 40% of the total voting power of the outstanding capital stock
of the entity; or
(B) the percentage of the total voting power of the outstanding
capital stock of the entity that is then held by any other
Person;
(ii) the entity succeeds to the interests of TrizecHahn Corporation
Corporation; but including only an entity which, immediately after
the succession: (A) is beneficially owned by all or substantially
all of the
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individuals and entities who were the respective beneficial owners
of TrizecHahn Corporation immediately prior to such succession, in
substantially the same proportions as the proportions beneficially
owned immediately prior to such succession; or (B) for a period of
two years following the succession, a majority of the Board of the
successor entity is comprised of individuals who were directors of
TrizecHahn Corporation immediately before the succession.
(n) "MVS" means the outstanding Multiple Voting Shares in the capital of
TrizecHahn Corporation at any time.
(o) The term "Person", when capitalized, shall mean any person, and shall also
include two or more persons acting as a partnership, limited partnership,
syndicate, or other group for the purpose or with the effect of changing or
influencing the control of Clark USA. The provisions of this paragraph (u)
shall be interpreted based on the interpretations of the comparable
provisions of Sections 13 and 14 of the U.S. Securities Exchange Act of
1934 and the rules thereunder.
(p) "Subsidiary" means any corporation, partnership, joint venture or other
entity during any period in which at least a fifty percent voting or
profits interest is beneficially owned by the Clark USA.
(q) TrizecHahn Corporation shall be a "substantial owner" of Clark USA for the
period in which it beneficially owns at least 25% of the Voting Power of
Clark USA, and no other shareholder of Clark USA beneficially owns more
Voting Power of Clark USA than does TrizecHahn Corporation.
(r) "SVS" means the outstanding Subordinate Voting Shares in the capital of
TrizecHahn Corporation at any time.
(s) "Tiger" shall mean, collectively, The Jaguar Fund N.V., Tiger (a limited
partnership), Puma (a limited partnership) and any other Person managed by
Tiger Management Corporation which at any time holds any shares of capital
stock of Clark USA.
(t) "Voting Power of Clark USA" shall mean the total voting power of the
outstanding capital stock of Clark USA.
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(u) "Voting Shares" means any security of TrizecHahn Corporation carrying a
right to vote for the election of directors of TrizecHahn Corporation under
all circumstances or under circumstances that have occurred and are
continuing.
ARTICLE IV
Agreement Term
--------------
IV.1 Subject to the automatic extension discussed below in this Article
IV.1, the "Agreement Term" shall be the period beginning on the Agreement Date,
and ending on the fifth anniversary of the Agreement Date. On the fifth
anniversary of the Agreement Date and on each anniversary date thereafter
(including the period during which this Agreement is extended), the Agreement
Term shall automatically be extended by one additional year unless, not less
than 90 days prior to any such anniversary, either the Corporation or the
Executive shall have given written notice to the Executive or the Corporation,
as applicable, that the Agreement Term will not be extended.
IV.2 If a Change in Control occurs during the Agreement Term, and at the
time the Change in Control, less than two years remains in the Agreement Term,
the Agreement Term shall be automatically extended to the second anniversary of
the Agreement Term.
ARTICLE V
Continuation of Employment
--------------------------
V.1 During the Agreement Term, the Corporation agrees to continue the
Executive in its employ, in accordance with the terms and provisions of this
Agreement, in accordance with the following:
(a) The Executive shall be employed by the Corporation as its EVP -
Corporate Development and CFO, and shall not be assigned tasks that would be
substantially inconsistent with that position.
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(b) The Executive shall receive, while employed, for each 12-consecutive
month period beginning on the Effective Date and each anniversary thereof, in
substantially equal monthly or more frequent installments, an annual base salary
of not less than $212,500.00 (the "Salary").
(c) The Executive is authorized to incur reasonable expenses for
entertainment, traveling, meals, lodging and similar items in promoting the
Corporation's business. Subject to the reimbursement applicable to the
Corporation's senior management employees as in effect from time to time, the
Corporation will reimburse the Executive for all reasonable expenses so
incurred.
(d) The Executive shall be provided with the welfare benefits and other
fringe benefits to the same extent and on the same terms as those benefits are
provided by the Corporation from time to time to the Corporation's other senior
management employees.
V.2 (a) During the Agreement Term, while the Executive is employed by the
Corporation, the Executive shall not solicit, initiate or encourage proposals or
offers from, or provide information relating to Clark USA, the Corporation or
any of the Affiliates to, any person, entity or group in connection with or
relating to any acquisition or disposition of all or any material part of Clark
USA's issued and outstanding shares, or any amalgamation, merger, sale of all or
any material part of the assets of Clark USA, the Corporation or any Subsidiary,
take-over bid, re-organization, re-capitalization, liquidation, winding-up of,
or other business combination or any similar transaction involving Clark USA,
the Corporation or any Subsidiary, without in each case the explicit approval of
the Board, the Chairman of the Board, the Chief Executive Officer of the
Corporation or the person performing the function of the Chairman of the Board
or Chief Executive Officer of the Corporation.
(b) The provisions of paragraph V.2(a) shall not apply to the sale by the
Executive of any shares of Clark USA owned by him.
ARTICLE VI
Obligations Upon Termination
----------------------------
VI.1 If, at any time during the Agreement Term, the Executive's Date of
Termination occurs as a result the
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Executive's employment being terminated by the Executive's employer (other than
for Cause, Disability, or death), or as a result of the Executive's employment
being terminated by the Executive for Good Reason:
(a) The Corporation shall pay to or to the order of the Executive in cash or
certified cheque within ten days after the Date of Termination, the
aggregate of the following amounts (less any statutory deductions):
(i) if not theretofore paid, the amount of the Executive's unpaid Basic
Compensation for the then current fiscal year of the Corporation for
the period to and including the Date of Termination, plus any other
compensation and benefit amounts that are accrued and unpaid as of
the Date of Termination; and
(ii) as partial compensation for the Executive's loss of employment, an
amount equal to three (3) times the Basic Compensation.
(b) If the Executive holds any options, rights, warrants or other entitlements
for the purchase or acquisition of securities in the capital of Clark USA,
the Corporation or any Affiliate granted by Clark USA or the Corporation
(collectively, "Rights"), regardless of whether such Rights are then
exercisable, notwithstanding the terms and conditions of such Rights or of
any plan or other document affecting such Rights, shall be deemed to be
immediately exercisable for a term that is the lesser of five years after
the Date of Termination or the remaining term to expiry for such Rights.
(c) The Corporation, at its expense, shall provide the Executive with the
reasonable job relocation counselling services of a firm chosen from time
to time by the Executive, for a period not to exceed 18 months after the
Date of Termination.
(d) The Corporation shall maintain in full force and effect, for the
Executive's continued benefit, until the earlier of:
(i) one year after the Date of Termination; and
(ii) the Executive's commencement of full time employment with a new
employer;
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all life insurance, medical, dental, health and accident and disability
plans, programs or arrangements in which the Executive was entitled to
participate immediately prior to the Date of Termination at a cost to the
Executive no greater than the Executive paid while employed, provided that
the Executive's continued participation is possible under the general terms
and provisions of such plans and programs. In the event that the
Executive's participation is barred, the Corporation shall arrange to
provide the Executive, at the Corporation's expense, with benefits
substantially similar to those which the Executive is entitled to receive
under such plans, programs or arrangements or pay cash in an amount after
tax sufficient to enable the Executive to purchase substantially similar
coverage for a one year period on an individual basis at a cost to the
Executive no greater than the Executive paid while employed. In the case of
the Executive's commencement of full time employment with a new employer
within the one year period, the Corporation agrees to make up any
differential in benefits between what the Executive would have received
from the Corporation in the one year period and what the Executive receives
from his new employer, so that the Executive is ensured of receiving the
same benefits which he would have been entitled to receive from the
Corporation had his employment with the Corporation continued for the one
year period at a cost to the Executive no greater than the Executive paid
while employed.
(e) Except as otherwise expressly provided in this Agreement, the Executive's
entitlement to benefits under the employee benefit plans and benefit
arrangements maintained by Clark USA, the Corporation, and the Affiliates,
shall be determined under the terms of the respective plans as in effect
from time to time, with such entitlement based on the fact that the
Executive's employment with Clark USA, the Corporation and the Affiliates
ceased on the Executive's Date of Termination.
Except as may be otherwise specifically provided in an amendment of this
subsection VI.1 adopted in accordance with subsection V11.8, payments under this
subsection VI.1 shall be in lieu of all benefits that may be otherwise payable
to or on behalf of the Executive pursuant to the terms of any severance pay
arrangement of Clark USA, the Corporation or any Affiliate or any other,
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similar arrangement of Clark USA, the Corporation or any Affiliate providing
benefits upon involuntary termination of employment.
VI.2 If, at any time during the Agreement Term, the Executive's Date of
Termination occurs as a result the Executive's employment being terminated by
the Executive's voluntary resignation (other than for Good Reason), or is
terminated by the employer for Cause, or if the Executive's Date of Termination
occurs as a result the Executive's employment being terminated by the
Executive's death or Disability:
(a) The Corporation shall pay to or to the order of the Executive in cash or
certified cheque within ten days after the Date of Termination, the
aggregate of the following amounts (less any statutory deductions), if not
theretofore paid, the amount of the Executive's unpaid Basic Compensation
for the then current fiscal year of the Corporation for the period to and
including the Date of Termination; and shall provide any other compensation
and benefit amounts that are accrued and unpaid as of the Date of
Termination; provided, however, that the Executive's entitlement to the
bonus amounts for the year shall be determined in accordance with the
provisions of the applicable bonus program.
(b) Except as otherwise expressly provided in this Agreement, the Executive's
entitlement to benefits under the employee benefit plans and benefit
arrangements maintained by Clark USA and the Corporation, shall be
determined under the terms of the respective plans as in effect from time
to time, with such entitlement based on the fact that the Executive's
employment with Clark USA and the Corporation ceased on the Executive's
Date of Termination.
VI.3 The Corporation shall pay to the Executive all reasonable legal and
professional fees and expenses incurred by the Executive in seeking to obtain or
enforce any right or benefit provided by this Agreement, if the Executive is
successful in obtaining such right or benefit.
VI.4 (a) In the event it shall be determined that any payment, benefit or
distribution (or combination thereof) by the Corporation, or by any other member
of the same affiliated group with the Corporation (as determined under Code
Section
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280G(d)(5)) for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement, or
otherwise) (a "Payment") would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended from time to time (the
"Code"), or any interest or penalties are incurred by the Executive with respect
to such excise tax (other than interest or penalties incurred as a result of the
failure of the Executive to file any tax return, or pay any tax (except any such
failure to pay tax in accordance with the terms hereof), required by applicable
law or to be filed or paid by the Executive) (such excise tax together with any
such interest and penalties, hereinafter collectively referred to as the "Excise
Tax"), the Executive shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by the Executive of all
taxes (including any interest or penalties imposed with respect to such taxes,
other than interest or penalties imposed as a result of the failure of the
Executive to file any tax return or pay any tax (except any such failure to pay
tax in accordance with the terms hereof), required by applicable law to be filed
or paid by the Executive), including, without limitation, any income taxes (and
any interest and penalties imposed with respect thereto, other than interest or
penalties imposed as a result of the failure of the Executive to file any tax
return or pay any tax (except any such failure to pay tax in accordance with the
terms hereof), required by applicable law to be filed or paid by the Executive)
and the Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of subsection VI.5(c), all
determinations required to be made under this subsection VI.5, including whether
and when a Gross-Up Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such determination, shall be
made by such nationally recognized certified public accounting firm as may be
designated by the Executive (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Corporation and the Executive within fifteen
(15) business days of the receipt of notice from the Executive that there has
been a Payment, or such earlier time as is requested by the Corporation. All
fees and expenses of the Accounting Firm shall be borne solely by the
Corporation. Any Gross-Up Payment, as determined pursuant to this Section VI.5
shall be paid by the Corporation to the Executive within five (5) days after the
receipt of the
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Accounting Firm's determination. If the Accounting Firm determines that no
Excise Tax is payable by the Executive, it shall so indicate to the Executive in
writing. Any determination by the Accounting Firm shall be binding upon the
Corporation and by the Executive. As a result of this uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Corporation should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Corporation exhausts its remedies pursuant to
subsection VI.5(c) and the Executive thereafter is required to make a payment of
any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid
by the Corporation to or for the benefit of the Executive.
(c) The Executive shall notify the Corporation in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Corporation of the Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten (10) business days after the
Executive is informed in writing of such claim and shall apprise the Corporation
of the nature of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the expiration of the
thirty (30) day period following the date on which it gives such notice to the
Corporation (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Corporation notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:
(1) give the Corporation any information requested by the Corporation
relating to such claim;
(2) take such action in connection with contesting such claim as the
Corporation shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Corporation;
(3) cooperate with the Corporation in good faith in order to effectively
contest such claim; and
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(4) permit the Corporation to participate in any proceedings relating to
such claim;
provided, however, that the Corporation shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto, other than interest or penalties
imposed as a result of the failure of the Executive to file any tax return or
pay any tax (except any such failure to pay tax in accordance with the terms
hereof), required by applicable law to be filed or paid by the Executive)
imposed as a result of such representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this subsection 5.5(c), the
Corporation shall control all proceedings taken in connection with such contest
and, at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the Executive
to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Corporation shall
determine; provided, however, that if the Corporation directs the Executive to
pay such claim and sue for a refund, the Corporation shall advance the amount of
such payment to the Executive, on an interest-free basis, and shall indemnify
and hold the Executive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect thereto, other than
interest or penalties imposed as a result of the failure of the Executive to
file any tax return or pay any tax (except any such failure to pay tax in
accordance with the terms hereof), required by applicable law to be filed or
paid by the Executive) imposed with respect to such advance or with respect to
any imputed income with respect to such advance; and provided, further, that if
the Executive is required to extend the statute of limitations to enable the
Corporation to contest such claim, the Executive may limit this extension solely
to such contested amount. The Corporation's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any
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other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by
the Corporation pursuant to subsection VI.5(c), the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall (subject
to the Corporation's complying with the requirements of subsection VI.5(c)
promptly pay to the Corporation the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after
the receipt by the Executive of an amount advanced by the Corporation pursuant
to subsection VI.5(c), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Corporation does not
notify the Executive in writing of its intent to contest such denial of refund
prior to the expiration of thirty (30) days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the amount
of such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.
ARTICLE VII
General
-------
VII.1 If the Executive's Date of Termination occurs for any reason,
subject to subsection VII.3 the Executive shall not be prohibited or restricted
in any manner whatsoever from obtaining employment with or otherwise forming or
participating in a business competitive to the business of Clark USA, the
Corporation or Subsidiary.
VII.2 If the Executive's Date of Termination occurs for any reason, the
Executive shall not be subject to any duty or obligation to seek alternate
employment or other sources of income or benefits, or to mitigate his damages,
or to any similar duty or obligation, and, except as specifically provided with
respect to benefits in paragraph VI.1(d), all payment and other obligations of
the Corporation under this Agreement shall not be subject to any rights of set-
off, duty to mitigate or other reduction, and shall be paid and performed in
full
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notwithstanding any alternate employment or other sources of income or
benefits obtained or received or receivable by the Executive.
VII.3 The Executive agrees that he shall maintain the confidentiality of
any confidential or proprietary information concerning Clark USA, the
Corporation or any Subsidiary until the date, if any, upon which: (i) the
relevant information becomes available to the public or is made available to the
Executive from a source which is not bound by an obligation of confidentiality
to Clark USA, the Corporation or the relevant Subsidiary; or (ii) the Executive
is required to disclose such information by any court or governmental or
regulatory authority of competent jurisdiction (in which case the Executive
shall notify the Corporation and, after such notification, shall be entitled to
disclose or make use of such information only to the extent he is so required).
VII.4 Any notice required or permitted to be given under this Agreement
shall be in writing and shall be properly given if delivered by hand or mailed
by prepaid registered mail addressed as follows:
(a) in the case of the Corporation, to:
Clark Refining and Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 63105
Attention: Chief Executive Officer of the Corporation
with a copy to:
Clark Refining and Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 63105
Attention: Chairman of the Board of the Corporation
(b) in the case of the Executive, to:
Maura J. Clark
155 Hanley #204
St. Louis, Missouri 63105
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or the last address of the Executive in the records of the
Corporation
or to such other address as the parties may from time to time specify by notice
given in accordance herewith. Any notice so given shall be conclusively deemed
to have been given or made on the day of delivery, if delivered, or if mailed by
registered mail, upon the date shown on the postal return receipt as the date
upon which the envelope containing such notice was actually received by the
addressee.
VII.5 This Agreement shall enure to the benefit of and be binding upon the
Executive and his heirs, executors, administrators and other legal personal
representatives and upon the Corporation and its successors and assigns.
VII.6 As a condition of receipt of the benefits described in paragraphs
VI.1(a) through VI.1(e), the Executive will be required to enter into a full and
complete release of the Corporation from any and all claims which the Executive
may then have for whatever reason or cause in connection with the Executive's
employment and the termination of it (including, without limitation, any rights
under an employment agreement which may then be in effect), other than those
obligations specifically set out in this Agreement, and other than obligations
of Clark USA, the Corporation and the Subsidiaries to the extent that the
documents providing for such obligations specifically provide that the
obligations are in addition to obligations under this Agreement. In agreeing to
the terms set out in this Agreement, the Executive specifically agrees to
execute a formal release document to that effect and will deliver upon request
appropriate resignations from all offices and positions with Clark USA, the
Corporation and any Subsidiaries and Affiliates if, as, and when requested by
the Board upon the termination of employment within the circumstances
contemplated by this Agreement. To avoid future uncertainty as to the
interpretation of this Agreement, the parties hereto expressly agree that if
Paul Melnuk ceases to be President and Chief Executive Officer of the
Corporation, and no events constituting Good Reason have occurred, then nothing
in this Agreement shall adversely affect the rights of the Executive which may
arise by reason of such cessation under any other agreement or arrangement
between the Executive and the Corporation.
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VII.7 Each of the Corporation and the Executive agrees to execute all such
documents and to do all such acts and things, in any case at the Corporation's
expense, as the other party may reasonably request and as may be lawful and
within its powers to do or to cause to be done in order to carry out and/or
implement the provisions of intent of this Agreement, including, without
limitation, seeking all such governmental, regulatory and other third party
approvals as may be necessary or desirable. Without limiting the generality of
the foregoing, the Corporation agrees to execute all such documents and to do
all such acts and things as the Executive may reasonably request and as may be
lawful and within the power of the Corporation to do or cause to be done in
order to minimize any tax consequences to the Executive or his legal personal
representatives in respect of the payment or performance by the Corporation of
the obligations of the Corporation upon termination arising under Article V or
in respect of other payments or actions required to be made or taken by or on
behalf of the Corporation in the event of termination of the Executive's
employment hereunder; provided that the Corporation shall in no material way be
prejudiced thereby.
VII.8 This Agreement may be amended only by an instrument in writing
signed by both parties.
VII.9 Neither party may waive or shall be deemed to have waived any right
it has under this Agreement (including under this subsection VII.9 except to the
extent that such waiver is in writing.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto.
CLARK REFINING AND MARKETING, INC.
By /s/ Paul D. Melnuk
-----------------------------
President & CEO
SIGNED, SEALED AND DELIVERED )
in the presence of )
)
)
/s/ Linda G. Schwent )
) /S/ Maura J. Clark
Linda G. Schwent ) ----------------------------
NOTARY PUBLIC, STATE OF MISSIOUR ) EXECUTIVE
MY COMMISSION EXPIRES 11/22/99 )
ST. CHARLES COUNTY )
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Exhibit 10.26
MEMORANDUM OF AGREEMENT
made as of the 8th day of July, 1997
(hereinafter referred to as the "Agreement Date")
B E T W E E N:
CLARK REFINING AND MARKETING, INC.,
a corporation incorporated
under the laws of Delaware
(hereinafter referred to as the "Corporation"),
OF THE FIRST PART
- and -
Edward J. Stiften
of
Foristell, Missouri
(hereinafter referred to as the "Executive"),
OF THE SECOND PART.
WHEREAS the Corporation is a wholly-owned subsidiary of Clark USA, Inc.
(hereinafter referred to as "Clark USA");
AND WHEREAS the Corporation recognizes the valuable services that the
Executive has provided and is continuing to provide to the Corporation, Clark
USA, and their affiliates, and believes that it is reasonable and fair to the
Corporation that the Executive receive fair treatment in the event of a Change
in Control (as hereinafter defined);
AND WHEREAS the Corporation considers the establishment and maintenance of
a sound and vital management to be essential to protecting and enhancing the
best interests of the Corporation, Clark USA, and its shareholders;
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AND WHEREAS the Corporation recognizes that, in the circumstances of the
capital structure of Clark USA, the risk of a Change in Control is high, and the
uncertainty and questions which a Change in Control may raise among management
could result in the departure or distraction of management personnel to the
detriment of the Corporation, Clark USA, and its shareholders;
AND WHEREAS in the event of a Change in Control, there is a possibility
that the employment of the Executive would be terminated without cause or
adversely modified and executives of the Corporation have expressed concern in
that regard to the Corporation;
AND WHEREAS the Board has determined that it would be in the best interests
of Clark USA and the Corporation to induce the Executive to remain in the employ
of Clark USA, the Corporation and the Subsidiaries, by indicating that in the
event of a Change in Control, the Executive would have certain automatic and
guaranteed rights;
AND WHEREAS both the Corporation and the Executive wish formally to agree
as to the terms and conditions which will govern the termination or modification
of the employment of the Executive following a Change in Control or during a
Potential Change in Control;
NOW THEREFORE, in consideration of the premises hereof and of the mutual
covenants and agreements hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties, the parties agree as follows:
ARTICLE II
Recitals
--------
II.1 The parties agree, and represent and warrant to each other, that the
above recitals are true and accurate.
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ARTICLE III
Interpretation
--------------
III.1 Unless elsewhere herein otherwise expressly provided or unless the
context otherwise requires, words importing the singular include the plural and
vice versa and words importing the masculine gender include the feminine and
neuter genders.
III.2 The headings of the Articles, sections, subsections, paragraphs, and
clauses herein are inserted for convenience of reference only and shall not
affect the meaning or construction hereof.
III.3 This Agreement shall be construed in accordance with the laws of the
State of Missouri, without regard to the conflict of law provisions of any
state. All disputes shall be litigated in St. Louis, Missouri.
III.4 If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of Law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party hereto. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties hereto as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
III.5 In this Agreement, unless the context otherwise requires, the
following terms shall have the following meanings, respectively:
(a) "Affiliate" means (i) any corporation, partnership, joint venture or other
entity during any period in which it beneficially owns at least thirty
percent of the voting power of all classes of stock of the Corporation
entitled to vote; and (ii) any corporation, partnership, joint venture or
other entity during any period in which at least a fifty percent voting or
profits interest is beneficially owned by
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the Corporation or by any entity that is an Affiliate by reason of clause
(i) next above.
(b) "Annual Salary" means the sum of:
(i) the annual salary of the Executive based upon the greater of (A) the
salary paid by or on behalf of Clark USA and the Corporation for the
calendar year ended immediately preceding the date of the Change in
Control and (B) the salary which would have been payable by or on
behalf of Clark USA and the Corporation to the Executive (based upon
the salary rate in effect immediately preceding the Change in Control)
for the 12 months immediately following the Change in Control; and
(ii) an amount equal to the greater of:
(A) the agreed yearly minimum bonus which is payable to the Executive
by Clark USA and the Corporation under the compensation terms in
effect immediately prior to the date of the Date of Termination;
or
(B) the average of the yearly bonus amounts paid to the Executive by
Clark USA and the Corporation over the last two fiscal years of
the Corporation ended immediately preceding the date of the Date
of Termination.
(c) "beneficial ownership" shall be determined in accordance with Rule 13d-3
issued under the U.S. Securities Exchange Act of 1934.
(d) "Board" means the board of directors of the Corporation.
(e) "Cause" means a determination by the Company that any of the following has
occurred:
(i) wilful and continued failure by the Executive to substantially perform
the Executive's duties with the Corporation (other than any such
failure resulting from his incapacity due to physical or mental
illness);
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(ii) wilful engaging by the Executive in misconduct which is materially
injurious to Clark USA, the Corporation, or the Affiliates,
monetarily or otherwise; or
(iii) the conviction of the Executive of a criminal offense involving
dishonesty or other moral turpitude;
provided that no act, or failure to act, on the Executive's part shall be
considered "wilful" unless the Company determines that such act or failure
to act by the Executive was in bad faith and was without reasonable belief
by the Executive that such act or failure to act was in the best interests
of Clark USA, the Corporation, or the Affiliates. For purposes of paragraph
(i) above, the phrase "wilful and continued failure by the Executive to
substantially perform the Executive's duties with the Corporation" shall
include, without limitation, any violation of paragraph IV.2(a).
(f) "Change in Control" means the first date upon which (I) a TrizecHahn
Corporation Change in Control shall have occurred, if on such date Tiger
shall beneficially own less than 20% of the number of shares of capital
stock of Clark USA held by it as of the Agreement Date; or (II) a Clark
Change in Control shall have occurred.
(g) "TrizecHahn Corporation Change in Control" means the occurrence of any of
the following events described in paragraph (i) through (vi) below:
(i) TrizecHahn Corporation - Voting/Board Control.
The date upon which the following three conditions shall have been
satisfied:
(A) the MVS shall have been converted into SVS in accordance with
their terms (the "Conversion");
(B) a person or group (other than Mr. Peter Munk) holds shares and/or
other securities which, directly or after conversion, exercise or
exchange thereof, would entitle the holders thereof to cast 20%
or more of the votes attached to the outstanding Voting Shares;
and
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(C) a change in the composition of the TrizecHahn Corporation Board
within two years after the date of Conversion such that the
directors of TrizecHahn Corporation in office immediately before
the date of Conversion and the directors recommended for election
or elected to succeed such directors by a majority of such
directors cease to constitute a majority of the TrizecHahn
Corporation Board;
provided, however, that a TrizecHahn Corporation Change in Control
will be deemed to have occurred under this paragraph (i) only if, on
the date on which such TrizecHahn Corporation Change in Control would
otherwise have occurred, TrizecHahn Corporation is a Substantial Owner
of Clark USA.
(ii) TrizecHahn Corporation - Voting.
The date upon which the following two conditions shall have been
satisfied:
(A) the Conversion shall have occurred; and
(B) a person or group (other than Mr. Peter Munk) holds shares and/or
other securities which, directly or after conversion, exercise or
exchange thereof, would entitle the holders thereof to cast 35%
or more of the votes attached to the outstanding Voting Shares;
provided, however, that a TrizecHahn Corporation Change in Control
will be deemed to have occurred under this paragraph (ii) only if, on
the date on which such TrizecHahn Corporation Change in Control would
otherwise have occurred, TrizecHahn Corporation is a Substantial Owner
of Clark USA.
(iii) TrizecHahn Corporation - MVS/Board.
The date upon which the following two conditions shall have been
satisfied:
(A) a majority of the MVS are beneficially owned, or control or
direction is exercised over a majority of the MVS, by any person
or group,
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other than Mr. Peter Munk or a member of his immediate family who
is a Canadian within the meaning of the Investment Canada Act
("Change in Ownership"); and
(B) there is a change in the composition of the TrizecHahn
Corporation Board within two years after the date of the Change
in Ownership and the directors recommended for election or
elected to succeed such directors by a majority of such directors
such that the directors in office immediately before the date of
the Change in Ownership cease to constitute a majority of the
TrizecHahn Corporation Board;
provided, however, that a TrizecHahn Corporation Change in Control
will be deemed to have occurred under this paragraph (iii) only if, on
the date on which such TrizecHahn Corporation Change in Control would
otherwise have occurred, TrizecHahn Corporation is a Substantial Owner
of Clark USA.
(iv) TrizecHahn Corporation - Merger/Board.
The date upon which the following two conditions shall have been
satisfied:
(A) the shareholders of TrizecHahn Corporation shall have approved
(I) an amalgamation, merger, or any other business combination or
consolidation of TrizecHahn Corporation with any other
corporation (other than a TrizecHahn Corporation Successor,
TrizecHahn Corporation Subsidiary, Clark USA, the Corporation, or
one or more of the Subsidiaries), (II) a plan for the liquidation
of TrizecHahn Corporation, (III) an agreement for the sale or
disposition of all or substantially all of the assets of
TrizecHahn Corporation; and
(B) within two years following a transaction referred to in paragraph
(iv)(A) above, a majority of the Board of the amalgamated or
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merged entity or successor entity into which
TrizecHahn Corporation was liquidated or which acquired
substantially all of the assets of TrizecHahn Corporation is
not comprised of individuals who were directors of TrizecHahn
Corporation immediately before the event referred to in
paragraph (iv)(A) above, or directors recommended for election
or elected to succeed such directors by a majority of such
directors;
provided, however, that a TrizecHahn Corporation Change in Control
will be deemed to have occurred under this paragraph (iv) only if,
on the date on which such TrizecHahn Corporation Change in Control
would otherwise have occurred, TrizecHahn Corporation is a
Substantial Owner of Clark USA.
(v) Increase in Ownership/Board Change.
The date upon which the following two conditions have been satisfied:
(A) any Person (excluding TrizecHahn Corporation, any TrizecHahn
Corporation Subsidiary, and any person who satisfies the requirements
set forth in Rule 13d-1(b)(i) and (ii) issued under the U.S.
Securities Exchange Act of 1934 (relating to certain persons acquiring
securities in the ordinary course of business and not with the purpose
or effect of changing or influencing the control of the issuer)) has
beneficial ownership of the Voting Power of Clark USA that is in
excess of the greater of:
(I) 20% of the Voting Power of Clark USA; or
(II) the Voting Power of Clark USA then held by TrizecHahn
Corporation;
(B) more than 50% of the Board of Directors of Clark USA is comprised
of persons who are neither executive officers of TrizecHahn
Corporation or any TrizecHahn Corporation Subsidiary, nor members of
the board of directors of TrizecHahn Corporation.
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(vi) Increase in Ownership.
The date upon which any Person (excluding TrizecHahn Corporation and
any TrizecHahn Corporation Subsidiary) has beneficial ownership of the
Voting Power of Clark USA that is in excess of the greater of:
(I) 35% of the Voting Power of Clark USA; or
(II) the Voting Power of Clark USA then held by TrizecHahn
Corporation.
(h) "Clark Change in Control" means the occurrence of any of the events
described in paragraphs (i) through (iii) below:
(i) Merger of Clark USA.
The date of approval by the shareholders of Clark USA of a
reorganization, merger or consolidation of Clark USA, in each case,
with respect to which all or substantially all of the individuals and
entities who were the respective beneficial owners of the common stock
and voting securities of Clark USA immediately prior to such
reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation (or following a series of
prearranged related transactions), beneficially own more than 50% of,
respectively, the then outstanding shares of common stock or the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such reorganization, merger
or consolidation.
(ii) Liquidation of Clark USA.
The date of approval by the shareholders of Clark USA of the sale or
other disposition of all or substantially all of the assets of Clark
USA; in each case, with respect to which all or substantially all of
the individuals and entities who were the respective beneficial owners
of the common stock and voting securities of Clark USA immediately
prior to such sale or disposition do not, following such sale
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or disposition (or following a series of prearranged related
transactions), beneficially own more than 50% of, respectively,
the then outstanding shares of common stock or the combined
voting power of the then outstanding voting securities entitled
to vote generally in the election of directors, as the case may
be, of the entity or entities acquiring all or substantially all
of the assets of Clark USA.
(iii) Disposition of the Corporation.
The first date on which Clark USA does not beneficially own more
than 50% of the total voting power of the outstanding capital
stock of the Corporation.
(i) "Clark USA" means Clark USA, Inc. and includes any corporation,
partnership, joint venture or other entity that succeeds to the
interests of Clark USA, Inc.
(j) "Corporation" means Clark Refining and Marketing, Inc. and includes
any corporation, partnership, joint venture or other entity that
succeeds to the interests of Clark Refining and Marketing, Inc.
(k) "Date of Termination" means the first date on which the Executive is
employed by neither Clark USA, the Corporation, nor any Subsidiary.
(l) "Disability" means the physical or mental illness of the Executive
resulting in the Executive's absence from his full time duties with
the Corporation for more than nine consecutive months and failure by
the Executive to return to full time performance of his duties within
thirty days after written demand by the Corporation to do so given at
any time after such nine-month period.
(m) "Good Reason" means the occurrence of any of the following events
without the Executive's written consent:
(i) the assignment to the Executive of a position that is not a
senior management position; provided, however, this paragraph (i)
shall not prevent the Executive being assigned a senior
management position: (A) with a Subsidiary of the Corporation or
Clark USA; (B)
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with responsibilities that are different from the responsibilities
assigned to the Executive immediately prior to the time of the Change
in Control; or (C) with reporting relationships that are different
from the Executive's reporting relationships immediately prior to the
Change in Control. For purposes of this paragraph (i), the term
"senior management position" shall mean any position of the
Corporation, Clark USA or any Subsidiary, or any other position with
the Corporation, Clark USA or any Subsidiary, that is substantially
comparable (in status and responsibility) to the executive's current
position with the Corporation, Clark USA or any Subsidiary, excluding
for this purpose an isolated, insubstantial and inadvertent action
not taken in bad faith and which is remedied by the Corporation
promptly after receipt of written notice thereof given by the
Executive;
(ii) the Corporation requiring the Executive to be based at any office or
location other than in the Greater St. Louis Area (or, if different,
the metropolitan area in which the Executive's principal office is
located immediately prior to the Change in Control); provided,
however, that Good Reason shall not be deemed to exist under this
paragraph (ii) if the relocation is in connection with a change in
the Executive's position at the Company, but only if either (A) the
change in position is a promotion, compared with the Executive's rank
immediately prior to the Change in Control; or (B) the change in
position is not a demotion (compared with the Executive's rank
immediately prior to the Change in Control, and provides a
developmental opportunity which may lead to a promotion;
(iii) any other action by the Executive's employer purporting to result in
a Date of Termination other than for Cause, Disability or death.
(n) "Greater St. Louis Area" means any location within 30 miles (traveling by
automobile) of 8182 Maryland Avenue, St. Louis, Missouri.
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(o) "group" means any person or company acting jointly or in concert with any
other person or company and for such purposes "acting jointly or in
concert" shall be interpreted in accordance with subsection 91(a) of the
Securities Act (Ontario).
(p) "TrizecHahn Corporation" means TrizecHahn Corporation Corporation, a
corporation incorporated under the laws of the Province of Ontario, and any
TrizecHahn Corporation Successor.
(q) "TrizecHahn Corporation Board" means the board of directors of TrizecHahn
Corporation.
(r) "TrizecHahn Corporation Subsidiary" means any corporation, partnership,
joint venture or other entity during any period in which at least a fifty
percent voting or profits interest is beneficially owned by TrizecHahn
Corporation.
(s) "TrizecHahn Corporation Successor" means any corporation, partnership,
joint venture or other entity which satisfies either (or both of) clause
(i) and (ii):
(i) Mr. Peter Munk has beneficial ownership that is in excess of the
greater of:
(A) 40% of the total voting power of the outstanding capital stock
of the entity; or
(B) the percentage of the total voting power of the outstanding
capital stock of the entity that is then held by any other
Person;
(ii) the entity succeeds to the interests of TrizecHahn Corporation
Corporation; but including only an entity which, immediately after
the succession: (A) is beneficially owned by all or substantially all
of the individuals and entities who were the respective beneficial
owners of TrizecHahn Corporation immediately prior to such
succession, in substantially the same proportions as the proportions
beneficially owned immediately prior to such succession; or (B) for a
period of two years following the succession, a majority of the Board
of
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the successor entity is comprised of individuals who were directors
of TrizecHahn Corporation immediately before the succession.
(t) "MVS" means the outstanding Multiple Voting Shares in the capital of
TrizecHahn Corporation at any time.
(u) The term "Person", when capitalized, shall mean any person, and shall also
include two or more persons acting as a partnership, limited partnership,
syndicate, or other group for the purpose or with the effect of changing or
influencing the control of Clark USA. The provisions of this paragraph (u)
shall be interpreted based on the interpretations of the comparable
provisions of Sections 13 and 14 of the U.S. Securities Exchange Act of
1934 and the rules thereunder.
(v) A "Potential Change in Control" shall exist during any period in which the
circumstances described in paragraphs (i), (ii), or (iii) below, exist
(provided, however, that a Potential Change in Control shall cease to exist
not later than the occurrence of a Change in Control):
(i) TrizecHahn Corporation, Clark USA or the Corporation enter into an
agreement, the consummation of which would result in the occurrence
of a Change in Control, provided that a Potential Change in Control
described in this paragraph (i) shall cease to exist upon the
expiration or other termination of all such agreements;
(ii) any person (including Clark USA and the Corporation) publicly
announces an intention to take or to consider taking actions the
consummation of which would constitute a Change in Control; provided
that a Potential Change in Control described in this paragraph (ii)
shall cease to exist upon the withdrawal of such intention, or upon
a reasonable determination by the Board that there is no reasonable
chance that such actions would be consummated;
(iii) the Board adopts a resolution to the effect that, for purposes of
this Agreement, a Potential Change in Control exists; provided that
a Potential Change in
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Control described in this paragraph (iii) shall cease to exist upon
a reasonable determination by the Board that the reasons that gave
rise to the resolution providing for the existence of a Potential
Change in Control have expired or no longer exist.
(w) "Subsidiary" means any corporation, partnership, joint venture or other
entity during any period in which at least a fifty percent voting or
profits interest is beneficially owned by the Clark USA.
(x) TrizecHahn Corporation shall be a "substantial owner" of Clark USA for the
period in which it beneficially owns at least 25% of the Voting Power of
Clark USA, and no other shareholder of Clark USA beneficially owns more
Voting Power of Clark USA than does TrizecHahn Corporation.
(y) "SVS" means the outstanding Subordinate Voting Shares in the capital of
TrizecHahn Corporation at any time.
(z) "Tiger" shall mean, collectively, The Jaguar Fund N.V., Tiger (a limited
partnership), Puma (a limited partnership) and any other Person managed by
Tiger Management Corporation which at any time holds any shares of capital
stock of Clark USA.
(aa) "Voting Power of Clark USA" shall mean the total voting power of the
outstanding capital stock of Clark USA.
(bb) "Voting Shares" means any security of TrizecHahn Corporation carrying a
right to vote for the election of directors of TrizecHahn Corporation under
all circumstances or under circumstances that have occurred and are
continuing.
ARTICLE IV
Agreement Term
--------------
IV.1 Subject to the automatic extension discussed below in this subsection
IV.1, the "Agreement Term" shall be the period beginning on the Agreement Date,
and ending on the fifth anniversary of the Agreement Date. On the fifth
anniversary of the Agreement Date and on each anniversary date thereafter
(including the period during which this Agreement is extended), the Agreement
Term shall automatically be extended by one
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additional year unless, not less than 90 days prior to any such anniversary, the
Corporation shall have given written notice to the Executive that the Agreement
Term will not be extended.
IV.2 (a) The Executive shall not solicit, initiate or encourage proposals
or offers from, or provide information relating to Clark USA, the Corporation or
any of the Affiliates to, any person, entity or group in connection with or
relating to any acquisition or disposition of all or any material part of Clark
USA's issued and outstanding shares, or any amalgamation, merger, sale of all or
any material part of the assets of Clark USA, the Corporation or any Subsidiary,
take-over bid, re-organization, re-capitalization, liquidation, winding-up of,
or other business combination or any similar transaction involving Clark USA,
the Corporation or any Subsidiary, without in each case the explicit approval of
any of the person to whom the Executive reports.
(b) The provisions of paragraph IV.2(a)shall not apply to the sale by the
Executive of any shares of Clark USA owned by him.
ARTICLE V
Continuation of Employment Following a Change in Control
--------------------------------------------------------
V.1 Upon a Change in Control, and for a period of two years thereafter, the
Corporation agrees to continue the Executive in its employ, in accordance with
the terms and provisions of this Agreement, on the same terms and conditions
which were in effect immediately prior to the Change in Control or on such other
terms as may be subsequently agreed upon in writing between the Corporation and
the Executive. Upon a Change in Control the provisions of this Article V and
Article VI shall become operative.
ARTICLE VI
Obligations Upon Termination
----------------------------
VI.1 If, at any time within two years following a Change in Control, the
Executive's Date of Termination occurs as a result the Executive's employment
being terminated by the Executive's employer (other than for Cause, Disability,
or death), or as a result of the Executive's employment being terminated by the
Executive for Good Reason:
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(a) The Corporation shall pay to or to the order of the Executive in cash or
certified cheque within ten days after the Date of Termination, the
aggregate of the following amounts (less any statutory deductions):
(i) if not theretofore paid, the amount of the Executive's unpaid Annual
Salary for the then current fiscal year of the Corporation for the
period to and including the Date of Termination, plus any other
compensation and benefit amounts that are accrued and unpaid as of
the Date of Termination; and
(ii) as partial compensation for the Executive's loss of employment, an
amount equal to twenty-four (24) months of Annual Salary; as defined
in Section III.5(b).
(b) If the Executive holds any options, rights, warrants or other entitlements
for the purchase or acquisition of securities in the capital of Clark USA,
the Corporation or any Affiliate granted by Clark USA and the Corporation
(collectively, "Rights"), regardless of whether such Rights are then
exercisable, notwithstanding the terms and conditions of such Rights or of
any plan or other document affecting such Rights, shall be deemed to be
immediately exercisable for a term that is the lesser of five years after
the Date of Termination or the remaining term to expiry for such Rights.
(c) The Corporation, at its expense, shall provide the Executive with the
reasonable job relocation counselling services of a firm chosen from time
to time by the Executive, for a period not to exceed 18 months after the
Date of Termination.
(d) The Corporation shall maintain in full force and effect, for the
Executive's continued benefit, until the earlier of:
(i) one year after the Date of Termination; and
(ii) the Executive's commencement of full time employment with a new
employer;
all life insurance, medical, dental, health and accident and disability
plans, programs or arrangements in which the
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Executive was entitled to participate immediately prior to the Date of
Termination at a cost to the Executive no greater than the Executive paid
while employed, provided that the Executive's continued participation is
possible under the general terms and provisions of such plans and programs.
In the event that the Executive's participation is barred, the Corporation
shall arrange to provide the Executive, at the Corporation's expense, with
benefits substantially similar to those which the Executive is entitled to
receive under such plans, programs or arrangements or pay cash in an amount
after tax sufficient to enable the Executive to purchase substantially
similar coverage for a one year period on an individual basis at a cost to
the Executive no greater than the Executive paid while employed. In the
case of the Executive's commencement of full time employment with a new
employer within the one year period, the Corporation agrees to make up any
differential in benefits between what the Executive would have received
from the Corporation in the one year period and what the Executive receives
from his new employer, so that the Executive is ensured of receiving the
same benefits which he would have been entitled to receive from the
Corporation had his employment with the Corporation continued for the one
year period at a cost to the Executive no greater than the Executive paid
while employed.
(e) Except as otherwise expressly provided in this Agreement, the Executive's
entitlement to benefits under the employee benefit plans and benefit
arrangements maintained by Clark USA and the Corporation shall be
determined under the terms of the respective plans as in effect from time
to time, with such entitlement based on the fact that the Executive's
employment with Clark USA and the Corporation ceased on the Executive's
Date of Termination.
Except as may be otherwise specifically provided in an amendment of this
subsection VI.1 adopted in accordance with subsection VII.9, payments under this
subsection VI.1 shall be in lieu of all benefits that may be otherwise payable
to or on behalf of the Executive pursuant to the terms of any severance pay
arrangement of Clark USA, the Corporation or any Affiliate or any other, similar
arrangement of Clark USA, the Corporation or any Affiliate providing benefits
upon involuntary termination of employment.
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VI.2 If, during a Potential Change in Control, the Executive's Date of
Termination occurs as a result of the Executive's employment being terminated by
the Executive's employer (other than for Cause, Disability, or death), and a
Change in Control occurs within 90 days following the date of the Executive's
Date of Termination, then:
(a) the Executive shall be treated as though his employment had continued until
the date of the Change in Control, and had been terminated immediately
thereafter for reasons other than for Cause, Disability, or death;
(b) the Executive shall be entitled to the compensation, benefits and rights
described in paragraphs VI.1(a) through (e), determined as though he had,
in fact, been employed through the date of the Change in Control and had
terminated employment in accordance with paragraph (a) above; and
(c) within ten days following the date of the Change in Control, the Executive
shall be entitled to the compensation and benefits that he would have been
entitled to receive if he had remained in the employ of the Corporation
until the date of the Change in Control.
Notwithstanding the foregoing provisions of this subsection VI.2, if the
Executive's employment is terminated by the Executive's employer during a
Potential Change in Control, but the Executive dies on or before the Change in
Control date, then this Agreement shall be inapplicable to the Participant, and
the amount of severance or benefits to which the Executive is entitled in such
circumstances shall be determined by the employment arrangements, if applicable,
with the Executive or, failing any such arrangements, by applicable law.
VI.3 The Corporation shall pay to the Executive all reasonable legal and
professional fees and expenses incurred by the Executive in seeking to obtain or
enforce any right or benefit provided by this Agreement, if the Executive is
successful in obtaining such right or benefit.
VI.4 (a) Notwithstanding anything in the Agreement to the contrary, in
the event that it shall be determined that any payment or distribution by the
Corporation, or by any other member of the same affiliated group with the
Corporation (as determined under Code Section 280G(d)(5)) to or for the benefit
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of the Executive, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise (a "Payment") would be non-
deductible by Clark USA, the Corporation, or any Affiliate (as applicable) for
U.S. Federal income tax purposes because of section 280G of the Internal Revenue
Code of 1986, as amended from time to time (the "Code") or any successor
provision, then the aggregate present value of the amounts payable or
distributable to or for the benefit of the Executive pursuant to this Agreement
("Agreement Payments") shall be reduced (but not below zero) to the Reduced
Amount. For purposes of this subsection VI.4, the "Reduced Amount" shall be an
amount expressed in present value which maximizes the aggregate present value of
Agreement Payments without causing any Payment to be non-deductible because of
Code section 280G. The determination to be made under this paragraph VI.4(a)
shall be made, within twenty days after the Date of Termination, by such
accounting firm that is currently acting as auditor for Clark USA (the
"Accounting Firm"), which shall provide detailed calculations thereof to Clark
USA and the Executive, provided, however, that the Executive shall elect which
and how much of the Agreement Payments shall be reduced consistent with such
calculations. The determination to be made by the Accounting Firm shall be
binding on Clark USA, the Corporation, or any Affiliate (as applicable) and the
Executive unless each of the following occurs: (i) within fifteen days of the
date of such determination, either party gives to the other party a written
legal opinion from a nationally recognized U.S. law firm stating that there is a
substantial possibility that the U.S. Internal Revenue Service (the "IRS") will
reach a conclusion different from that reached by the Accounting Firm; (ii)
either party, within fifteen days of the date of such letter, seeks a private
letter ruling from the IRS; and (iii) the IRS issues a private letter ruling
reaching a conclusion that is different from that reached by the Accounting
Firm. A private letter ruling by the IRS issued under these circumstances shall
be binding upon Clark USA, the Corporation, or any Affiliate (as applicable) and
the Executive. Present value, for purposes of the calculations under this
subsection VI.4, shall be determined in accordance with section 280G(d)(4) of
the Code.
(b) As a result of uncertainty in the application of section 280G of the
Code at the time of any initial determination by the Accounting Firm hereunder,
it is possible that Agreement Payments will have been paid or distributed by
Clark USA, the Corporation or an Affiliate which should not be so paid or
-19-
<PAGE>
distributed ("Overpayment") or that additional Agreement Payments which were not
paid or distributed could have been so paid or distributed ("Underpayment"), in
each case, consistent with the calculation of the Reduced Amount hereunder. In
the event that the Accounting Firm determines that an Overpayment has been made,
any such Overpayment shall be treated for all purposes as a loan to the
Executive which the Executive shall repay to Clark USA, the Corporation, or any
Affiliate (as applicable) promptly upon receiving notice of such Overpayment
together with interest at the applicable Federal rate provided for in section
7872(f)(2) of the Code; provided, however, that no amount shall be payable by
the Executive to Clark USA, the Corporation, or any Affiliate or if paid by the
Executive to Clark USA, the Corporation, or any Affiliate, shall be returned to
the Executive) if and to the extent that such payment would not reduce the
amount which is non-deductible under section 280G of the Code or which is
subject to taxation under section 4999 of the Code. In the event that the
Accounting Firm determines that an Underpayment has occurred, any such
Underpayment shall be promptly paid by Clark USA, the Corporation, or any
Affiliate, to or for the benefit of the Executive together with interest at the
applicable Federal rate provided for in section 7872(f)(2) of the Code.
ARTICLE VII
General
VII.1 If, within two years after the date of a Change in Control, the
Executive's employment with Clark USA, the Corporation and the Subsidiaries is
terminated by the Corporation (or other employer, as applicable) without Cause,
or is terminated by the Executive for Good Reason, subject to Section VII.3, the
Executive shall not be prohibited or restricted in any manner whatsoever from
obtaining employment with or otherwise forming or participating in a business
competitive to the business of Clark USA, the Corporation or Subsidiary.
VII.2 If, at any time within two years following a Change in Control, the
Executive's Date of Termination occurs as a result the Executive's employment
being terminated by the Executive's employer (other than for Cause, Disability,
or death), or as a result of the Executive's employment being terminated by the
Executive for Good Reason, the Executive shall not be subject to any duty or
obligation to seek alternate employment or other sources of income or benefits,
or to mitigate
-20-
<PAGE>
his damages, or to any similar duty or obligation, and, except as specifically
provided with respect to benefits in paragraph VI.1(d), all payment and other
obligations of the Corporation under this Agreement shall not be subject to any
rights of set-off, duty to mitigate or other reduction, and shall be paid and
performed in full notwithstanding any alternate employment or other sources of
income or benefits obtained or received or receivable by the Executive.
VII.3 The Executive agrees that he shall maintain the confidentiality of
any confidential or proprietary information concerning Clark USA, the
Corporation or any Subsidiary until the date, if any, upon which: (i) the
relevant information becomes available to the public or is made available to the
Executive from a source which is not bound by an obligation of confidentiality
to Clark USA, the Corporation or the relevant Subsidiary; or (ii) the Executive
is required to disclose such information by any court or governmental or
regulatory authority of competent jurisdiction (in which case the Executive
shall notify the Corporation and, after such notification, shall be entitled to
disclose or make use of such information only to the extent he is so required).
VII.4 Subject to the provisions of paragraph VI.2 (relating to a Potential
Change in Control), the Corporation and the Executive agree that if the
employment of the Executive is terminated prior to a Change in Control, this
Agreement shall have no application and the amount of severance or benefits, if
any, to which the Executive is entitled in such circumstances shall be
determined by the employment arrangements, if applicable, with the Executive or,
failing any such arrangements, by applicable law.
VII.5 Any notice required or permitted to be given under this Agreement
shall be in writing and shall be properly given if delivered by hand or mailed
by prepaid registered mail addressed as follows:
-21-
<PAGE>
(a) in the case of the Corporation, to:
Clark Refining and Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 63105
Attention: Chief Administrative Officer
of the Corporation
with a copy to:
Clark Refining and Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 63105
Attention: Chief Financial Officer of the Corporation
(b) in the case of the Executive, to:
Edward J. Stiften
2223 Oberhelman Road
Foristell, Missouri 63348
or the last address of the Executive in the records of the Corporation
or to such other address as the parties may from time to time specify by notice
given in accordance herewith. Any notice so given shall be conclusively deemed
to have been given or made on the day of delivery, if delivered, or if mailed by
registered mail, upon the date shown on the postal return receipt as the date
upon which the envelope containing such notice was actually received by the
addressee.
VII.6 This Agreement shall enure to the benefit of and be binding upon the
Executive and his heirs, executors, administrators and other legal personal
representatives and upon the Corporation and its successors and assigns.
VII.7 The terms set out in this Agreement, provided that such terms are
satisfied by the Corporation, are in lieu of (and not in addition to) and in
full satisfaction of any and all other claims or entitlements which the
Executive has or may have upon the termination of employment if:
-22-
<PAGE>
(a) at any time within two years following a Change in Control, the Executive's
Date of Termination occurs as a result the Executive's employment being
terminated by the Executive's employer (other than for Cause, Disability,
or death), or as a result of the Executive's employment being terminated by
the Executive for Good Reason; or
(b) during a Potential Change in Control under circumstances which will result
in the Executive being treated as having terminated employment after a
Change in Control in accordance with subsection VI.2;
and the compliance by the Corporation with these terms will effect a full and
complete release of the Corporation from any and all claims which the Executive
may then have for whatever reason or cause in connection with the Executive's
employment and the termination of it (including, without limitation, any rights
under an employment agreement which may then be in effect), other than those
obligations specifically set out in this Agreement, and other than obligations
of Clark USA, the Corporation and the Subsidiaries and Affiliates to the extent
that the documents providing for such obligations specifically provide that the
obligations are in addition to obligations under this Agreement. In agreeing to
the terms set out in this Agreement, the Executive specifically agrees to
execute a formal release document to that effect and will deliver upon request
appropriate resignations from all offices and positions with Clark USA, the
Corporation and any Subsidiaries and Affiliates if, as, and when requested by
the Company upon the termination of employment within the circumstances
contemplated by this Agreement.
VII.8 Each of the Corporation and the Executive agrees to execute all such
documents and to do all such acts and things, in any case at the Corporation's
expense, as the other party may reasonably request and as may be lawful and
within its powers to do or to cause to be done in order to carry out and/or
implement the provisions of intent of this Agreement, including, without
limitation, seeking all such governmental, regulatory and other third party
approvals as may be necessary or desirable. Without limiting the generality of
the foregoing, the Corporation agrees to execute all such documents and to do
all such acts and things as the Executive may reasonably request and as may be
lawful and within the power of the Corporation to do or cause to be done in
order to minimize any tax consequences to the Executive or his
-23-
<PAGE>
legal personal representatives in respect of the payment or performance by the
Corporation of the obligations of the Corporation upon termination arising under
Article V or in respect of other payments or actions required to be made or
taken by or on behalf of the Corporation in the event of termination of the
Executive's employment hereunder; provided that the Corporation shall in no
material way be prejudiced thereby.
VII.9 This Agreement may be amended only by an instrument in writing
signed by both parties.
VII.10 Neither party may waive or shall be deemed to have waived any right
it has under this Agreement (including under this subsection VII.10) except to
the extent that such waiver is in writing.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto.
CLARK REFINING AND MARKETING, INC.
By Paul D. Melnuk
-------------------------------
President & CEO
-------------------------------
SIGNED, SEALED AND DELIVERED )
in the presence of )
)
)
/s/ Linda G. Schwent )
- --------------------------------)
Linda G. Schwent ) Edward J. Stiften
- --------------------------------) -------------------------------
Notary Public, State of Missouri) EXECUTIVE
My Commission Expires 11/22/99 )
St. Charles County )
-24-
<PAGE>
EXHIBIT 12.1
CLARK REFINING & MARKETING, INC. AND SUBSIDIARY
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER
YEAR ENDED DECEMBER 31, 30,
--------------------------------------------- -------------------------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Earnings Available for
Fixed Charges
Pretax earnings from
continuing
operations........... $ 2,949 $ 855 $27,806 $(41,200) $(52,441) $(38,584) $ 68,026
Fixed charges......... 50,511 43,205 44,690 50,827 54,956 41,217 41,810
Capitalized interest.. (5,108) (2,776) (2,409) (1,404) (1,033) (754) (972)
Other (a)............. 182 197 (468) (1,413) (136) (139) (103)
------- ------- ------- -------- -------- -------- --------
$48,534 $41,481 $69,619 $ 6,810 $ 1,346 $ 1,740 $108,761
======= ======= ======= ======== ======== ======== ========
Fixed Charges
Gross interest expense
(b).................. $49,277 $42,072 $42,157 $ 47,394 $ 49,455 $ 37,128 $ 37,566
Interest factor
attributable to rent
expense.............. 1,234 1,133 2,533 3,433 5,501 4,089 4,244
------- ------- ------- -------- -------- -------- --------
$50,511 $43,205 $44,690 $ 50,827 $ 54,956 $ 41,217 $ 41,810
======= ======= ======= ======== ======== ======== ========
Ratio of Earnings to
Fixed Charges.......... 0.96x 0.96x 1.56x 0.13x 0.02x 0.04x 2.60x
</TABLE>
- -------
(a) Represents adjustments to recognize only distributed earnings for less
than 50% owned companies accounted for under the equity method.
(b) Represents interest expense on long-term and short-term debt and
amortization of debt discount and debt issue costs.
<PAGE>
EXHIBIT 21.1
Clark Port Arthur Pipeline Company, a Delaware corporation, is registered to
do business in the states of Delaware and Texas.
<PAGE>
EXHIBIT 23.1
To the Board of Directors of
Clark Refining & Marketing, Inc.:
We consent to the inclusion in this Registration Statement on Form S-4 of our
report dated February 4, 1997, on our audits of the consolidated financial
statements of Clark Refining & Marketing, Inc. We also consent to the reference
to our Firm under the caption "Experts."
COOPERS & LYBRAND L.L.P.
St. Louis, Missouri
December 12, 1997
<PAGE>
EXHIBIT 25.1
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT
OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE PURSUANT TO SECTION 305(b)(2) ___________
______________________________
BANKERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
NEW YORK 13-4941247
(Jurisdiction of Incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification no.)
FOUR ALBANY STREET
NEW YORK, NEW YORK 10006
(Address of principal (Zip Code)
executive offices)
Bankers Trust Company
Legal Department
130 Liberty Street, 31st Floor
New York, New York 10006
(212) 250-2201
(Name, address and telephone number of agent for service)
_________________________________
CLARK REFINING & MARKETING, INC.
(Exact name of obligor as specified in its charter)
Delaware 43-1495734
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization Identification no.)
8182 MARYLAND AVENUE
ST. LOUIS, MO 63105
(Address of principal executive offices (Zip Code)
8 3/8% NEW SENIOR NOTES DUE 2007
(Title of the indenture securities)
<PAGE>
Item 1. General Information.
Furnish the following information as to the trustee.
(a) Name and address of each examining or supervising authority
to which it is subject.
Name Address
---- -------
Federal Reserve Bank (2nd District) New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
New York State Banking Department Albany, NY
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the Trustee, describe each such
affiliation.
None.
Item 3.-15. Not Applicable
Item 16. List of Exhibits.
Exhibit 1 - Restated Organization Certificate of Bankers Trust
Company dated August 7, 1990, Certificate of
Amendment of the Organization Certificate of Bankers
Trust Company dated June 21, 1995 - Incorporated
herein by reference to Exhibit 1 filed with Form T-1
Statement, Registration No. 33-65171, Certificate of
Amendment of the Organization Certificate of Bankers
Trust Company dated March 20, 1996, incorporate by
referenced to Exhibit 1 filed with Form T-1
Statement, Registration No. 333-25843 and Certificate
of Amendment of the Organization Certificate of
Bankers Trust Company dated September 17, 1997, copy
attached.
Exhibit 2 - Certificate of Authority to commence business -
Incorporated herein by reference to Exhibit 2 filed
with Form T-1 Statement, Registration No. 33-21047.
Exhibit 3 - Authorization of the Trustee to exercise corporate
trust powers - Incorporated herein by reference to
Exhibit 2 filed with Form T-1 Statement, Registration
No. 33-21047.
Exhibit 4 - Existing By-Laws of Bankers Trust Company, as amended
on February 18, 1997, Incorporated herein by
reference to Exhibit 4 filed with Form T-1 Statement,
Registration No. 333-24509-01.
-2-
<PAGE>
Exhibit 5 - Not applicable.
Exhibit 6 - Consent of Bankers Trust Company required by Section
321(b) of the Act. - Incorporated herein by reference
to Exhibit 4 filed with Form T-1 Statement,
Registration No. 22-18864.
Exhibit 7 - The latest report of condition of Bankers Trust
Company dated as of September 30, 1997. Copy
attached.
Exhibit 8 - Not Applicable.
Exhibit 9 - Not Applicable.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York, and State of New York, on the 15th day
of December, 1997.
BANKERS TRUST COMPANY
By: /s/ Kevin Weeks
--------------------------------
Kevin Weeks
Assistant Vice President
-4-
<PAGE>
<TABLE>
<S> <C> <C> <C>
Legal Title of Bank: Bankers Trust Company Call Date: 09/30/97 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-1
City, State ZIP: New York, NY 10006 11
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3
</TABLE>
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for September 30, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, reported the amount outstanding as of the last business day of the
quarter.
Schedule RC--Balance Sheet
<TABLE>
<CAPTION>
C400
------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS / / / / / / / / /
1. Cash and balances due from depository institutions (from Schedule RC-A):.................. / / / / / / / / /
a. Noninterest-bearing balances and currency and coin (1)................................ 0081 1,526,000 1.a.
b. Interest-bearing balances (2)......................................................... 0071 2,591,000 1.b.
2. Securities:............................................................................... / / / / / / / / /
a. Held-to-maturity securities (from Schedule RC-B, column A)............................ 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D).......................... 1773 3,903,000 2.b.
3. Federal funds sold and securities purchased under agreements to resell.................... 1350 29,339,000 3.
4. Loans and lease financing receivables:.................................................... / / / / / / / / /
a. Loans and leases, net of unearned income (from Schedule RC-C)...RCFD 2122 19,343,000 / / / / / / / / / 4.a.
b. LESS: Allowance for loan and lease losses......................RCFD 3123 723,000 / / / / / / / / / 4.b.
c. LESS: Allocated transfer risk reserve..........................RCFD 3128 0 / / / / / / / / / 4.c.
d. Loans and leases, net of unearned income,............................................. / / / / / / / / /
allowance, and reserve (item 4.a minus 4.b and 4.c)................................... 2125 18,620,000 4.d.
5. Trading Assets (from schedule RC-D)....................................................... 3545 43,032,000 5.
6. Premises and fixed assets (including capitalized leases).................................. 2145 766,000 6.
7. Other real estate owned (from Schedule RC-M).............................................. 2150 186,000 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M).. 2130 59,000 8.
9. Customers' liability to this bank on acceptances outstanding.............................. 2155 703,000 9.
10. Intangible assets (from Schedule RC-M).................................................... 2143 84,000 10.
11. Other assets (from Schedule RC-F)......................................................... 2160 5,343,000 11.
12. Total assets (sum of items 1 through 11).................................................. 2170 106,152,000 12.
-------------------------
</TABLE>
__________________________
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: Bankers Trust Company Call Date: 09/30/97 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-2
City, State Zip: New York, NY 10006 12
FDIC Certificate No.: / 0 / 0 / 6 / 2 / 3
Schedule RC--Continued ----------------------------
Dollar Amounts in Thousands / / / / / Bil Mil Thou
- --------------------------- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LIABILITIES / / / / / / / / / / / / / /
13. Deposits: / / / / / / / / / / / / / /
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part I) RCON 2200 22,016,000
(1) Noninterest-bearing(1)......................RCON 6631 2,272,000...... / / / / / / / / / / / / / /
(2) Interest-bearing............................RCON 6636 19,744,000...... / / / / / / / / / / / / / /
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, / / / / / / / / / / / / / /
part II)............................................................................ RCFN 2200 26,396,000
(1) Noninterest-bearing.........................RCFN 6631 1,304,000...... / / / / / / / / / / / / / /
(2) Interest-bearing............................RCFN 6636 25,092,000...... / / / / / / / / / / / / / /
14. Federal funds purchased and securities sold under agreements to repurchase RCFD 2800 11,779,000
15. a. Demand notes issued to the U.S. Treasury.............................................. RCON 2840 0
b. Trading liabilities (from Schedule RC-D).............................................. RCFD 3548 23,059,000
16. Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases): / / / / / / / / / / / / / /
a. With a remaining maturity of one year or less......................................... RCFD 2332 6,391,000
b. With a remaining maturity of more than one year through three years................... A547 369,000
c. With a remaining maturity of more than three years.................................... A548 3,176,000
17. Not Applicable. / / / / / / / / / / / / / /
18. Bank's liability on acceptances executed and outstanding................................... RCFD 2920 703,000
19. Subordinated notes and debentures (2)...................................................... RCFD 3200 1,250,000
20. Other liabilities (from Schedule RC-G)..................................................... RCFD 2930 5,222,000
21. Total liabilities (sum of items 13 through 20)............................................. RCFD 2948 100,361,000
22. Not Applicable / / / / / / / / / / / / / /
/ / / / / / / / / / / / / /
EQUITY CAPITAL / / / / / / / / / / / / / /
23. Perpetual preferred stock and related surplus.............................................. RCFD 3838 1,000,000
24. Common stock............................................................................... RCFD 3230 1,202,000
25. Surplus (exclude all surplus related to preferred stock)................................... RCFD 3839 540,000
26. a. Undivided profits and capital reserves................................................ RCFD 3632 3,409,000
b. Net unrealized holding gains (losses) on available-for-sale securities................ RCFD 8434 15,000
27. Cumulative foreign currency translation adjustments........................................ RCFD 3284 (375,000)
28. Total equity capital (sum of items 23 through 27).......................................... RCFD 3210 5,791,000
29. Total liabilities and equity capital (sum of items 21 and 28).............................. RCFD 3300 106,152,000
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that
best describes the most comprehensive level of auditing work performed for Number
the bank by independent external auditors as of any date during 1996....................... RCFD 6724 N/A
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a
certified public accounting firm which submits a report on the
consolidated holding company (but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may
be required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- ----------------------
(1) Including total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
</TABLE>
<PAGE>
State of New York,
Banking Department
I, MANUEL KURSKY, Deputy Superintendent of Bank of the State of New York,
DO HEREBY APPROVE the annexed Certificate entitled "CERTIFICATE OF AMENDMENT OF
THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY Under Section 8005 of the
Banking Law," dated September 17, 1997, providing for an increase in authorized
capital stock from $2,001,666,670 consisting of 100,166,667 shares with a par
value of $10 each designated as Common Stock and 500 shares with a par value of
$1,000,000 each designated as Series Preferred Stock to $2,201,666,670
consisting of 120,166,667 shares with a par value of $10 each designated as
Common Stock and 1,000 shares with a par value of $1,000,000 each designated as
Series Preferred Stock.
Witness, my hand and official seal of the Banking Department at the City of New
York, this 26th day of September in the Year of our Lord one thousand nine
hundred and ninety-seven.
Manuel Kursky
-----------------------------------------
Deputy Superintendent of Banks
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
ORGANIZATION CERTIFICATE
OF BANKERS TRUST
Under Section 8005 of the Banking Law
----------
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a
Managing Director and an Assistant Secretary of Bankers Trust Company, do hereby
certify:
1. The name of the corporation is Bankers Trust Company.
2. The organization certificate of said corporation was filed by the
Superintendent of Banks on the 5th of march, 1903.
3. The organization certificate as heretofore amended is hereby amended to
increase the aggregate number of shares which the corporation shall have
authority to issue and to increase the amount of its authorized capital stock in
conformity therewith.
4. Article III of the organization certificate with reference to the
authorized capital stock, the number of shares into which the capital stock
shall be divided, the par value of the shares and the capital stock outstanding,
which reads as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is Two Billion One Million, Six Hundred Sixty-Six Thousand, Six
Hundred Seventy Dollars ($2,001,666,670), divided into One Hundred Million,
One Hundred Sixty-Six Thousand, Six Hundred Sixty-Seven (100,166,667)
shares with a par value of $10 each designated as Common Stock and 1000
shares with a par value of One Million Dollars ($1,000,000) each designated
as Series Preferred Stock."
is hereby amended to read as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is Two Billion, Two Hundred and One Million, Six Hundred Sixty-Six
Thousand, Six Hundred Seventy Dollars ($2,201,666,670), divided into One
Hundred Twenty Million, One Hundred Sixty-Six Thousand, Six Hundred Sixty-
Seven (120,166,667) shares with a par value of $10 each designated as
Common Stock and 1000 shares with a par value of One Million Dollars
($1,000,000) each designated as Series Preferred Stock."
<PAGE>
6. The foregoing amendment of the organization certificate was
authorized by unanimous written consent signed by the holder of all outstanding
shares entitled to vote thereon.
IN WITNESS WHEREOF, we have made and subscribed this certificate this
17th day of September, 1997.
James T. Byrne, Jr.
-------------------------
James T. Byrne, Jr.
Managing Director
Lea Lahtinen
-------------------------
Lea Lahtinen
Assistant Secretary
State of New York )
) ss:
County of New York )
Lea Lahtinen, being fully sworn, deposes and says that she is an
Assistant Secretary of Bankers Trust Company, the corporation described in the
foregoing certificate; that she has read the foregoing certificate and knows the
contents thereof, and that the statements herein contained are true.
Lea Lahtinen
-------------------------
Lea Lahtinen
Sworn to before me this 17th day
of September, 1997.
Josephine A. Monti
- ----------------------------------
Notary Public
JOSEPHINE A. MONTI
Notary Public State of New York
No. 52-4519901
Qualified in New York County
Commission Expires October 19, 1997
<PAGE>
EXHIBIT 25.2
Conformed Copy
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
-----------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
-----------
MARINE MIDLAND BANK
(Exact name of trustee as specified in its charter)
New York 16-1057879
(Jurisdiction of incorporation (I.R.S. Employer
or organization if not a U.S. Identification No.)
national bank)
140 Broadway, New York, N.Y. 10005-1180
(212) 658-1000 (Zip Code)
(Address of principal executive offices)
Charles E. Bauer
Vice President
Marine Midland Bank
140 Broadway
New York, New York 10005-1180
Tel: (212) 658-1792
(Name, address and telephone number of agent for service)
CLARK REFINING & MARKETING, INC.
(Exact name of obligor as specified in its charter)
Delaware 43-1491230
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
8182 Maryland Avenue 63105
St. Louis, Missouri
(314) 854-9696 (Zip Code)
(Address of principal executive offices)
8 7/8% NEW SENIOR SUBORDINATED NOTES DUE 2007
(Title of Indenture Securities)
<PAGE>
General
Item 1. General Information.
--------------------
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to which
it is subject.
State of New York Banking Department.
Federal Deposit Insurance Corporation, Washington, D.C.
Board of Governors of the Federal Reserve System, Washington,
D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
--------------------------
If the obligor is an affiliate of the trustee, describe each
such affiliation.
None
<PAGE>
Item 16. List of Exhibits.
-----------------
<TABLE>
<CAPTION>
Exhibit
- -------
<S> <C>
T1A(i) *Copy of the Organization Certificate of
Marine Midland Bank.
T1A(ii) *Certificate of the State of New York
Banking Department dated December 31,
1993 as to the authority of Marine Midland
Bank to commence business.
T1A(iii) Not applicable.
T1A(iv) *Copy of the existing By-Laws of Marine
Midland Bank as adopted on January 20,
1994.
T1A(v) Not applicable.
T1A(vi) *Consent of Marine Midland Bank required
by Section 321(b) of the Trust Indenture
Act of 1939.
T1A(vii) Copy of the latest report of condition of
the trustee (September 30, 1997),
published pursuant to law or the
requirement of its supervisory or
examining authority.
T1A(viii) Not applicable.
T1A(ix) Not applicable.
</TABLE>
* Exhibits previously filed with the Securities and Exchange Commission with
Registration No. 33-53693 and incorporated herein by reference thereto.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee,
Marine Midland Bank, a banking corporation and trust company organized under the
laws of the State of New York, has duly caused this statement of eligibility to
be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York on the 15th day of December, 1997.
MARINE MIDLAND BANK
By: /s/ Frank J. Godino
-----------------------------------------
Frank J. Godino
Vice President
<PAGE>
EXHIBIT T1A (VII)
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
OMB Number: 1557-0081
FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL Expires March 31, 1999
- --------------------------------------------------------------------------
[1]
This financial information has not been reviewed, or confirmed
for accuracy or relevance, by the Federal Reserve System.
Please refer to page 1,
Table of Contents, for
the required disclosure
of estimated burden.
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR
A BANK WITH DOMESTIC AND FOREIGN
OFFICES--FFIEC 031
REPORT AT THE CLOSE OF BUSINESS (950630)
SEPTEMBER 30, 1997 -----------
(RCRI 9999)
This report is required by law; 12 This report form is to be filed by
U.S.C. (S)324 (State member banks); banks with branches and consolidated
12 U.S.C. (S) 1817 (State nonmember subsidiaries in U.S. territories and
banks); and 12 U.S.C. (S)161 possessions, Edge or Agreement
(National banks). subsidiaries, foreign branches,
consolidated foreign subsidiaries,
or International Banking Facilities.
NOTE: The Reports of Condition and The Reports of Condition and Income
Income must be signed by an are to be prepared in accordance with
authorized officer and the Report of Federal regulatory authority
Condition must be attested to by not instructions. NOTE: These
less than two directors (trustees) instructions may in some cases differ
for State nonmember banks and three from generally accepted accounting
directors for State member and principles.
National Banks.
I, Gerald A. Ronning, Executive VP & We, the undersigned directors
Controller (trustees), attest to the correctness
- ------------------------------------ of this Report of Condition
Name and Title of Officer Authorized (including the supporting schedules)
to Sign Report and declare that it has been examined
by us and to the best of our
of the named bank do hereby declare knowledge and belief has been
that these Reports of Condition and prepared in conformance with the
Income (including the supporting instructions issued by the
schedules) have been prepared in appropriate Federal regulatory
conformance with the instructions authority and is true and correct.
issued by the appropriate Federal
regulatory authority and are true to
the best of my knowledge and believe.
/s/ Malcolm Burnett
--------------------------------------
Director (Trustee)
/s/ Gerald A. Ronning /s/ James H. Cleave
- -------------------------------------- --------------------------------------
Signature of Officer Authorized to Director (Trustee)
Sign Report
10/27/97 /s/ Bernard J. Kennedy
- -------------------------------------- --------------------------------------
Date of Signature Director (Trustee)
FOR BANKS SUBMITTING HARD COPY REPORT
FORMS:
NATIONAL BANKS: Return the original
STATE MEMBER BANK: Return the only in the special return address
original and one copy to the envelope provided. If express mail
appropriate Federal Reserve District is used in lieu of the special return
Bank. address envelope, return the original
only to the FDIC, c/o Quality Data
STATE NONMEMBER BANKS: Return the Systems, 2127 Espey Court, Suite 204,
original only in the special return Crofton, MD 21114.
address envelope provided. If
express mail is used in lieu of the
special return address envelope,
return the original only to the
FDIC, c/o Quality Data Systems, 2127
Espey Court, Suite 204, Crofton, MD
21114.
FDIC Certificate Number 0 0 5 8 9
(RCRI 9030)
-------------
<PAGE>
NOTICE
This form is intended to assist institutions with state publication
requirements. It has not been approved by any state banking authorities. Refer
to your appropriate state banking authorities for your state publication
requirements.
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of the
Marine Midland Bank of Buffalo
Name of Bank City
in the state of New York, at the close of business September 30, 1997
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Thousands
of dollars
Cash and balances due from depository
institutions:
Noninterest-bearing balances
currency and coin.................................... $ 1,110,485
Interest-bearing balances............................ 2,048,920
Held-to-maturity securities.......................... 0
Available-for-sale securities........................ 3,391,694
Federal funds sold and securities purchased
under agreements to resell........................... 1,342,831
Loans and lease financing receivables:
Loans and leases net of unearned
income............................................... 21,487,570
LESS: Allowance for loan and lease
losses............................................... 425,157
LESS: Allocated transfer risk reserve................ 0
Loans and lease, net of unearned
income, allowance, and reserve....................... 21,062,413
Trading assets....................................... 968,456
Premises and fixed assets (including
capitalized leases).................................. 221,523
Other real estate owned................................. 5,545
Investments in unconsolidated
subsidiaries and associated companies................... 0
Customers' liability to this bank on
acceptances outstanding................................. 23,847
Intangible assets....................................... 482,701
Other assets............................................ 537,780
Total assets............................................ 31,196,195
LIABILITIES
Deposits:
In domestic offices.................................. 19,952,350
Noninterest-bearing.................................. 3,982,634
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Interest-bearing................................................. 15,969,716
In foreign offices, Edge, and Agreement
subsidiaries, and IBFs.............................................. 3,344,008
Noninterest-bearing.............................................. 0
Interest-bearing................................................. 3,344,008
Federal funds purchased and securities sold
under agreements to repurchase................................... 2,540,798
Demand notes issued to the U.S. Treasury............................ 279,418
Trading Liabilities................................................. 208,931
Other borrowed money:
With a remaining maturity of one year
or less.......................................................... 1,359,650
With a remaining maturity of more than
one year through three years..................................... 73,635
With a remaining maturity of more than
three years...................................................... 102,337
Bank's liability on acceptances
executed and outstanding............................................ 23,847
Subordinated notes and debentures................................... 497,711
Other liabilities................................................... 596,321
Total liabilities................................................... 28,979,006
Limited-life preferred stock and
related surplus..................................................... 0
EQUITY CAPITAL
Perpetual preferred stock and related
surplus............................................................. 0
Common Stock........................................................ 205,000
Surplus............................................................. 1,983,923
Undivided profits and capital reserves.............................. 10,090
Net unrealized holding gains (losses)
on available-for-sale securities.................................... 18,176
Cumulative foreign currency translation
adjustments......................................................... 0
Total equity capital................................................ 2,217,189
Total liabilities, limited-life
preferred stock, and equity capital................................. 31,196,195
</TABLE>
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
To Tender for Exchange
8 3/8% Senior Notes due November 15, 2007 and
8 7/8% Senior Subordinated Notes due November 15, 2007
of
Clark Refining & Marketing, Inc.
Pursuant to the Prospectus dated ________ __, 1998
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON __________,
1998 UNLESS EXTENDED.
For the 8 7/8% Senior Subordinated Notes,
To: Marine Midland Bank, as Exchange Agent
By Registered or Certified Mail: By Overnight Courier:
Attn: Corporate Trust Operations Attn: Corporate Trust Operations
Marine Midland Bank Marine Midland Bank
140 Broadway, Level A 140 Broadway, Level A
New York, New York 10005-1180 New York, New York 10005-1180
Attention: Corporate Trust Operations Attention: Corporate Trust Operations
By Hand:
Marine Midland Bank
140 Broadway, Level A
New York, New York 10005-1180
By Facsimile:
(212) 658-2292
For the 8 3/8% Senior Notes,
To: Bankers Trust Company, as Exchange Agent
By Registered or Certified Mail: By Overnight Courier:
BT Services Tennessee, Inc. BT Services Tennessee, Inc.
Reorganization Unit Corporate Trust & Agency Group
P.O. Box 292737 Reorganization Unit
Nashville, Tennessee 37211 648 Grassmere Park Road
Nashville, Tennessee 37229-2737
By Hand:
Attn: Reorganization Department
Bankers Trust Company
Corporate Trust & Agency Group
<PAGE>
Receipt & Delivery Window
123 Washington Street, 1st Floor
New York, New York 10006
By Facsimile:
(615) 835-3701
Delivery of this instrument to an address other than as set forth
above or transmission of instructions via a facsimile number other than the one
listed above will not constitute a valid delivery. The instructions
accompanying this Letter of Transmittal should be read carefully before this
Letter of Transmittal is completed.
The undersigned acknowledges that he or she has received the
Prospectus, dated _________ ___, 1998 (the "Prospectus"), of Clark Refining &
Marketing, Inc. (the "Company") and this Letter of Transmittal (the "Letter of
Transmittal"), which together constitute the Company's offer (the "Exchange
Offer") to exchange (i) its 8 3/8% New Senior Notes due November 15, 2007 (the
"New Senior Notes") for an equal principal amount of its 8 3/8 Senior Notes due
November 15, 2007 (the "Old Senior Notes") and (ii) its 8 7/8% New Senior
Subordinated Notes due November 15, 2007 (the "New Senior Subordinated Notes")
for an equal principal amount of its 8 7/8 Senior Subordinated Notes due
November 15, 2007 (the "Old Senior Subordinated Notes"). The Old Senior Notes
and the Old Senior Subordinated Notes are collectively referred to herein as the
"Old Notes" and the New Senior Notes and the New Senior Subordinated Notes are
collectively referred to herein as the "New Notes." The form and terms of the
New Senior Notes and the New Senior Subordinated Notes are the same as the form
and terms of the Old Senior Notes and Old Senior Subordinated Notes, except that
the New Notes have been registered under the Securities Act of 1933, as amended
(the "Securities Act"), and hence will not bear legends restricting the transfer
thereof. The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
_____________, 1998 unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term shall mean the latest date and time to
which the Exchange Offer is extended. Capitalized terms used but not defined
herein have the meaning given to them in the Prospectus.
This Letter of Transmittal is to be used by Holders of the Old Notes.
This Letter of Transmittal is to be used by such Holders if (i) certificates
representing the Old Notes are to be physically delivered to the Depositary
herewith by such Holders or (ii) tender of Old Notes is to be made by book-entry
transfer to the Depositary's account at DTC pursuant to the procedures set forth
under the caption "The Exchange Offer--Procedure for Tendering Old Notes" in the
Exchange Offer and instructions are not being transmitted through the DTC
Automated Tender Offer Program ("ATOP").
Holders of Old Notes who are tendering by book-entry transfer to the
Depositary's account at DTC can execute the tender through ATOP for which the
transaction will be eligible. DTC participants that are accepting the Exchange
Offer must transmit their acceptance to DTC, which will verify the acceptance
and execute a book-entry delivery of the Depositary's account at DTC. DTC will
then send an Agent's Message to the Depositary for its acceptance. Delivery of
the Agent's Message by DTC will satisfy the terms of the Exchange Offer as to
execution and delivery of this Letter of Transmittal by the participant
identified in the Agent's Message.
Delivery of documents to DTC does not constitute delivery to the
Depositary.
The term "Holder" with respect to the Exchange Offer means any person
in whose name Old Notes are registered on the books of the Company or any other
person who has obtained a properly completed bond power from the registered
holder. The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer. Holders who wish to tender their Old Notes must complete
this letter in its entirety.
2
<PAGE>
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING THE BOX
<TABLE>
<CAPTION>
DESCRIPTION OF 8 3/8% SENIOR NOTES DUE 2007
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Aggregate Principal Amount
Principal Tendered (must
Names and Address(es) of Amount be in Integral
Registered Holder(s) Certificate Represented by Multiple
(Please fill in, if blank) Number(s) Certificate(s) of $1,000)*
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Total
- ----------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF 8 7/8% SENIOR SUBORDINATED NOTES DUE 2007
- ----------------------------------------------------------------------------------------------------------------------
Aggregate Principal Amount
Principal Tendered (must
Names and Address(es) of Amount be in Integral
Registered Holder(s) Certificate Represented by Multiple
(Please fill in, if blank) Number(s) Certificate(s) of $1,000)*
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Total
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Unless indicated in the column labeled "Principal Amount Tendered," any
tendering Holder of 8 3/8% Senior Notes due 2007 and 8 7/8% Senior
Subordinated Notes due 2007, as the case may be, will be deemed to have
tendered the entire aggregate principal amount represented by the column
labeled "Aggregate Principal Amount Represented by Certificate(s)."
If the space provided above is inadequate, list the certificate numbers and
principal amounts on a separate signed schedule and affix the list to this
Letter of Transmittal.
The minimum permitted tender is $1,000 in principal amount. All other
tenders must be integral multiples of $1,000.
3
<PAGE>
SPECIAL REGISTRATION INSTRUCTIONS
(See Instructions 4, 5 and 6)
To be completed ONLY if certificates for Old Notes in a principal amount not
tendered, or New Notes issued in exchange for Old Notes accepted for exchange,
are to be issued in the name of someone other than the undersigned.
Issue certificate(s) to:
Name: _______________________________________
(Please Print)
Address: ____________________________________
--------------------------------------------
(Include Zip Code)
--------------------------------------------
(Tax Identification or Social Security No.)
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 4, 5 and 6)
To be completed ONLY if certificates for Old Notes in a principal amount not
tendered, or New Notes issued in exchange for Old Notes accepted for exchange,
are to be sent to someone other than the undersigned, or to the undersigned at
an address other than that shown above.
Deliver certificate(s) to:
Name: _______________________________________
(Please Print)
Address: ____________________________________
--------------------------------------------
(Include Zip Code)
--------------------------------------------
(Tax Identification or Social Security No.)
4
<PAGE>
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the undersigned
hereby tenders to the Company the principal amount of Old Notes indicated above.
Subject to and effective upon the acceptance for exchange of the principal
amount of Old Notes tendered in accordance with this Letter of Transmittal, the
undersigned sells, assigns and transfers to, or upon the order of, the Company
all right, title and interest in and to the Old Notes tendered hereby. The
undersigned hereby irrevocably constitutes and appoints the Exchange Agent its
agent and attorney-in-fact (with full knowledge that the Exchange Agent also
acts as the agent of the Company) with respect to the tendered Old Notes with
full power of substitution to (i) deliver certificates for such Old Notes to the
Company and deliver all accompanying evidences of transfer and authenticity to,
or upon the order of, the Company and (ii) present such Old Notes for transfer
on the books of the Company and receive all benefits and otherwise exercise all
rights of beneficial ownership of such Old Notes, all in accordance with the
terms of the Exchange Offer. The power of attorney granted in this paragraph
shall be deemed to be irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that he or she has full
power and authority to tender, sell, assign and transfer the Old Notes tendered
hereby and that the Company will acquire good and unencumbered title thereto,
free and clear of all liens, restrictions, charges and encumbrances and not
subject to any adverse claim, when the same are acquired by the Company. The
undersigned hereby further represents that any New Notes acquired in exchange
for Old Notes tendered hereby will have been acquired in the ordinary course of
business of the person receiving such New Notes, whether or not such person is
the undersigned, that neither the Holder nor any such other person has an
arrangement or understanding with any person to participate in the distribution
of such New Notes and that neither the Holder nor any such other person is an
"affiliate," as defined in Rule 405 under the Securities Act, of the Company.
The undersigned will, upon request, execute and deliver any additional documents
deemed by the Exchange Agent or the Company to be necessary or desirable to
complete the assignment, transfer and purchase of the Old Notes tendered hereby.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted validly tendered Old Notes when, as and if the Company has given oral
or written notice thereof to the Exchange Agent.
If any tendered Old Notes are not accepted for exchange pursuant to the
Exchange Offer for any reason, certificates for any such unaccepted Old Notes
will be returned, without expense, to the undersigned at the address shown below
or at a different address as may be indicated herein under "Special Delivery
Instructions" as promptly as practicable after the Expiration Date.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representatives, successors and assigns.
The undersigned understands that tenders of Old Notes pursuant to the
procedures described under the caption "The Exchange Offer--Procedures for
Tendering" in the Prospectus and in the instructions hereto will constitute a
binding agreement between the undersigned and the Company upon the terms and
subject to the conditions of the Exchange Offer.
Unless otherwise indicated under "Special Registration Instructions",
please issue the certificates representing the New Notes issued in exchange for
the Old Notes accepted for exchange and any certificates for Old Notes not
tendered or not exchanged, in the name(s) of the undersigned. Similarly, unless
otherwise indicated under "Special Delivery Instructions", please send the
certificates representing the New Notes issued in exchange for the Old Notes
accepted for exchange and any certificates for Old Notes not tendered or not
exchanged (and accompanying documents, as appropriate) to the undersigned at the
address shown below the undersigned's signature(s). In the event that both
"Special Registration Instructions" and "Special Delivery Instructions" are
completed, please issue the certificates representing the New Notes issued in
exchange for the Old Notes accepted for exchange in the name(s) of, and return
any certificates for Old Notes not tendered or not exchanged to, the person(s)
so indicated. The undersigned understands that the Company has no obligation
pursuant to the "Special Registration Instructions" and "Special Delivery
Instructions" to transfer any Old Notes from the name of the registered
Holder(s) thereof if the Company does not accept for exchange any of the Old
Notes so tendered.
5
<PAGE>
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, this Letter of
Transmittal or any other documents required hereby to the Exchange Agent prior
to the Expiration Date, may tender their Old Notes according to the guaranteed
delivery procedures set forth in the Prospectus under the caption "The Exchange
Offer--Guaranteed Delivery Procedures." See Instruction 1 regarding the
completion of this Letter of Transmittal printed below.
PLEASE SIGN HERE WHETHER OR NOT
OLD NOTES ARE BEING PHYSICALLY TENDERED HEREBY
X Date:
------------------------------------------------ ---------------------
X Date:
------------------------------------------------ ---------------------
Signature(s) of Registered Holder(s) or Authorized Signatory
Area Code and Telephone Number:_________________________________________________
The above lines must be signed by the registered holder(s) as their name(s)
appear(s) on the Old Notes or by person(s) authorized to become registered
holder(s) by a properly completed bond power from the registered holder(s), a
copy of which must be transmitted with this Letter of Transmittal. If the Old
Notes to which this Letter of Transmittal relate are held of record by two or
more joint holders, then all such holders must sign this Letter of Transmittal.
If signature is by a trustee, executor, administrator, guardian, attorney-in-
fact, officer of a corporation or other person acting in a fiduciary or
representative capacity, then such person must (i) set forth his or her full
title below and (ii) unless waived by the Company, submit evidence satisfactory
to the Company of such person's authority so to act. See Instruction 4 regarding
the completion of this Letter of Transmittal printed below.
Name(s): (Please Print)
-----------------------------------------------------------------------
________________________________________________________________________________
Capacity: ______________________________________________________________________
Address: (Include Zip Code)
- --------------------------------------------------------------------------------
________________________________________________________________________________
Signature(s) Guaranteed by an Eligible Institution:
(If required by Instruction 4)
(Authorized Signature)
- --------------------------------------------------------------------------------
________________________________________________________________________________
(Title)
________________________________________________________________________________
(Name of Firm)
Dated: _________________, 1998
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. Delivery of this Letter of Transmittal and Old Notes. The tendered Old
Notes, as well as a properly completed and duly executed copy of this Letter of
Transmittal or facsimile hereof and any other documents required by this Letter
of Transmittal must be received by the Exchange Agent at its address set forth
herein prior to 5:00 p.m., New York City time, on the Expiration Date. The
method of delivery of the tendered Old Notes, this Letter of Transmittal and all
other required documents to the Exchange Agent is at the election and risk of
the Holder and, except as otherwise provided below, the delivery will be deemed
made only when actually received by the Exchange Agent. Instead of delivery by
mail, it is recommended that the Holder use an overnight or hand delivery
service. In all cases, sufficient time should be allowed to assure timely
delivery. No Letter of Transmittal or Old Notes should be sent to the Company.
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, this Letter of
Transmittal or any other documents required hereby to the Exchange Agent prior
to the Expiration Date must tender their Old Notes according to the guaranteed
delivery procedures set forth in the Prospectus. Pursuant to such procedure: (i)
such tender must be made by or through an Eligible Institution; (ii) prior to
the Expiration Date, the Exchange Agent must have received from the Eligible
Institution a properly completed and duly executed Notice of Guaranteed Delivery
(by facsimile transmission, mail or hand delivery) setting forth the name and
address of the Holder, the certificate number or numbers of such Old Notes and
the principal amount of Old Notes tendered, stating that the tender is being
made thereby and guaranteeing that, within five New York Stock Exchange trading
days after the Expiration Date, this Letter of Transmittal (or facsimile hereof)
together with the certificate(s) representing the Old Notes and any other
required documents will be deposited by the Eligible Institution with the
Exchange Agent; and (iii) such properly completed and executed Letter of
Transmittal (or facsimile hereof), as well as all other documents required by
this Letter of Transmittal and the certificate(s) representing all tendered Old
Notes in proper form for transfer, must be received by the Exchange Agent within
five New York Stock Exchange trading days after the Expiration Date, all as
provided in the Prospectus under the caption "The Exchange Offer--Guaranteed
Delivery Procedures." Any Holder who wishes to tender his Old Notes pursuant to
the guaranteed delivery procedures described above must ensure that the Exchange
Agent receives the Notice of Guaranteed Delivery prior to 5:00 p.m., New York
City time, on the Expiration Date. Upon request to the Exchange Agent, a Notice
of Guaranteed Delivery will be sent to Holders who wish to tender their Old
Notes according to the guaranteed delivery procedures set forth above.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Old Notes, and withdrawal of tendered Old Notes
will be determined by the Company in its sole discretion, which determination
will be final and binding. The Company reserves the absolute right to reject any
and all Old Notes not properly tendered or any Old Notes the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the right to waive any irregularities or
conditions of tender as to particular Old Notes. The Company's interpretation of
the terms and conditions of the Exchange Offer (including the instructions in
this Letter of Transmittal) shall be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of Old Notes
must be cured within such time as the Company shall determine. Neither the
Company, the Exchange Agent nor any other person shall be under any duty to give
notification of defects or irregularities with respect to tenders of Old Notes,
nor shall any of them incur any liability for failure to give such notification.
Tenders of Old Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Old Notes received by the Exchange
Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering Holders, unless otherwise provided in this Letter of
Transmittal, as soon as practicable following the Expiration Date.
7
<PAGE>
2. Tender by Holder. Only a Holder of Old Notes may tender such Old Notes
in the Exchange Offer. Any beneficial owner of Old Notes who is not the
registered holder and who wishes to tender should arrange with such holder to
execute and deliver this Letter of Transmittal on such owner's behalf or must,
prior to completing and executing this Letter of Transmittal and delivering his
or her Old Notes, either make appropriate arrangements to register ownership of
the Old Notes in such owner's name or obtain a properly completed bond power
from the registered holder.
3. Partial Tenders. Tenders of Old Notes will be accepted only in
integral multiples of $1,000. If less than the entire principal amount of any
Old Notes is tendered, the tendering Holder should fill in the principal amount
tendered in the fourth column of the box entitled "Description of 8 3/8% Senior
Notes due 2007" or the box entitled "Description of 8 7/8% Senior Subordinated
Notes due 2007" above. The entire principal amount of any Old Notes delivered to
the Exchange Agent will be deemed to have been tendered unless otherwise
indicated. If the entire principal amount of all Old Notes is not tendered, then
Old Notes for the principal amount of Old Notes not tendered and a certificate
or certificates representing New Notes issued in exchange for any Old Notes
accepted will be sent to the Holder at his or her registered address, unless a
different address is provided in the appropriate box on this Letter of
Transmittal, promptly after the Old Notes are accepted for exchange.
4. Signatures on the Letter of Transmittal; Bond Powers and Endorsements;
Guarantee of Signatures. If this Letter of Transmittal (or facsimile hereof) is
signed by the registered holder(s) of the Old Notes tendered hereby, the
signature must correspond with the name(s) as written on the face of the Old
Notes without alteration, enlargement or any change whatsoever.
If this Letter of Transmittal (or facsimile hereof) is signed by the
registered holder or holders of Old Notes tendered and the certificate or
certificates for New Notes issued in exchange therefor is to be issued (or any
untendered principal amount of Old Notes is to be reissued) to the registered
holder, then such holder need not and should not endorse any tendered Old Notes,
nor provide a separate bond power. In any other case, such holder must either
properly endorse the Old Notes tendered or transmit a properly completed
separate bond power with this Letter of Transmittal with the signatures on the
endorsement or bond power guaranteed by an Eligible Institution.
If this Letter of Transmittal (or facsimile hereof) is signed by a person
other than the registered holder or holders of any Old Notes listed, such Old
Notes must be endorsed or accompanied by appropriate bond powers in each case
signed as the name of the registered holder or holders appears on the Old Notes.
If this Letter of Transmittal (or facsimile hereof) or any Old Notes or
bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, or officers of corporations or others acting in a fiduciary
or representative capacity, such persons should so indicate when signing, and,
unless waived by the Company, evidence satisfactory to the Company of their
authority so to act must be submitted with this Letter of Transmittal.
Endorsements on Old Notes or signatures on bond powers required by this
Instruction 4 must be guaranteed by an Eligible Institution.
Except as otherwise provided below, all signatures on this Letter of
Transmittal must be guaranteed by a firm that is a member of a registered
national securities exchange or the National Association of Securities Dealers,
Inc., a commercial bank or trust company having an office or correspondent in
the United States or an "eligible guarantor institution" within the meaning of
Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (an "Eligible
Institution"). Signatures on this Letter of Transmittal need not be guaranteed
if (a) this Letter of Transmittal is signed by the registered holder(s) of the
Old Notes tendered herewith and such holder(s) have not completed the box set
forth herein entitled "Special Registration Instructions" or the box entitled
"Special Delivery Instructions" or (b) such Old Notes are tendered for the
account of an Eligible Institution.
8
<PAGE>
5. Special Registration and Delivery Instructions. Tendering Holders
should indicate, in the applicable box or boxes, the name and address to which
New Notes or substitute Old Notes for principal amounts not tendered or not
accepted for exchange are to be issued or sent, if different from the name and
address of the person signing this Letter of Transmittal. In the case of
issuance in a different name, the taxpayer identification or social security
number of the person named must also be indicated.
6. Transfer Taxes. The Company will pay all transfer taxes, if any,
applicable to the exchange of Old Notes pursuant to the Exchange Offer. If,
however, certificates representing New Notes or Old Notes for principal amounts
not tendered or accepted for exchange are to be delivered to, or are to be
registered in the name of, any person other than the registered holder of the
Old Notes tendered hereby, or if tendered Old Notes are registered in the name
of any person other than the person signing this Letter of Transmittal, or if a
transfer tax is imposed for any reason other than the exchange of Old Notes
pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered holder or on any other persons) will be
payable by the tendering Holder. If satisfactory evidence of payment of such
taxes or exemption therefrom is not submitted with this Letter of Transmittal,
the amount of such transfer taxes will be billed directly to such tendering
Holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes listed in this Letter of
Transmittal.
7. Waiver of Conditions. The Company reserves the right, in its sole
discretion, to amend, waive or modify specified conditions in the Exchange Offer
in the case of any Old Notes tendered.
8. Mutilated, Lost, Stolen or Destroyed Old Notes. Any tendering Holder
whose Old Notes have been mutilated, lost, stolen or destroyed should contact
the Exchange Agent at the address indicated herein for further instructions.
9. Requests for Assistance or Additional Copies. Questions and requests
for assistance and requests for additional copies of the Prospectus or this
Letter of Transmittal may be directed to the Exchange Agent at the address
specified in the Prospectus. Holders may also contact their broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Exchange Offer.
9
<PAGE>
(DO NOT WRITE IN SPACE BELOW)
<TABLE>
<CAPTION>
=======================================================================================================================
Certificate Surrendered Old Notes Tendered Old Notes Accepted
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
=======================================================================================================================
Delivery Prepared by _________________________ Checked By ______________________ Date_______________
</TABLE>
10
<PAGE>
EXHIBIT 99.2
CLARK REFINING & MARKETING, INC.
Notice of Guaranteed Delivery
of
8 3/8% Senior Notes due November 15, 2007
and
8 7/8% Senior Subordinated Notes due November 15, 2007
As set forth in the Prospectus, dated ________ ___, 1998 (as the same
may be amended from time to time, the "Prospectus") of Clark Refining &
Marketing, Inc. (the "Company") under the caption "The Exchange Offer--
Guaranteed Delivery Procedures," this form or one substantially equivalent
hereto must be used to accept the Company's offer (the "Exchange Offer") to
exchange $1,000 principal amount at maturity of its 8 3/8% New Senior Notes due
November 15, 2007 and its 8 7/8% New Senior Subordinated Notes due November 15,
2007 (together, the "New Notes"), which have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), for each $1,000
principal amount at maturity of its outstanding 8 3/8% Senior Notes due November
15, 2007 and 8 7/8% Senior Subordinated Notes due November 15, 2007 (together,
the "Old Notes") if (i) certificates representing the Old Notes to be exchanged
are not lost but are not immediately available or (ii) time will not permit all
required documents to reach the Exchange Agent prior to the Expiration Date.
This form may be delivered by an Eligible Institution by mail or hand delivery
or transmitted, via facsimile, to the Exchange Agent at its address set forth
below not later than 5:00 p.m., New York City Time, on ________ ___, 1998. All
capitalized terms used herein but not defined herein shall have the meanings
ascribed to them in the Prospectus.
The Exchange Agent is:
For the 8 7/8% Senior Subordinated Notes,
Marine Midland Bank
By Registered or Certified Mail: By Overnight Courier:
Attn: Corporate Trust Operations Attn: Corporate Trust Operations
Marine Midland Bank Marine Midland Bank
140 Broadway, Level A 140 Broadway, Level A
New York, New York 10005-1180 New York, New York 10005-1180
Attention: Corporate Trust Operations Attention: Corporate Trust Operations
By Hand:
Marine Midland Bank
140 Broadway, Level A
New York, New York 10005-1180
By Facsimile:
(212) 658-2292
For the 8 3/8% Senior Notes,
Bankers Trust Company
By Registered or Certified Mail: By Overnight Courier:
BT Services Tennessee, Inc. BT Services Tennessee, Inc.
Reorganization Unit Corporate Trust & Agency Group
P.O. Box 292737 Reorganization Unit
Nashville, Tennessee 37229-2737 648 Grassmere Park Road
Nashville, Tennessee 37211
By Hand:
Attn: Reorganization Department
Bankers Trust Company
<PAGE>
Corporate Trust & Agency Group
Receipt & Delivery Window
123 Washington Street, 1st Floor
New York, New York 10006
By Facsimile:
(615) 835-3701
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION VIA FACSIMILE, OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
Ladies and Gentlemen:
The undersigned hereby tender(s) for exchange to the Company, upon the
terms and subject to the conditions set forth in the Prospectus and Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Old Notes set forth below pursuant to the guaranteed delivery procedures set
forth in the Prospectus under the caption "The Exchange Offer--Guaranteed
Delivery Procedures."
The undersigned understands and acknowledges that the Exchange Offer will
expire at 5:00 p.m., New York City time, on _________ __, 1998, unless extended
by the Company. With respect to the Exchange Offer, "Expiration Date" means
such time and date, or if the Exchange Offer is extended, the latest time and
date to which the Exchange Offer is so extended by the Company.
All authority herein conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall survive the death or incapacity of the undersigned and
every obligation of the undersigned under this Notice of Guaranteed Delivery
shall be binding upon the heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives of the undersigned.
2
<PAGE>
- ----------------------------------------------------------------
SIGNATURES
Signature of Owner
Signature of Owner (if more than one)
Dated: , 1998
Name(s):
(Please Print)
Address:
(Include Zip Code)
Area Code and
Telephone No.:
Capacity (full title), if signing in a repre-
sentative capacity:
Taxpayer Identification or
Social Security No.:
- ----------------------------------------------------------------
Principal Amount of Old Notes
Exchanged: $
----------------------------------
Certificate Nos. of Old Notes (if available)
---------------------------------------------
---------------------------------------------
Total $
---------------------------------------
IF OLD NOTES WILL BE DELIVERED BY BOOK-ENTRY
TRANSFER, PROVIDE THE DEPOSITORY TRUST COMPANY
("DTC") ACCOUNT NO.:
Account No.:
3
<PAGE>
GUARANTEE OF DELIVERY
(Not to be used for signature guarantee)
The undersigned, a member firm of a registered national security exchange
or of the National Association of Securities Dealers, Inc. or a commercial bank
or trust company having an office or a corespondent in the United States, hereby
guarantees that (a) that the above named person(s) "own(s)" the Old Notes
tendered hereby within the meaning of Rule 10b-4 under the Securities Exchange
Act of 1934, (b) that such tender of Old Notes complies with Rule 10b-4 and (c)
within five New York Stock Exchange trading days from the date of this Notice of
Guaranteed Delivery, certificates representing the Old Notes tendered hereby, in
proper form for transfer, or, in the case of a book-entry transfer, confirmation
of a book-entry transfer into the Exchange Agent's account at DTC, together, in
each case, with a properly completed and duly executed Letter of Transmittal (or
a facsimile thereof), will be delivered by the undersigned to the Exchange
Agent.
Name of Firm:
Authorized Signature
Address Name:
Title:
Area Code and Telephone No.: Date:
NOTE: DO NOT SEND OLD NOTES WITH THIS FORM. ACTUAL SURRENDER OF OLD NOTES
MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, THE LETTER OF TRANSMITTAL.
4
