<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 1, 1997
CLARK USA, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-13514 43-1495734
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
8182 Maryland Avenue 63105-3721
St. Louis, Missouri (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (314) 854-9696
================================================================================
<PAGE>
Item 5. Other Events
On October 1, 1997, Clark USA, Inc. (the "Company") completed certain
transactions related to its capital stock. The Company, Trizec Hahn Corporation
("TrizecHahn"), Tiger Management Corporation ("Tiger") and certain affiliates of
Tiger (the "Tiger Funds") reclassified all of the Class A Common Stock of the
Company (the "Class A Common Stock") owned by the Tiger Funds (representing
approximately 31% of the total voting power of all classes of the Company's
stock) as a new class of common stock designated Class E Common Stock (the
"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
million.
The Company subsequently reclassified all of the Class E Common Stock into
63,000 shares ($1,000 Liquidation Preference Per Share) of 11 1/2% Subordinated
Cumulative Exchangeable Preferred Stock, par value $0.01 per share (including
any additional shares paid in lieu of cash dividends, the "Exchangeable
Preferred Stock"). Dividends accrue on the Exchangeable Preferred Stock from
October 1, 1997 and are payable semi-annually commencing April 1, 1998 at a rate
per annum of 11 1/2% of the liquidation preference per share. Dividends may be
paid, at the Company's option, on any dividend payment date occurring prior to
October 1, 2002, either in cash or in additional shares of Exchangeable
Preferred Stock. The Exchangeable Preferred Stock is redeemable at the Company's
option, in whole or in part, at any time on or after October 1, 2002 at
specified redemption prices plus accrued and unpaid dividends to the date of
redemption. In addition, prior to October 1, 2000, the Company may, at its
option, redeem the Exchangeable Preferred Stock, in whole or in part, with the
net cash proceeds from one or more equity offerings at specified redemption
prices. The Company is required, subject to certain conditions, to redeem all of
the Exchangeable Preferred Stock outstanding on October 1, 2009. Subject to
certain conditions the Exchangeable Preferred Stock is exchangeable, in whole or
in part, into 11 1/2% subordinated Exchange Debentures due October 1, 2009. On
October 1, 1997 the Exchangeable Preferred Stock was sold to qualified
institutional buyers in reliance on Rule 144A under the Securities Act.
Also on October 1, 1997, the Company and Occidental C.O.B. Partners ("Oxy")
agreed to exchange all shares of common stock of the Company owned by Oxy for an
equal number of shares of a new class of convertible common stock designated as
Class F Common Stock (the "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 the Company's voting stock. The Class F Common Stock will be convertible at
any time to Common Stock, on a one-for-one basis, at the option of any holder
other than Occidental Petroleum Corporation and its affiliates. Pursuant to an
existing Stockholders' Agreement between the Company and Oxy (the "Oxy
Stockholders' Agreement"), the Company was obligated to issue additional shares
of common stock to Oxy if the Company effected an underwritten registered public
offering at less than a specified price per share. In connection with the above
transaction, the Company issued to Oxy an additional 545,455 shares of Class F
Common Stock in full satisfaction of the Company's obligation to issue shares
under the Oxy Stockholders' Agreement.
As a result of the above transactions, the total economic interest in the
Company is held as follows: TrizecHahn 65.0%, Oxy 28.9%, Gulf Resources 5.9% and
Paul D. Melnuk 0.2%. The total voting power in the Company is held as follows:
TrizecHahn 73.3%, Oxy 19.9%, Gulf Resources 6.6% and Paul D. Melnuk 0.2%.
TrizecHahn has informed the Company that it intends to distribute to its
shareholders (the "Trizec-Hahn Spinoff") all of its shares of the Company's
common stock by the end of 1997. In connection with the TrizecHahn Spinoff, it
is contemplated that the Company's common stock would be quoted on the Nasdaq
Stock market or on a national securites exchange. However, there can be no
assurance that the TrizecHahn Spinoff will be completed or that the Company's
common stock will be so quoted.
Subject to certain market conditions and other factors, the Company also
may refinance its Senior Secured Zero Coupon Notes due 2000, Series A and Clark
Refining & Marketing, Inc. ("Clark") 10 1/2% Senior Notes due 2001 through the
issuance of new indebtedness and with available cash. The Company expects the
refinancing could result
2
<PAGE>
in a net reduction of long-term debt of approximately $75 million to $100
million. There can be no assurance, however, that the Company will refinance or
reduce such long-term indebtedness, or what the terms of any refinancing, if
effected, would be.
On September 25, 1997, Clark entered into a credit agreement (the "Credit
Agreement") which provides for borrowings and letter of credit issuances of up
to the lesser of $400 million or the amount available under a defined borrowing
base calculated with respect to Clark's cash, investments, eligible receivables
and hydrocarbon inventories, provided that borrowings are limited to the
principal amount of $50 million. Borrowings under the Credit Agreement are
secured by substantially all of Clark's cash and cash equivalents, receivables,
crude oil and refined product inventories and trademarks.
Employment Agreements
Clark has entered into employment agreements with its five senior
executives (the "Executive Employment Agreements"). The Executive Employment
Agreements are substantially similar to the Executive Employment Agreement of
Paul D. Melnuk which is attached as an exhibit hereto. The Executive Employment
Agreements have five year terms, and provide for automatic extensions on an
annual basis unless 90 days notice of cancellation is given by either party. The
Executive Employment Agreements provide that if a Change in 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
in Control date.
The Executive Employee Agreements provide separation benefits to the
employee if the employee's employment is terminated by Clark without "Cause"
prior to the expiration date of the agreement. "Cause" is defined to include the
employee's wilful failure to substantially perform his or her duties, wilful
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 (or in certain circumstances
two times) annual salary and bonus, acceleration of stock option exercisability,
continuation of Clark'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
in Control.
As used in the Executive Employment Agreements, a "Change in Control"
includes certain mergers, changes of ownership, changes in the composition of
the board of directors and events of liquidation with respect to Clark USA, and
the disposition of Clark by Clark USA, and also includes certain change of
control events relating to TrizecHahn so long as TrizecHahn continues to own at
least 25% of the Company, and no other stockholder owns a greater interest in
the Company than TrizecHan.
3
<PAGE>
EXHIBIT INDEX
3.1 Certificate of Designations, dated October 1, 1997.
4.1 Certificate of Designations, dated October 1, 1997 (Incorporated by
reference to Exhibit 3.1 filed herein).
10.1 Credit Agreement, dated as of September 25, 1997, among Clark Refining &
Marketing, Inc., as Borrower, Bankers Trust Company, as Administrative
Agent and Collateral 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).
10.2 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).
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: October 7, 1997 CLARK USA, INC.
By: /s/ Dennis R. Eichholz
----------------------
Dennis R. Eichholz
Controller and Treasurer
<PAGE>
Exhibit 3.1
CERTIFICATE OF DESIGNATIONS OF POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL AND OTHER SPECIAL RIGHTS OF 11 1/2% SENIOR CUMULATIVE
EXCHANGEABLE PREFERRED STOCK AND QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS THEREOF
- --------------------------------------------------------------------------------
Pursuant to Section 151 of the
General Corporation law of the State of Delaware
- --------------------------------------------------------------------------------
Clark USA, Inc. (the "Corporation"), a corporation organized and existing
under the General Corporation Law of the State of Delaware, does hereby certify
that, pursuant to authority conferred upon the board of directors of the
Corporation (the "Board of Directors") by its Amended and Restated Certificate
of Incorporation, as amended (hereinafter referred to as the "Certificate of
Incorporation"), and pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, said Board of Directors, at a meeting
held on September 18, 1997, duly approved and adopted the following resolution
(the "Certificate of Designations"):
RESOLVED, that, pursuant to the authority vested in the Board of Directors
by its Certificate of Incorporation, the Board of Directors does hereby create,
authorize and provide for the issuance of 11 1/2% Senior Cumulative Exchangeable
Preferred Stock, par value $0.01 per share, with a stated value of $1,000 per
share, consisting of 250,000 shares, having the designations, preferences,
relative, participating, optional and other special rights and the
qualifications, limitations and restrictions thereof that are set forth in the
Certificate of Incorporation and in this Certificate of Designations as follows:
(a) Designation. There is hereby created out of the authorized and
unissued shares of Preferred Stock of the Corporation a class of Preferred Stock
designated as the "11 1/2% Senior Cumulative Exchangeable Preferred Stock." The
number of shares constituting such series shall be 250,000 and are referred to
as the "Exchangeable Preferred Stock," of which 63,000 shares of Exchangeable
Preferred Stock shall be initially issued, with an additional 124,000 shares
reserved for issuance in accordance with paragraph (c)(i) hereof and with the
remaining shares issuable as otherwise permitted hereunder or under applicable
law. The liquidation preference of the Exchangeable Preferred Stock shall be
$1,000 per share.
(b) Rank. The Exchangeable Preferred Stock shall, with respect to dividend
distributions and distributions upon the liquidation, winding-up or dissolution
of the Corporation, rank (i) senior to all classes of Common Stock of the
Corporation and to each other class of Capital Stock of the Corporation or
series of Preferred Stock of the Corporation hereafter established the terms of
which do not expressly provide that it ranks senior to, or on a parity with, the
Exchangeable Preferred Stock as to dividend distributions and distributions upon
the liquidation, winding-up or dissolution of the Corporation (collectively
referred to, together with all classes of Common Stock of the Corporation, as
"Junior Securities"); (ii) subject to certain conditions, on a parity with the
Existing Preferred Stock and any class
<PAGE>
of Capital Stock of the Corporation or series of Preferred Stock of the
Corporation hereafter established the terms of which expressly provide that such
class or series will rank on a parity with the Exchangeable Preferred Stock as
to dividend distributions and distributions upon the liquidation, winding-up or
dissolution of the Corporation (collectively referred to as "Parity
Securities"); and (iii) junior to each other class of Capital Stock of the
Corporation or series of Preferred Stock of the Corporation hereafter
established the terms of which expressly provide that such class or series will
rank senior to the Exchangeable Preferred Stock as to dividend distributions and
distributions upon the liquidation, winding-up or dissolution of the Corporation
(collectively referred to as "Senior Securities").
(c) Dividends.
(i) Beginning on the Issue Date, the Holders of the outstanding
shares of Exchangeable Preferred Stock shall be entitled to receive, when,
as and if declared by the Board of Directors, out of funds legally
available therefor, distributions in the form of dividends on each share of
Exchangeable Preferred Stock, at a rate per annum equal to 11 1/2% of the
liquidation preference per share of the Exchangeable Preferred Stock,
payable semi-annually. All dividends shall be cumulative, whether or not
declared, on a daily basis from the date of issuance of the Exchangeable
Preferred Stock and shall be payable semi-annually in arrears on each
Dividend Payment Date, commencing April 1, 1998. Dividends declared may be
paid, at the Corporation's option, on any Dividend Payment Date occurring
on or prior to October 1, 2002, either in cash or by the issuance of
additional shares of Exchangeable Preferred Stock (and, at the
Corporation's option, payment of a whole share (after rounding up) or cash
in lieu of a fractional share) having an aggregate liquidation preference
equal to the amount of such dividends. In the event that on or prior to
October 1, 2002, dividends are declared and paid through the issuance of
additional shares of Exchangeable Preferred Stock, as provided in the
previous sentence, such dividends shall be deemed paid in full and shall
not accumulate. Each dividend shall be payable to the Holders of record as
they appear on the stock books of the Corporation on the Dividend Record
Date immediately preceding the related Dividend Payment Date. Dividends
shall cease to accumulate in respect of the Exchangeable Preferred Stock on
the Exchange Date or on the date of their earlier redemption (including a
Special Redemption) unless the Corporation shall have failed to issue the
appropriate aggregate principal amount of Exchange Debentures in respect of
the Exchangeable Preferred Stock on such Exchange Date or shall have failed
to pay the relevant redemption price on the date fixed for redemption.
(ii) All dividends paid with respect to shares of the Exchangeable
Preferred Stock pursuant to paragraph (c)(i) shall be paid pro rata to the
Holders entitled thereto.
(iii) Nothing herein contained shall in any way or under any
circumstances be construed or deemed to require the Board of Directors to
declare, or the Corporation to pay or set apart for payment, any dividends
on shares of the Exchangeable Preferred Stock at any time.
(iv) Dividends accruing after October 1, 2002, on the Exchangeable
Preferred Stock for any past Dividend Period and dividends in connection
with any optional redemption pursuant to paragraph (e)(i) may be declared
and paid at any time, without reference to any regular
<PAGE>
Dividend Payment Date, to Holders of record on such date, not more than
forty-five (45) days prior to the payment thereof, as may be fixed by the
Board of Directors.
(v) Dividends payable on the Exchangeable Preferred Stock for any
period less than a year shall be computed on the basis of a 360-day year of
twelve 30-day months and the actual number of days elapsed in the period
for which payable.
(vi) So long as any shares of Exchangeable Preferred Stock are
outstanding, the Corporation shall not make any payment on account of, or
set apart for payment money for a sinking or other similar fund for, the
purchase, redemption or other retirement of, any Parity Securities or
Junior Securities or any warrants, rights, calls or options exercisable for
or convertible into any Parity Securities or Junior Securities, and shall
not permit any corporation or other entity directly or indirectly
controlled by the Corporation to purchase or redeem any Parity Securities
or Junior Securities or any such warrants, rights, calls or options,
except, in any case, in exchange for, or out of the proceeds of, the
substantially concurrent sale (other than to a Subsidiary of the
Corporation) of, other shares of the Corporation's Capital Stock (other
than Disqualified Capital Stock) or options, warrants or other rights to
purchase shares of Capital Stock (other than Disqualified Stock) of the
Corporation, unless full cumulative dividends determined in accordance
herewith on the Exchangeable Preferred Stock have been paid (or are deemed
paid) in full.
(d) Liquidation Preference.
(i) In the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the affairs of the Corporation, the Holders of
shares of Exchangeable Preferred Stock then outstanding shall be entitled
to be paid out of the assets of the Corporation available for distribution
to its stockholders, an amount in cash equal to the liquidation preference
for each share outstanding, plus, without duplication, an amount in cash
equal to accumulated and unpaid dividends thereon to the date fixed for
liquidation, dissolution or winding-up (including an amount equal to a
prorated dividend for the period from the last Dividend Payment Date to the
date fixed for liquidation, dissolution or winding-up), before any
distribution shall be made or any assets distributed to the holders of any
Junior Securities including, without limitation, Common Stock of the
Corporation. Except as provided in the preceding sentence, Holders of
Exchangeable Preferred Stock shall not be entitled to any distribution in
the event of any liquidation, dissolution or winding-up of the affairs of
the Corporation. If upon any voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation, the amounts payable with
respect to the Exchangeable Preferred Stock and all other Parity Securities
are not sufficient to pay in full the liquidation payments payable to the
Holders of outstanding shares of the Exchangeable Preferred Stock and all
Parity Securities, then the holders of all such shares shall share equally
and ratably in such distribution of assets first in proportion to the full
liquidation preference to which each is entitled until such preferences are
paid in full, and then in proportion to their respective amounts of
accumulated but unpaid dividends.
<PAGE>
(ii) For the purposes of this paragraph (d), neither the sale, conveyance,
exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Corporation nor the consolidation or merger of the Corporation with or into one
or more entities shall be deemed to be a liquidation, dissolution or winding-up
of the affairs of the Corporation.
(e) Redemption.
(i) Optional Redemption.
(A) The Corporation may, at the option of the Board of Directors,
redeem, to the extent of funds legally available therefor, at any time on
and after October 1, 2002, in whole or in part, in the manner provided for
in paragraph (e)(iii) hereof, any or all of the shares of the Exchangeable
Preferred Stock, at the redemption prices (expressed as a percentage of the
liquidation preference) set forth below, plus, without duplication, an
amount in cash equal to all accumulated and unpaid dividends per share
(including an amount in cash equal to a prorated dividend for the period
from the Dividend Payment Date immediately prior to the Redemption Date to
the Redemption Date) (the "Optional Redemption Price") if redeemed during
the 12-month period beginning October 1 of each of the years set forth
below:
<TABLE>
<S> <C>
2002 ................................ 105.750%
2003 ................................ 103.833%
2004 ................................ 101.917%
2005 and thereafter ................. 100.000%
</TABLE>
; provided that no redemption pursuant to this paragraph (e)(i)(A) shall be
authorized or made unless prior thereto all accumulated and unpaid
dividends are declared and paid in full, or declared and a sum in cash set
apart sufficient for such payment, on the Exchangeable Preferred Stock for
all Dividend Periods terminating on or prior to the Redemption Date.
(B) In addition to the foregoing paragraph (e)(i)(A), the
Corporation may, at its option, use the Net Available Proceeds of one or
more Equity Offerings to redeem for cash, in whole or in part, shares of
Exchangeable Preferred Stock in the manner provided for in paragraph
(e)(iii) hereof, at a redemption price equal to 107% prior to October 1,
1998, 108% thereafter but prior to October 1, 1999 and 109% thereafter but
prior to October 1, 2000 of the liquidation preference thereof, plus,
without duplication, an amount in cash equal to all accumulated and unpaid
dividends to the Redemption Date (including, without limitation, an amount
in cash equal to a prorated dividend for the period from the Dividend
Payment Date immediately prior to the Redemption Date to the Redemption
Date) (the "Equity Offering Redemption Price"). Any such redemption
pursuant to this paragraph (e)(i)(B) must occur on or prior to ninety (90)
days after the receipt by the Corporation of the proceeds of any such
Equity Offering. The Corporation
<PAGE>
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 shares of Exchangeable Preferred Stock
pursuant to this paragraph.
(C) In the event of a redemption pursuant to paragraph (e)(i)(A)
or (e)(i)(B) hereof of only a portion of the then outstanding shares
of the Exchangeable Preferred Stock, the Corporation shall effect such
redemption on a pro rata basis according to the number of shares held
by each Holder of the Exchangeable Preferred Stock, except that the
Corporation may redeem such shares held by Holders of fewer than 10
shares (or shares held by Holders who would hold less than 10 shares
as a result of such redemption), as may be determined by the
Corporation.
(ii) Mandatory Redemption. On October 1, 2009, the Corporation shall
redeem, to the extent of funds legally available therefor, in the manner
provided for in paragraph (e)(iii) hereof, all of the shares of the
Exchangeable Preferred Stock then outstanding at a redemption price equal
to 100% of the liquidation preference per share, plus, without duplication,
an amount in cash equal to all accumulated and unpaid dividends per share
(including, without limitation, an amount equal to a prorated dividend for
the period from the Dividend Payment Date immediately prior to the
Redemption Date to the Redemption Date) (the "Mandatory Redemption Price").
(iii) Procedures for Redemption.
(A) At least thirty (30) days and not more than sixty (60) days
prior to the date fixed for any redemption of the Exchangeable
Preferred Stock, written notice (the "Redemption Notice") shall be
given by first class mail, postage prepaid, to each Holder of record
on the record date fixed for such redemption of the Exchangeable
Preferred Stock at such Holder's address as it appears on the stock
books of the Corporation; provided that no failure to give such notice
nor any deficiency therein shall affect the validity of the procedure
for the redemption of any shares of Exchangeable Preferred Stock to be
redeemed except as to the Holder or Holders to whom the Corporation
has failed to give said notice or to whom such notice was defective.
The Redemption Notice shall state:
(1) whether the redemption is pursuant to paragraph
(e)(i)(A), (e)(i)(B) or (e)(ii) hereof;
(2) the Optional Redemption Price, the Mandatory Redemption
Price or the Equity Offering Redemption Price, as the case may
be;
(3) whether all or less than all the outstanding shares of
the Exchangeable Preferred Stock are to be redeemed and the
total number of shares of the Exchangeable Preferred Stock
being redeemed;
(4) the date fixed for redemption;
<PAGE>
(5) that the Holder is to surrender to the Corporation, in
the manner, at the place or places and at the price designated,
his certificate or certificates representing the shares of
Exchangeable Preferred Stock to be redeemed; and
(6) that dividends on the shares of the Exchangeable
Preferred Stock to be redeemed shall cease to accumulate on
such Redemption Date unless the Corporation defaults in the
payment of the Optional Redemption Price, the Mandatory
Redemption Price or the Equity Offering Redemption Price, as
the case may be.
(B) Each Holder of Exchangeable Preferred Stock shall surrender
the certificate or certificates representing such shares of
Exchangeable Preferred Stock to the Corporation, duly endorsed (or
otherwise in proper form for transfer, as determined by the
Corporation), in the manner and at the place designated in the
Redemption Notice, and on the Redemption Date the full Optional
Redemption Price, Mandatory Redemption Price or Equity Offering
Redemption Price, as the case may be, for such shares shall be payable
in cash to the Person whose name appears on such certificate or
certificates as the owner thereof, and each surrendered certificate
shall be canceled and retired. In the event that less than all of the
shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares.
(C) On and after the Redemption Date, unless the Corporation
defaults in the payment in full of the applicable redemption price,
dividends on the Exchangeable Preferred Stock called for redemption
shall cease to accumulate on the Redemption Date, and all rights of
the Holders of redeemed shares shall terminate with respect thereto on
the Redemption Date, other than the right to receive the Optional
Redemption Price, the Mandatory Redemption Price or the Equity
Offering Redemption Price, as the case may be, without interest;
provided, however, that if a notice of redemption shall have been
given as provided in paragraph (iii)(A) above and the funds necessary
for redemption (including an amount in respect of all dividends that
will accrue to the Redemption Date) shall have been irrevocably
deposited in trust for the equal and ratable benefit of the Holders of
the shares to be redeemed, then, at the close of business on the day
on which such funds are segregated and set aside, the Holders of the
shares to be redeemed shall cease to be stockholders of the
Corporation and shall be entitled only to receive the Optional
Redemption Price, the Mandatory Redemption Price or the Equity
Offering Redemption Price, as the case may be, without interest.
(f) Voting Rights.
(i) The Holders of Exchangeable Preferred Stock, except as
otherwise required under Delaware law or as set forth in paragraph (ii) and
(iii) below, shall not be entitled or permitted to vote on any matter
required or permitted to be voted upon by the stockholders of the
Corporation.
<PAGE>
(ii) So long as any shares of the Exchangeable Preferred Stock are
outstanding, the Corporation shall not amend its Certificate of
Incorporation so as to: (A) affect materially and adversely the specified
rights, preferences, privileges or voting rights of Holders of shares of
Exchangeable Preferred Stock; or (B) authorize the issuance of additional
shares of any class of Senior Securities (or amend the provisions of any
existing class of Capital Stock to make such class of Capital Stock Senior
Securities), without the affirmative vote or consent of Holders of at least
a majority of the issued and outstanding shares of Exchangeable Preferred
Stock, voting or consenting, as the case may be, as one class, given in
person or by proxy, either in writing or by resolution adopted at an annual
or special meeting.
Notwithstanding the previous sentence (1) the creation, authorization or
issuance of any shares of any Junior Securities or Parity Securities or (2)
the increase or decrease in the amount of authorized Capital Stock of any
class constituting Junior Securities or Parity Securities, including
Preferred Stock constituting Junior Securities or Parity Securities, shall
not require the consent of Holders of Exchangeable Preferred Stock and
shall not be deemed to affect adversely the rights, preferences, privileges
or voting rights of Holders of Exchangeable Preferred Stock.
(iii) (A) If (1) after October 1, 2002, dividends on the Exchangeable
Preferred Stock required to be paid in cash are in arrears and unpaid
for three (3) or more semi-annual Dividend Periods (whether or not
consecutive) (a "Dividend Default"); or (2) the Corporation fails to
redeem all of the then outstanding shares of Exchangeable Preferred
Stock on or before October 1, 2009; or (3) the Corporation fails to
make a Change of Control Offer following a Change of Control if such
Change of Control Offer is required by paragraph (h) hereof and/or
fails to purchase shares of Exchangeable Preferred Stock from Holders
who elect to have such shares purchased pursuant to the Change of
Control Offer; (4) the Corporation breaches or violates one of the
provisions set forth in any of paragraphs (l)(i) (Limitation on
Indebtedness), (l)(iii) (Limitation on Restricted Payments) or (l)(iv)
(Limitation on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries of the Corporation) hereof and the breach or
violation continues for a period of sixty (60) days or more after the
Corporation receives notice thereof specifying the default from the
Holders of at least 25% of the shares of Exchangeable Preferred Stock
then outstanding, or (5) the Corporation fails to pay at the final
stated maturity (giving effect to any extensions thereof) the
principal amount of any Indebtedness of the Corporation or any
Subsidiary of the Corporation, or the final stated maturity of any
such Indebtedness is accelerated, if the aggregate principal amount of
such Indebtedness, together with the aggregate principal amount of any
other such Indebtedness in default for failure to pay principal at the
final stated maturity (giving effect to any extensions thereof) or
which has been accelerated, aggregates $25 million or more at any
time, in each case, after a 20-day period during which such default
shall not have been cured or such acceleration rescinded, then in the
case of any of clauses (1) - (5) the number of directors constituting
the Board of Directors shall be adjusted by the number, if any,
necessary to permit the Holders of Exchangeable Preferred Stock,
voting as one class together with the holders of shares of any Parity
Securities issued after the Issue Date upon which like voting rights
have been conferred and are then exercisable (each such Parity
Securities
<PAGE>
with such exercisable voting rights and, after the occurrence of a
Voting Rights Triggering Event (as defined below), each share of
Exchangeable Preferred Stock, individually a "Triggered Security" and
collectively the "Triggered Securities"), to elect the lesser of two
directors and that number of directors constituting 25% of the members
of the Board of Directors. Each such event described in clauses (1) -
(5) is a "Voting Rights Triggering Event." Upon occurrence of such
Voting Rights Triggering Event, Holders of a majority of the issued
and outstanding shares of Exchangeable Preferred Stock, voting as one
class together with the holders of any other Triggered Securities,
shall have the right to elect the lesser of two directors or that
number of directors constituting 25% of the members of the Board of
Directors at a meeting therefor called and at every subsequent meeting
at which the terms of office of the directors so elected by the
holders of the Triggered Securities expire (other than as described in
subparagraph (f)(iii)(B) below). The voting rights provided herein
shall be the exclusive remedy at law or in equity of the holders of
the Exchangeable Preferred Stock for any Voting Rights Triggering
Event.
(B) The right of the Holders of Exchangeable Preferred Stock,
to elect members of the Board of Directors as set forth in
subparagraph (f)(iii)(A) above shall continue until such time as (x)
in the event such right arises due to a Dividend Default, all
accumulated dividends that are required to be paid in cash and that
are in arrears on the Exchangeable Preferred Stock are paid in full in
cash; and (y) in all other cases, the failure, breach or default
giving rise to such Voting Rights Triggering Event is remedied, cured
or waived by the Holders of at least a majority of the shares of
Exchangeable Preferred Stock then outstanding and entitled to vote
thereon, at which time (1) the special right of the Holders of
Exchangeable Preferred Stock so to vote as a class for the election of
directors and (2) the term of office of each of the directors elected
by the Holders of the Triggered Securities shall each terminate and
the remaining directors shall constitute the entire Board of
Directors. At any time after voting power to elect directors shall
have become vested and be continuing in the Holders of Exchangeable
Preferred Stock pursuant to this paragraph (f)(iii), or if vacancies
shall exist in the offices of directors elected by the Holders of
Exchangeable Preferred Stock, a proper officer of the Corporation may,
and upon the written request of the holders of record of at least
twenty-five percent (25%) of the shares of Triggered Securities then
outstanding addressed to the secretary of the Corporation shall, call
a special meeting of the holders of Triggered Securities, for the
purpose of electing the directors which such Holders are entitled to
elect. If such meeting shall not be called by a proper officer of the
Corporation within twenty (20) days after personal service of said
written request upon the secretary of the Corporation, or within
twenty (20) days after mailing the same within the United States by
certified mail, addressed to the secretary of the Corporation at its
principal executive offices, then the holders of record of at least
twenty-five percent (25%) of the outstanding shares of Triggered
Securities may designate in writing one of their number to call such
meeting at the reasonable expense of the Corporation, and such meeting
may be called by the Person so designated upon the notice required for
the annual meetings of stockholders of the Corporation and shall be
held at the place for holding the annual meetings of stockholders.
<PAGE>
Any holder of Triggered Securities so designated shall have, and the
Corporation shall provide, access to the lists of stockholders to be
called pursuant to the provisions hereof.
(C) At any meeting held for the purpose of electing directors
at which the Holders of Exchangeable Preferred Stock shall have the
right, voting together as a separate class with the holders of shares
of any other Triggered Securities, to elect directors as aforesaid,
the presence in person or by proxy of the holders of outstanding
shares representing at least a majority of the voting power of the
Triggered Securities shall be required to constitute a quorum of such
Triggered Securities.
(D) Any vacancy occurring in the office of a director elected
by the holders of Triggered Securities may be filled by the remaining
directors elected by the holders of Triggered Securities unless and
until such vacancy shall be filled by the holders of Triggered
Securities .
(iv) In any case in which the holders of Triggered Securities shall
be entitled to vote pursuant to this paragraph (f) or pursuant to Delaware
law, each Holder of Exchangeable Preferred Stock entitled to vote with
respect to such matter shall be entitled to one vote for each $1,000 in
liquidation preference of Triggered Securities.
(g) Exchange.
(i) Requirements.
The outstanding shares of Exchangeable Preferred Stock are
exchangeable, in whole but not in part, on a pro rata basis, at the option
of the Corporation, at any time on any Dividend Payment Date, for the
Corporation's 11 1/2% Exchange Debentures due 2009 (the "Exchange
Debentures") to be substantially in the form of Exhibit A to the Indenture,
dated as of October 1, 1997, between the Corporation and Bankers Trust
Company, as trustee (the "Exchange Indenture"), a copy of which is on file
with the secretary of the Corporation; provided, however, that any such
exchange may only be made if on or prior to the date of such exchange (1)
the Corporation has paid (or is deemed to have paid) all accumulated
dividends on the Exchangeable Preferred Stock (including the dividends
payable on the date of exchange) and there shall be no contractual
impediment to such exchange; (2) there shall be legally available funds
sufficient therefor; (3) immediately after giving effect to such exchange,
no Default or Event of Default (each as defined in the Exchange Indenture)
would exist under the Exchange Indenture and no default or event of default
would exist under the Existing Note Indentures and no default or event of
default under any other material instrument governing Indebtedness
outstanding at the time would be caused thereby; (4) that the Exchange
Indenture has been qualified under the Trust Indenture Act of 1939, as
amended, if required at the time of such exchange; and (5) the Corporation
shall have delivered a written opinion to the effect that all conditions to
be satisfied prior to such exchange have been satisfied. The exchange rate
shall be $1.00 principal amount of Exchange Debentures for each $1.00 of
liquidation preference of Exchangeable Preferred Stock, including, to the
extent necessary, Exchange Debentures in principal amounts less than
$1,000;
<PAGE>
provided that the Corporation shall have the right, at its option, to pay
cash in an amount equal to the principal amount of that portion of any
Exchange Debenture that is not an integral multiple of $1,000 instead of
delivering an Exchange Debenture in a denomination of less than $1,000.
(ii) Procedure for Exchange.
(A) At least thirty (30) days and not more than sixty (60) days
prior to the date fixed for exchange, written notice (the "Exchange
Notice") shall be given by first-class mail, postage prepaid, to each
Holder of record on the record date fixed for such exchange of the
Exchangeable Preferred Stock at such Holder's address as the same
appears on the stock books of the Corporation; provided that no
failure to give such notice nor any deficiency therein shall affect
the validity of the procedure for the exchange of any shares of
Exchangeable Preferred Stock to be exchanged except as to the Holder
or Holders to whom the Corporation has failed to give said notice or
to whom such notice was defective. The Exchange Notice shall state:
(1) the date fixed for exchange;
(2) that the Holder is to surrender to the Corporation, in
the manner and at the place or places designated, his
certificate or certificates representing the shares of
Exchangeable Preferred Stock to be exchanged;
(3) that dividends on the shares of Exchangeable Preferred
Stock to be exchanged shall cease to accrue on such Exchange
Date whether or not certificates for shares of Exchangeable
Preferred Stock are surrendered for exchange on such Exchange
Date unless the Corporation shall default in the delivery of
Exchange Debentures; and
(4) that interest on the Exchange Debentures shall accrue
from the Exchange Date whether or not certificates for shares
of Exchangeable Preferred Stock are surrendered for exchange on
such Exchange Date.
(B) On or before the Exchange Date, each Holder of
Exchangeable Preferred Stock shall surrender the certificate or
certificates representing such shares of Exchangeable Preferred Stock,
in the manner and at the place designated in the Exchange Notice. The
Corporation shall cause the Exchange Debentures to be executed on the
Exchange Date and, upon surrender in accordance with the Exchange
Notice of the certificates for any shares of Exchangeable Preferred
Stock so exchanged, duly endorsed (or otherwise in proper form for
transfer, as determined by the Corporation), such shares shall be
exchanged by the Corporation into Exchange Debentures. The Corporation
shall pay interest on the Exchange Debentures at the rate and on the
dates specified therein from the Exchange Date.
<PAGE>
(C) If notice has been mailed as aforesaid, and if before the
Exchange Date specified in such notice (1) the Exchange Indenture
shall have been duly executed and delivered by the Corporation and the
trustee thereunder and (2) all Exchange Debentures necessary for such
exchange shall have been duly executed by the Corporation and
delivered to the trustee under the Exchange Indenture with irrevocable
instructions to authenticate the Exchange Debentures necessary for
such exchange, then the rights of the Holders of Exchangeable
Preferred Stock so exchanged as stockholders of the Corporation shall
cease (except the right to receive Exchange Debentures, an amount in
cash equal to the amount of accrued and unpaid dividends to the
Exchange Date and, if the Corporation so elects, cash in lieu of any
Exchange Debenture not an integral multiple of $1,000 and/or $1.00),
and the Person or Persons entitled to receive the Exchange Debentures
issuable upon exchange shall be treated for all purposes as the
registered holder or holders of such Exchange Debentures as of the
Exchange Date.
(iii) No Exchange in Certain Cases. Notwithstanding the foregoing
provisions of this paragraph (g): (A) the Corporation shall not be entitled
to exchange the Exchangeable Preferred Stock for Exchange Debentures if
such exchange, or any term or provision of the Exchange Indenture or the
Exchange Debentures, or the performance of the Corporation's obligations
under the Exchange Indenture or the Exchange Debentures, shall violate any
applicable law or if, at the time of such exchange, the Corporation is
insolvent or if it would be rendered insolvent by such exchange; and (B) in
the event that the Exchange Indenture is amended other than as would be (or
is) permitted by Section 901 thereof if any Exchange Debentures were (or
are) outstanding, the Corporation shall not have the right to exchange the
Exchangeable Preferred Stock then outstanding for Exchange Debentures
unless prior to such exchange the Corporation obtains the affirmative vote
or consent of holders of at least a majority in liquidation preference of
the Exchangeable Preferred Stock then outstanding (or, in the case of
provisions of the Exchange Indenture so amended would require the unanimous
consent of the holder of Exchange Debentures, the affirmative vote or
consent of all holders of the Exchangeable Preferred Stock then
outstanding).
(h) Change of Control.
(i) Upon the occurrence of a Change of Control after October 1,
2005, the Corporation shall notify the Holders of the Exchangeable
Preferred Stock in writing of such occurrence and shall make an offer to
purchase (the "Change of Control Offer") all or any part (having a
liquidation preference equal to $1,000 or an integral multiple thereof) of
each holder's then outstanding shares of Exchangeable Preferred Stock at a
purchase price of 101% of the aggregate liquidation preference thereof
plus, without duplication, an amount in cash equal to all accumulated and
unpaid dividends per share (including, without limitation, an amount in
cash equal to a prorated dividend for the period from the Dividend Payment
Date immediately prior to the Change of Control Payment Date to the Change
of Control Payment Date).
(ii) Within 30 days following the consummation of a transaction
resulting in a Change of Control, the Corporation shall send, by first
class mail, postage prepaid, a notice to each
<PAGE>
Holder of Exchangeable Preferred Stock at such Holder's address as it
appears on the stock books of the Corporation, which notice shall govern
the terms of the Change of Control Offer. The notice to the Holders shall
contain all instructions and materials necessary to enable such Holders to
tender Exchangeable Preferred Stock pursuant to the Change of Control
Offer. Such notice shall state
(A) that a Change of Control has occurred, that the Change of
Control Offer is being made pursuant to this paragraph (h) and that
all Exchangeable Preferred Stock validly tendered and not withdrawn
will be accepted for payment;
(B) the purchase price (including the amount of accumulated
and unpaid dividends, if any) and the purchase date (which shall be no
earlier than 30 days nor later than 70 days from the date such notice
is mailed, other than as may be required by law) (the "Change of
Control Payment Date");
(C) that any shares of Exchangeable Preferred Stock not
tendered will continue to accumulate dividends;
(D) that, unless the Corporation defaults in making payment
therefor, any share of Exchangeable Preferred Stock accepted for
payment pursuant to the Change of Control Offer shall cease to
accumulate dividends after the Change of Control Payment Date;
(E) that Holders electing to have any shares of Exchangeable
Preferred Stock purchased pursuant to a Change of Control Offer will
be required to surrender the certificate or certificates representing
such shares properly endorsed for transfer together with such
customary documents as the Corporation and the transfer agent may
reasonably require, in the manner and at the place specified in the
notice prior to the close of business on the Business Day prior to the
Change of Control Payment Date;
(F) that Holders will be entitled to withdraw their election
if the Corporation receives, not later than five (5) Business Days
prior to the Change of Control Payment Date, a telegram, facsimile
transmission or letter setting forth the name of the Holder, the
number of shares of Exchangeable Preferred Stock the Holder delivered
for purchase and a statement that such Holder is withdrawing his
election to have such shares of Exchangeable Preferred Stock
purchased;
(G) that Holders whose shares of Exchangeable Preferred Stock
are purchased only in part will be issued a new certificate
representing the unpurchased shares of Exchangeable Preferred Stock;
and
(H) the circumstances and relevant facts regarding such Change
of Control.
(iii) The Corporation will comply with any securities laws and
regulations, to the extent such laws and regulations are applicable to the
repurchase of the Exchangeable Preferred Stock in connection with a Change
of Control Offer.
<PAGE>
(iv) On the Change of Control Payment Date the Corporation shall (A)
accept for payment the shares of Exchangeable Preferred Stock validly
tendered pursuant to the Change of Control Offer, (B) pay to the Holders of
shares so accepted the purchase price therefor in cash and (C) cancel and
retire each surrendered certificate. Unless the Corporation defaults in
the payment for the shares of Exchangeable Preferred Stock tendered
pursuant to the Change of Control Offer, dividends will cease to accumulate
with respect to the shares of Exchangeable Preferred Stock tendered and all
rights of Holders of such tendered shares will terminate, except for the
right to receive payment therefor, on the Change of Control Payment Date.
(v) If the purchase of the Exchangeable Preferred Stock would
violate or constitute a default under the Existing Note Indentures, then,
notwithstanding anything to the contrary contained above, prior to
complying with the foregoing provisions, but in any event within 30 days
following the consummation of a transaction resulting in a Change of
Control, the Corporation shall, to the extent needed to permit such
purchase of the Exchangeable Preferred Stock, either (A) repay in full all
such Indebtedness under the Existing Notes or (B) obtain the requisite
consents, if any, under the Existing Note Indentures required to permit the
repurchase of Exchangeable Preferred Stock required by this paragraph (h).
Until the requirements of the immediately preceding sentence are satisfied,
the Corporation shall not make, and shall not be obligated to make, any
Change of Control Offer; provided that the Corporation's failure to comply
with the provisions of this paragraph (h)(v) shall constitute a Voting
Rights Triggering Event.
(i) Conversion or Exchange. The Holders of shares of Exchangeable
Preferred Stock shall not have any rights hereunder to convert such shares into
or exchange such shares for shares of any other class or classes or of any other
series of any class or classes of Capital Stock of the Corporation.
(j) Reissuance of Exchangeable Preferred Stock. Shares of Exchangeable
Preferred Stock that have been issued and reacquired in any manner, including
shares purchased or redeemed or exchanged, shall (upon compliance with any
applicable provisions of the laws of Delaware) have the status of authorized and
unissued shares of Preferred Stock undesignated as to series and may be
redesignated and reissued as part of any series of Preferred Stock, provided
that any issuance of such shares as Exchangeable Preferred Stock must be in
compliance with the terms hereof.
(k) Business Day. If any payment, redemption or exchange shall be
required by the terms hereof to be made on a day that is not a Business Day,
such payment, redemption or exchange shall be made on the immediately succeeding
Business Day.
(l) Certain Additional Provisions.
(i) Limitation on Indebtedness. The Corporation shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly,
create, issue, incur, assume, guarantee or become liable for in any other
manner, contingently or otherwise, or extend the maturity of or become
responsible for the payment of (collectively, "incur") any Indebtedness
(including Acquired Debt) other than (i) the Exchange Debentures and (ii)
Permitted Indebtedness, unless after giving effect
<PAGE>
to the incurrence of such Indebtedness and the receipt and application of
the proceeds therefrom, the Corporation's Consolidated Operating Cash Flow
Ratio is greater than 2 to 1. Notwithstanding the foregoing, the
Corporation'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
Corporation.
(ii) Limitation on Certain Indebtedness. The Corporation shall not
incur or permit to exist any Indebtedness that is by its terms both (i)
subordinate in right of payment to any Senior Debt and (ii) senior in right
of payment to the Exchange Debentures, if issued, in each case other than
by reason of its maturity. The Corporation shall not incur or permit to
exist any Indebtedness that is by its terms subordinate in right of payment
to the Exchange Debentures unless such Indebtedness constitutes
Subordinated Debt.
(iii) Limitation on Restricted Payments. The Corporation 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
Voting Rights Triggering Event or event that, with the giving of notice or
the passing of time, or both, would constitute a Voting Rights Triggering
Event shall have occurred and be continuing or would occur as a consequence
thereof, and (ii) 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
Corporation and evidenced by a Board Resolution), the aggregate amount of
all Restricted Payments declared or made subsequent to June 30, 1997, 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 Corporation for the period
(taken as one accounting period) from June 30, 1997, to the end of the
Corporation'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 Corporation and evidenced by a Board
Resolution), received by the Corporation since June 30, 1997, from any
Person other than a Subsidiary of the Corporation as a result of the
issuance of Capital Stock (other than any Disqualified Capital Stock) of
the Corporation including such Capital Stock issued upon conversion of
Indebtedness or upon exercise of warrants and any contributions to the
capital of the Corporation received by the Corporation from any such Person
plus (c) $50 million plus (d) to the extent that any Restricted Investment
that was made after June 30, 1997, is sold for cash or otherwise liquidated
or repaid for cash, the lesser of (A) the cash return of capital with
respect to such Restricted Investment (less the cost of disposition, if
any) and (B) the initial amount of such Restricted Investment. 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
Corporation, such dividend shall be deemed to be paid at the date of
declaration.
The foregoing shall not be violated by reason of (a) the payment of
any dividends or distributions payable solely in shares of the
Corporation's Capital Stock (other than Disqualified
<PAGE>
Stock) or in options, warrants or other rights to acquire the Corporation's
Capital Stock (other than Disqualified Stock), (b) the payment of dividends
in accordance with the terms of the Exchangeable Preferred Stock, (c) 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, (d) the retirement of any shares of the
Corporation's Capital Stock in exchange for, or out of the proceeds of, the
substantially concurrent sale (other than to a Subsidiary of the
Corporation) of, other shares of its Capital Stock (other than Disqualified
Capital Stock) or options, warrants or other rights to purchase the
Corporation's Capital Stock (other than Disqualified Stock), (e) the
Chevron Payment, (f) the AOC Payment, (g) the Gulf Payments, (h) the making
of any payment in redemption of Capital Stock of the Corporation or options
to purchase such Capital Stock granted to officers or employees of the
Corporation pursuant to any stock option, stock purchase or other stock
plan approved by the board of directors of the Corporation in connection
with the severance or termination of officers or employees not to exceed $4
million per annum and (i) the exchange of the Exchangeable Preferred Stock,
in accordance with its terms, for the Exchange Debentures, and the making
of payments of principal (premium, if any), and interest thereon in
accordance with the Exchange Debenture Indenture.
The board of directors of the Corporation may designate any Restricted
Subsidiary to be an Unrestricted Subsidiary if such designation would not
cause a Voting Rights Triggering Event or event that, with the giving of
notice or the passing of time, or both, would constitute a Voting Rights
Triggering Event; provided that in no event shall the business currently
operated by the Corporation and Clark be transferred to or held by an
Unrestricted Subsidiary. For purposes of making such determination, all
outstanding Investments by the Corporation 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
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.
(iv) Limitation on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries of the Corporation. The Corporation shall not, and
shall not permit any Restricted Subsidiary of the Corporation 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 Corporation to (i) pay dividends or make
any other distributions on any such Restricted Subsidiary's Capital Stock
or pay any Indebtedness owed to the Corporation or any Restricted
Subsidiary of the Corporation, (ii) make any loans or advances to the
Corporation or any Restricted Subsidiary of the Corporation, or (iii)
transfer any of its property or assets to the Corporation or any Restricted
Subsidiary of the Corporation, except for, in the case of clauses (i), (ii)
and (iii) above, any restrictions (a) existing hereunder or under the
Exchange Indenture and any restrictions existing on the Issue Date pursuant
to any agreement relating to Existing Indebtedness of the Corporation's
Restricted Subsidiaries, (b) pursuant to an agreement
<PAGE>
relating to Indebtedness incurred by such Restricted Subsidiary prior to
the date on which such Restricted Subsidiary was acquired by the
Corporation 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 Corporation not to have the funds
necessary to redeem the Exchangeable Preferred Stock (including payment of
liquidation value and accrued and unpaid dividends, including Additional
Dividends) upon any mandatory redemption thereof.
(v) Limitation on Transactions with Shareholders and Affiliates.
The Corporation shall not, and shall not permit any Restricted Subsidiary
of the Corporation 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 Corporation or
of any Restricted Subsidiary of the Corporation (other than transactions
between or among the Corporation and/or its Restricted Subsidiaries except
for Restricted Subsidiaries owned in any part by the Principal
Shareholders) or (ii) any Affiliate of the Corporation (other than
transactions between or among the Corporation 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
Corporation 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 $15
million per annum, the Corporation 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
$15 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 Corporation must receive a favorable
opinion from a nationally recognized investment banking firm chosen by the
Corporation or, if no such investment banking firm is in a position to
provide such opinion, a similar firm chosen by the Corporation (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 Shareholder/Affiliate
Transactions involving the purchase or sale of crude oil in the ordinary
<PAGE>
course of the Corporation'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.
(vi) Limitation on Sale of Capital Stock of Restricted Subsidiaries.
The Corporation shall not permit (i) any Person (other than the Corporation
or any of its Wholly-Owned Restricted Subsidiaries) to own any Capital
Stock of Clark, or (ii) any Person (other than the Corporation or any of
its Restricted Subsidiaries) to own 50% or more of the Capital Stock of any
of its Restricted Subsidiaries other than Clark; provided, however, that
this provision shall not prohibit (a) the issuance and sale of all, but not
less than all, of the issued and outstanding Capital Stock of any
Restricted Subsidiary owned by the Corporation or any of its Restricted
Subsidiaries in compliance with the other provisions of this Indenture, (b)
the ownership by directors of director's qualifying shares or (c) the
issuance and sale of nonvoting, nonconvertible preferred stock of any
Restricted Subsidiary, provided that the aggregate amount of all nonvoting,
nonconvertible preferred stock of Restricted Subsidiaries does not exceed
5% of Consolidated Net Tangible Assets of the Corporation.
(vii) Provision of Financial Information. So long as any of the
Exchangeable Preferred Stock is outstanding, the Corporation will file with
the Commission the annual reports, quarterly reports and other documents
that the Corporation would have been required to file with the Commission
pursuant to Sections 13(a) and 15(d) of the Exchange Act if the Corporation
were subject to such Sections, and the Corporation will provide to all
Holders copies of such reports and documents. In addition, the Corporation
has agreed that, for so long as any Exchangeable Preferred Stock remains
outstanding, it will furnish to all holders thereof 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.
(viii) Mergers, Consolidations and Certain Sales of Assets. The
Corporation shall not consolidate or merge with or into (whether or not the
Corporation 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)
if the Corporation is not the Surviving Person, the Exchangeable Preferred
Stock shall be converted into or exchanged for and shall become shares of
such successor, transferee or resulting Person, having in respect of such
successor, transferee or resulting Person, the same powers, preferences and
relative, participating, optional or other special rights and
qualifications, limitations and restrictions thereon that the Exchangeable
Preferred Stock had immediately prior to such transaction, (iii) at the
time of and immediately after such transaction no Voting Rights Triggering
Event or event that, with the passing of time or the giving of notice, or
both, would become a Voting Rights Triggering Event shall have occurred
and be continuing, (iv) the Surviving Person will have Consolidated
Adjusted Net Worth (immediately after the transaction but prior to any
purchase accounting adjustments resulting from the transaction) equal to or
greater than 90% of the Consolidated Adjusted Net Worth of the
<PAGE>
Corporation immediately preceding the transaction, and (v) after giving pro
forma effect to the transaction, 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 (l)(i) above. Upon
any such sale of all or substantially all of the assets of the Corporation
to another Person or any merger or consolidation where the Corporation is
not the surviving entity, such Person or survivor shall become the obligor
in respect of the Exchangeable Preferred Stock and the Corporation will be
relieved of all further obligations and covenants hereunder.
(ix) Limitation on Issuance of Guarantees of Indebtedness. The
Corporation shall not permit any Restricted Subsidiary, directly or
indirectly, to guarantee or secure the payment of any Indebtedness of the
Corporation that is expressly by its terms subordinate or junior in right
of payment (other than by reason of maturity) to any other Indebtedness of
the Corporation.
(m) Definitions. As used in this Certificate of Designations, the
following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
"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
the Corporation 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 transition 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 Wholly Owned 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
<PAGE>
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 Gulf Transaction shall not be deemed an Asset Disposition
hereunder.
"Board of Directors" shall have the meaning ascribed to it in the
introductory paragraph of this Certificate of Designations.
"Borrowing Base" means, as of any date, an amount equal to the sum of
(i) 95% of the accounts receivable owned by the Corporation 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 Corporation and its Restricted Subsidiaries as of such date, plus
(iii) 100% of the cash and Cash Equivalents owned by the Corporation 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, The City of New York, New York are authorized or obligated by
law 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
<PAGE>
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.
"Certificate of Incorporation" shall have the meaning ascribed to it
in the introductory paragraph of this Certificate of Designations.
"Change of Control" means any transaction the result of which is that
any Person (an "Acquiring Person") other than TrizecHahn, or a Person, a
majority of whose voting equity is owned by TrizecHahn, becomes the
Beneficial Owner, directly or indirectly, of shares of stock of the
Corporation, Clark or any Subsidiary of the Corporation or TrizecHahn that
owns, directly or indirectly, any equity interest in Clark, as the case may
be, entitling such Acquiring Person to exercise 50% or more of the total
voting power of all classes of stock of the Corporation, Clark or such
Subsidiary, 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 Offer" has the meaning ascribed to it in Section
(h)(i) hereof.
"Change of Control Payment Date" shall have the meaning ascribed to it
in paragraph (h)(ii)(B) hereof.
"Chevron Payment" means that certain contingent payment obligation of
the Corporation 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 the Corporation and Chevron
U.S.A. Inc., as amended.
"Clark" means Clark Refining & Marketing, Inc., a Delaware corporation
and a Wholly Owned Subsidiary of the Corporation.
"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 instrument such Commission is not existing
and performing the duties now assigned to it, then the body performing such
duties at such time.
"Common Stock" of any Person means Capital Stock of such Person that
does not rank prior, as to the payment of dividends or as to the
distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding-up of such Person, to shares of Capital Stock of any
other class of such Person.
<PAGE>
"Consolidated Adjusted Net Worth" of any Person means the total amount
of consolidated stockholder's equity (par value plus additional paid-in
capital 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 Quarter for which such determination is
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 revaluations 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; and (vii)
the cumulative foreign currency translation adjustment, if any.
"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, whether or not distributed to the Corporation 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.
<PAGE>
"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, 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 and Preferred Stock
Dividends of such Person and its Restricted Subsidiaries 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 obliga tions; provided, however, that if such Person or any Restricted
Subsidiary of such Person shall have acquired, sold or otherwise disposed
of any Material Asset 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 on a pro forma basis as if such acquisition, sale or
disposition 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.
"Corporation" has the meaning ascribed to it in the introductory
paragraph of this Certificate of Designations.
<PAGE>
"Credit Agreement" means that certain Second Amended and Restated
Credit Agreement, dated as of September 25, 1997, by and among Clark and
the financial institutions party thereto, including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, renewed,
refunded, replaced or refinanced from time to time.
"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
Corporation 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,
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 October 1, 2009.
"Dividend Default" shall have the meaning ascribed to it in paragraph
(f)(iii) hereof.
"Dividend Payment Date" means April 1 and October 1 of each year.
"Dividend Period" means the Initial Dividend Period and, thereafter,
each semi-annual period commencing on a Dividend Payment Date and ending
one day before the next Dividend Payment Date.
"Dividend Record Date" means March 15 and September 15 of each year.
"Equity Offering" means any offering of Junior Securities.
"Equity Offering Redemption Price" shall have the meaning ascribed to
it in paragraph (e)(i)(B) hereof.
"Exchange Act" means the Securities Exchange Act of 1934 and any
statute successor thereto, in each case as amended from time to time.
"Exchange Date" means the date of issuance of any Exchange Debentures
in accordance with paragraph (g) hereof.
"Exchange Debentures" means the Corporation's 11 1/2% Exchange
Debentures due 2009 that the Corporation may issue at its election in
exchange for the Exchangeable Preferred Stock in accordance with the terms
of the Exchangeable Preferred Stock.
"Exchange Indenture" shall have the meaning ascribed to it in
paragraph (g)(i) hereof.
<PAGE>
"Exchange Notice" shall have the meaning ascribed to it in paragraph
(g)(ii)(A) hereof.
"Exchangeable Preferred Stock" shall have the meaning ascribed to it
in paragraph (a) hereof.
"Existing Indebtedness" means any outstanding Indebtedness of the
Corporation and its Subsidiaries as of the Issue Date.
"Existing Note Indentures" means the indentures governing the
Corporation's 10-7/8% Series B Senior Notes due 2005 and the Corporation's
Senior Secured Zero Coupon Notes due 2000, Series A.
"Existing Notes" means the Corporation's 10-7/8% Series B Senior Notes
due 2005 and the Corporation's Senior Secured Zero Coupon Notes due 2000,
Series A.
"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. 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, and/or any issuance to Gulf Resources Corporation of any equity
interest in the Corporation, in each case, pursuant to the Gulf Merger
Agreement, the Gulf Oil
<PAGE>
Purchase Contract, the Gulf Stockholders' Agreement and the Gulf Pledge
Agreement, as each is in effect on the date hereof.
"Gulf Oil Purchase Contract" means that certain Crude Oil Purchase
Contract, dated as of December 1, 1995, between the Gulf Resources
Corporation ("Gulf") and GFR, Inc. ("Gulf Sub").
"Gulf Merger Agreement" means that certain Agreement and Plan of
Merger, dated as of November 3, 1995, among the Corporation, Gulf and Gulf
Sub.
"Gulf Pledge Agreement" means that certain Pledge Agreement, dated as
of December 1, 1995, from Gulf Sub and Gulf to the Corporation.
"Gulf Stockholders' Agreement" means that certain Stockholders'
Agreement, dated as of December 1, 1995, among the Corporation, Gulf, Gulf
Sub, the Horsham Corporation, 1096153 Ontario Limited, Clark Holdings
Limited, The Jaguar Fund, N.V., Puma (a Limited Partnership), Tiger (a
Limited Partnership), and Occidental C.O.B. Partners.
"Gulf Transaction" means the transactions contemplated by the Gulf
Merger Agreement.
"Holder" means a holder of shares of Exchangeable Preferred Stock as
reflected in the stock books of the Corporation.
"Indebtedness" with respect to any Person, means any indebtedness,
including, in the case of the Corporation, the indebtedness evidenced by
the Exchange Debentures, if and when issued, 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 Corporation, 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 Clark to any Person other than the Corporation.
"Initial Dividend Period" means the dividend period commencing on the
Issue Date and ending on March 31, 1998.
"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,
<PAGE>
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 October 1, 1997.
"Junior Subordinated Indebtedness" means any Indebtedness of the
Corporation which is subordinated in right of payment to the Exchange
Debentures 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) are required to be
made by the Corporation at any time prior to October 1, 2009.
"Junior Securities" shall have the meaning ascribed to it in paragraph
(b)(i) hereof.
"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, recorded or
otherwise perfected under applicable law (including any conditional sale or
other title 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).
"Mandatory Redemption Price" shall have the meaning ascribed to it in
paragraph (e)(ii) hereof.
<PAGE>
"Maturity" means, with respect to any Exchange Debentures, the date on
which the principal of such Exchange Debentures becomes due and payable as
provided in the Indenture, whether at the Stated Maturity or by declaration
of acceleration, call for redemption or otherwise.
"Net Available Proceeds" from any Equity Offering or any issuance of
Capital Stock by any Person 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) therefrom by such Person, 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
Corporation 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 Corporation 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;
and (iii) as to which the lenders have been notified in writing that they
will not have any recourse to the stock or assets of the Corporation or any
of its Restricted Subsidiaries.
"Obligations" means any principal (and premium, if any), interest,
penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Optional Redemption Price" shall have the meaning ascribed to it in
paragraph (e)(i)(A) hereof.
"Parity Securities" shall have the meaning ascribed to it in paragraph
(b) hereof.
"Permitted Indebtedness" means Indebtedness incurred by the
Corporation or its Restricted Subsidiaries (i) to renew, extend, refinance
or refund Indebtedness that is permitted to be incurred pursuant to clauses
(ii) through (iv) 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
<PAGE>
determined by the Corporation 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 Corporation 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 Indebted ness that is pari passu
with the Exchange Debentures the refinancing or refunding Indebtedness is
made pari passu with the Exchange Debentures or subordinated to the
Exchange Debentures, (B) in the case of any refinancing or refunding of
Indebtedness that is subordinated to the Exchange Debentures the
refinancing or refunding of Indebtedness is made subordinated to the
Exchange Debentures at least to the same extent as such Indebtedness being
refinanced or refunded was subordinated to the Exchange Debentures and (C)
in the case of the refinancing or refunding of Indebtedness that is
subordinated to the Exchange Debentures, 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 Corporation
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 Exchange Debentures and (y) does not permit redemption or
other retirement (including pursuant to an offer to purchase made by the
Corporation 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 Corporation or such Restricted
Subsidiary), which is conditioned upon the change of control of the
Corporation or such Restricted Subsidiary); (ii) arising from time to time
under the Credit Agreement or any refinancings, renewals, extensions,
refundings or replacements thereof or extensions of credit to finance
working capital requirements in an aggregate principal amount not to 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 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 Corporation and/or its Restricted
Subsidiaries other than Restricted Subsidiaries owned in any part by the
Principal Shareholders; (vi) which is Junior Subordinated Indebtedness;
(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; and (xi) in addition to
Indebtedness permitted by clauses (i) through (x) above,
<PAGE>
Indebtedness not to exceed on a consolidated basis for the Corporation and
its Restricted Subsidiaries at any time $50 million.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock Corporation, trust, estate,
unincorporated organization or government or any agency or political
subdivision thereof.
"Preferred Stock," as applied to the Capital Stock of any Person,
means Capital Stock of such Person of any class or classes (however
designated) that ranks prior, as to the payment of dividends or as to the
distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding-up of such Person, to shares of Capital Stock of any
other class of such Person.
"Principal Shareholders" means (i) TrizecHahn, (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 Corporation and its Subsidiaries.
"Quarter" means a fiscal quarterly period of the Corporation.
"Redemption Date," with respect to any shares of Exchangeable
Preferred Stock, means the date on which such shares of Exchangeable
Preferred Stock are redeemed by the Corporation.
"Redemption Notice" shall have the meaning ascribed to it in paragraph
(e)(iii)(A) hereof.
"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"), directly or indirectly, by the Corporation or a Restricted
Subsidiary of the Corporation, 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 Corporation (other than the
Exchangeable Preferred Stock and the Exchange Debentures) which is
subordinate in right of payment to the Exchangeable Preferred Stock.
"Restricted Investment" means any direct or indirect Investment by the
Corporation or any Restricted Subsidiary of the Corporation in (i) any
Affiliate of the Corporation which is not a Restricted Subsidiary of the
Corporation and (ii) any Unrestricted Subsidiary of the Corporation, other
than direct or indirect investments in (a) Polymer Asphalt L.L.C., a
Missouri limited liability Corporation and (b) any pipeline Corporation in
which the Corporation or any of its Restricted Subsidiaries now owns or
hereafter acquires any interest; provided that the aggregate amount of
Investments made by the Corporation or any of its Restricted Subsidiaries
pursuant to clauses (a) and (b) above shall not exceed $25 million in the
aggregate at any one time outstanding.
"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
Corporation to any Restricted Subsidiary of the Corporation, (b)
<PAGE>
payments by any Restricted Subsidiary of the Corporation to the Corporation
or any other Restricted Subsidiary of the Corporation, (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.
"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.
"Senior Securities" shall have the meaning ascribed to it in paragraph
(b) hereof.
"Stated Maturity" means October 1, 2009.
"Stock Payment" means (i) with respect to the Corporation, any
dividend, either in cash or in property (except dividends payable in
Capital Stock of the Corporation which is not convertible into
Indebtedness), on, or the making by the Corporation 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 Corporation, 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 Corporation's Capital Stock (other than
Disqualified Stock) or options, warrants or other rights to purchase the
Corporation's Capital Stock (other than Disqualified Stock)), and (ii) with
respect to any Restricted Subsidiary of the Corporation, any redemption,
repurchase, retirement, defeasance or any acquisition of its Capital Stock
or the Capital Stock of the Corporation or any warrants, rights, or options
to purchase or acquire shares of any class of its Capital Stock or the
Capital Stock of the Corporation, now or hereafter outstanding, except with
respect to its Capital Stock or such warrants, rights or options to
purchase or acquire shares of any class of its Capital Stock owned by the
Corporation or a Restricted Subsidiary of the Corporation.
"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 Corporation and Clark.
"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
<PAGE>
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.
"Triggered Securities" shall have the meaning ascribed to it in
paragraph (f)(iii)(A) hereof.
"TrizecHahn" means TrizecHahn Corporation, an Ontario 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.
"Unrestricted Subsidiary" means any Subsidiary (other than Clark or
any successor to Clark) that is designated by the board of directors of the
Corporation 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 Corporation or any Restricted
Subsidiary of the Corporation unless the terms of any such agreement,
contract, arrangement or understanding are no less favorable to the
Corporation or such Restricted Subsidiary than those that might be obtained
at the time from Persons who are not Affiliates of the Corporation; (c) is
a Person with respect to which neither the Corporation 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; (d) has not guaranteed or otherwise
directly or indirectly provided credit support for any Indebtedness of the
Corporation or any of its Restricted Subsidiaries; and (e) has at least one
director on its board of directors that is not a director or executive
officer of the Corporation or any of its Restricted Subsidiaries and has at
least one executive officer that is not a director or executive officer of
the Corporation or any of its Restricted Subsidiaries. If, at any time, any
Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary and any Indebtedness of such Subsidiary shall be deemed to be
incurred by a Restricted Subsidiary of the Corporation as of such date
(and, if such
<PAGE>
Indebtedness is not permitted to be incurred as of such date under
"Limitations on Indebtedness", the Corporation shall be in default of such
covenant). The board of directors of the Corporation 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 Corporation of any
outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (i) such Indebtedness is permitted
under "Limitations on Indebtedness", and (ii) no Default or Event of
Default would be in existence following such designation.
"Voting Rights Triggering Event" shall have the meaning ascribed to it
in paragraph (f)(iii)(A) hereof.
"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.
IN WITNESS WHEREOF, the undersigned has signed this Certificate this 1st
day of October, 1997.
CLARK USA, INC.
By:_____________________
Name: Maura J. Clark
Title: Executive Vice President &
Chief Financial Officer
Attested By:
__________________________
Name: Katherine D. Knocke
Title: Secretary
