EXHIBIT 4.2
EXECUTION COPY
================================================================================
CITGO PETROLEUM CORPORATION
Issuer
11 3/8% Senior Notes Due 2011
----------
INDENTURE
Dated as of February 27, 2003
----------
THE BANK OF NEW YORK
Trustee
================================================================================
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
------- ---------
310(a)(1) .......................................... 7.10
(a)(2) .......................................... 7.10
(a)(3) .......................................... N.A.
(a)(4) .......................................... N.A.
(b) .......................................... 7.08; 7.10
(c) .......................................... N.A.
311(a) .......................................... 7.11
(b) .......................................... 7.11
(c) .......................................... N.A.
312(a) .......................................... 2.05
(b) .......................................... 11.02
(c) .......................................... 11.02
313(a) .......................................... 7.06
(b)(1) .......................................... N.A.
(b)(2) .......................................... 7.06
(c)(1) .......................................... 11.02
(c)(2) .......................................... 11.02
(d) .......................................... 7.06
314(a) .......................................... 4.02; 4.13; 4.14
(b) .......................................... N.A.
(c)(1) .......................................... 11.04.
(c)(2) .......................................... 11.04.
(c)(3) .......................................... N.A.
(d) .......................................... N.A.
(e) .......................................... 11.05
315(a) .......................................... 7.01
(b) .......................................... 7.05; 11.02
(c) .......................................... 7.01
(d) .......................................... 7.01
(e) .......................................... 6.11
316(a)(1)(A) .......................................... 6.05
(a)(1)(B) .......................................... 6.04
(a)(2) .......................................... N.A.
(b) .......................................... 6.07
(c) .......................................... 9.04
317(a)(1) .......................................... 6.08
(a)(2) .......................................... 6.09
(b) .......................................... 2.04
318(a) .......................................... 11.01
(c) .......................................... 11.01
N.A. means Not Applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the
Indenture.
TABLE OF CONTENTS
Page
----
ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.01. Definitions....................................................1
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.............42
SECTION 1.03. Rules of Construction.........................................42
ARTICLE 2
The Securities
SECTION 2.01. Form and Dating...............................................43
SECTION 2.02. Execution and Authentication..................................43
SECTION 2.03. Registrar and Paying Agent....................................44
SECTION 2.04. Paying Agent To Hold Money in Trust...........................45
SECTION 2.05. Securityholder Lists..........................................45
SECTION 2.06. Transfer and Exchange.........................................46
SECTION 2.07. Replacement Securities........................................46
SECTION 2.08. Outstanding Securities........................................47
SECTION 2.09. Temporary Securities..........................................47
SECTION 2.10. Cancellation..................................................47
SECTION 2.11. Defaulted Interest............................................48
SECTION 2.12. CUSIP Numbers.................................................48
SECTION 2.13. Issuance of Additional Securities.............................48
ARTICLE 3
Redemption
SECTION 3.01. Notices to Trustee............................................49
SECTION 3.02. Selection of Securities To Be Redeemed........................49
SECTION 3.03. Notice of Redemption..........................................50
SECTION 3.04. Effect of Notice of Redemption................................51
SECTION 3.05. Deposit of Redemption Price...................................51
SECTION 3.06. Securities Redeemed in Part...................................51
ii
ARTICLE 4
Covenants
SECTION 4.01. Payment of Securities.........................................51
SECTION 4.02. SEC Reports...................................................52
SECTION 4.03. Limitation on Indebtedness....................................53
SECTION 4.04. Limitation on Restricted Payments.............................57
SECTION 4.05. Limitation on Restrictions on Distributions
from Restricted Subsidiaries............................61
SECTION 4.06. Limitation on Sales of Assets and Subsidiary Stock............63
SECTION 4.07. Limitation on Affiliate Transactions..........................68
SECTION 4.08. Limitation on Issuance of Guarantees of Indebtedness..........70
SECTION 4.09. Change of Control.............................................71
SECTION 4.10. Limitation on Liens...........................................73
SECTION 4.11. Limitation on Sale/Leaseback Transactions.....................74
SECTION 4.12. Business Activities of Pledged Entities.......................74
SECTION 4.13. Compliance Certificate........................................75
SECTION 4.14. Further Instruments and Acts..................................75
SECTION 4.15. Investment Grade Covenants....................................75
ARTICLE 5
Successor Company
SECTION 5.01. When Company May Merge or Transfer Assets.....................77
SECTION 5.02. When Subsidiary Guarantor May Merge or Transfer Assets........78
ARTICLE 6
Defaults and Remedies
SECTION 6.01. Events of Default.............................................79
SECTION 6.02. Acceleration..................................................82
SECTION 6.03. Other Remedies................................................83
SECTION 6.04. Waiver of Past Defaults.......................................83
SECTION 6.05. Control by Majority...........................................83
SECTION 6.06. Limitation on Suits...........................................84
SECTION 6.07. Rights of Holders to Receive Payment..........................84
iii
SECTION 6.08. Collection Suit by Trustee....................................85
SECTION 6.09. Trustee May File Proofs of Claim..............................85
SECTION 6.10. Priorities....................................................85
SECTION 6.11. Undertaking for Costs.........................................86
SECTION 6.12. Waiver of Stay or Extension Laws..............................86
ARTICLE 7
Trustee
SECTION 7.01. Duties of Trustee.............................................86
SECTION 7.02. Rights of Trustee.............................................88
SECTION 7.03. Individual Rights of Trustee..................................89
SECTION 7.04. Trustee's Disclaimer..........................................89
SECTION 7.05. Notice of Defaults............................................89
SECTION 7.06. Reports by Trustee to Holders.................................90
SECTION 7.07. Compensation and Indemnity....................................90
SECTION 7.08. Replacement of Trustee........................................91
SECTION 7.09. Successor Trustee by Merger...................................92
SECTION 7.10. Eligibility; Disqualification.................................93
SECTION 7.11. Preferential Collection of Claims Against Company.............93
ARTICLE 8
Discharge of
Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities; Defeasance..............93
SECTION 8.02. Conditions to Defeasance......................................95
SECTION 8.03. Application of Trust Money....................................96
SECTION 8.04. Repayment to Company..........................................96
SECTION 8.05. Indemnity for Government Obligations..........................97
SECTION 8.06. Reinstatement.................................................97
ARTICLE 9
Amendments
SECTION 9.01. Without Consent of Holders....................................97
SECTION 9.02. With Consent of Holders.......................................98
SECTION 9.03. Compliance with Trust
Indenture Act...........................99
SECTION 9.04. Revocation and Effect of Consents and Waivers.................99
iv
SECTION 9.05. Notation on or Exchange of Securities........................100
SECTION 9.06. Trustee To Sign Amendments...................................100
SECTION 9.07. Payment for Consent..........................................101
ARTICLE 10
Subsidiary Guaranties
SECTION 10.01. Guaranties..................................................101
SECTION 10.02. Limitation on Liability.....................................103
SECTION 10.03. Successors and Assigns......................................104
SECTION 10.04. No Waiver...................................................104
SECTION 10.05. Modification................................................104
SECTION 10.06. Release of Subsidiary Guarantor.............................104
SECTION 10.07. Form of Supplemental
Indenture..............................105
ARTICLE 11
Miscellaneous
SECTION 11.01. Trust
Indenture Act Controls................................105
SECTION 11.02. Notices.....................................................106
SECTION 11.03. Communication by Holders with Other
Holders................................................107
SECTION 11.04. Certificate and Opinion as to Conditions Precedent..........107
SECTION 11.05. Statements Required in Certificate or Opinion...............107
SECTION 11.06. When Securities Disregarded.................................108
SECTION 11.07. Rules by Trustee, Paying Agent and Registrar................108
SECTION 11.08. Legal Holidays..............................................108
SECTION 11.09. Governing Law...............................................109
SECTION 11.10. No Recourse Against Others..................................109
SECTION 11.11. Successors..................................................109
SECTION 11.12. Multiple Originals..........................................109
SECTION 11.13. Table of Contents; Headings.................................109
v
Exhibit I - Form of Supplemental
Indenture to be Delivered By Subsidiary
Guarantors
Rule 144A/Regulation S Appendix
Exhibit 1 - Form of Initial Security
Exhibit A - Form of Exchange Security
INDENTURE dated as of 27, 2003, between
CITGO PETROLEUM CORPORATION, a Delaware corporation
(the "Company"), and THE BANK OF
NEW YORK, a
New York
banking corporation (the "Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Securities.
ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Additional Assets" means
(1) any property, plant or equipment used in a Related
Business;
(2) the Capital Stock of a Person that becomes a Restricted
Subsidiary as a result of the acquisition of such Capital Stock by the
Company or another Restricted Subsidiary; or
(3) Capital Stock constituting a minority interest in any
Person that at such time is a Restricted Subsidiary;
provided, however, that any such Restricted Subsidiary
described in clause (2) or (3) above is primarily engaged in a Related Business.
"Additional Securities" means, subject to the Company's
compliance with Section 4.03, 11 3/8% Senior Securities Due 2011 issued from
time to time after the Issue Date under the terms of this Indenture (other than
pursuant to Section 2.06, 2.07, 2.09 or 3.06 of this Indenture and other than
Exchange Securities or Private Exchange Securities issued pursuant to an
exchange offer for other Securities outstanding under this Indenture).
"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
2
definition, "control" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing. For purposes of Sections 4.04, 4.06 and 4.07 only, "Affiliate" shall
also mean any beneficial owner of Capital Stock representing 5% or more of the
total voting power of the Voting Stock (on a fully diluted basis) of the Company
or of rights or warrants to purchase such Capital Stock (whether or not
currently exercisable) and any Person who would be an Affiliate of any such
beneficial owner pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other
disposition by the Company or any Restricted Subsidiary, including any
disposition by means of a merger, consolidation or similar transaction (each
referred to for the purposes of this definition as a "disposition") of:
(1) any shares of Capital Stock, or other ownership interests,
of a Restricted Subsidiary (other than directors' qualifying shares or
shares required by applicable law to be held by a Person other than the
Company or a Restricted Subsidiary);
(2) substantially all the assets of any division or line of
business of the Company or any Restricted Subsidiary; or
(3) any other assets of the Company or any Restricted
Subsidiary outside of the ordinary course of business of the Company or
such Restricted Subsidiary
other than, in the case of clauses (1), (2) and (3) above, (A) a disposition by
a Restricted Subsidiary to the Company or by the Company or a Restricted
Subsidiary to a Wholly Owned Subsidiary, (B) for purposes of Section 4.06 only,
(x) a disposition that constitutes a Restricted Payment (or would constitute a
Restricted Payment but for the exclusions from the definition thereof) and that
is not prohibited by Section 4.04, and (y) a disposition of all or substantially
all the assets of the Company in accordance with Section 5.01, (C) a
disposition, whether in a single
3
transaction or a series of related transactions, of assets with a fair market
value of less than $10,000,000), (D) sales pursuant to a Qualified Receivables
Transaction of accounts receivable and related assets of the type specified in
the definition of "Qualified Receivables Transaction" to a Receivables
Subsidiary (in the case of a sale by the Company or any of its Restricted
Subsidiaries) or any other Person (in the case of a sale by a Receivables
Subsidiary), in each case, for the fair market value thereof, including cash in
an amount at least equal to 90% of the fair market value thereof as determined
in accordance with GAAP, (E) sales by the Company or any Restricted Subsidiary
of hydrocarbons or refined products therefrom that the Company or any Restricted
Subsidiary had previously acquired from the Permitted Holder or any of its
Subsidiaries pursuant to an arrangement between the Company and the Permitted
Holder providing for the resale by the Company or any Restricted Subsidiary of
the Permitted Holder's products for a customary fee, (F) sales by the Company or
any Restricted Subsidiary of inventory at fair market value for cash
consideration to the extent such cash consideration is applied by the Company or
such Restricted Subsidiary within 20 days of such sale to acquire hydrocarbons
or refined products, and (G) a disposition of cash or Temporary Cash
Investments.
"Attributable Debt" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Securities, compounded annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended); provided, however, that if such
Sale/Leaseback Transaction results in a Capital Lease Obligation, the amount of
Indebtedness represented thereby will be determined in accordance with the
definition of "Capital Lease Obligation".
"Available Liquidity" with respect to the Company means, at
any time, the sum of (w) committed lines of credit that may be readily drawn by
the Company, (x) funds readily available to the Company pursuant to an accounts
receivable facility permitted by Section 4.03(b)(13) and (y) unrestricted cash
on the consolidated balance sheet of the Company held by the Company or any
Restricted
4
Subsidiary; provided, however, that any cash of any Restricted Subsidiary shall
be deemed to be unrestricted for purposes of this definition only to the extent
that such Restricted Subsidiary is not, at the applicable time, subject to any
material restrictions, directly or indirectly, on its ability to dividend or
distribute such cash to the Company.
"Average Life" means, as of the date of determination, with
respect to any Indebtedness, the quotient obtained by dividing (1) the sum of
the products of the numbers of years from the date of determination to the dates
of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Indebtedness multiplied by
the amount of such payment by (2) the sum of all such payments.
"Board of Directors" with respect to a Person means the Board
of Directors of such Person or any committee thereof duly authorized to act on
behalf of such Board.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligation" means an obligation that is
required to be classified and accounted for as a capital lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP; and the Stated Maturity thereof
shall be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be terminated by the
lessee without payment of a penalty. For purposes of Section 4.10, a Capital
Lease Obligation shall be deemed to be secured by a Lien on the property being
leased.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participation or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.
5
"Change of Control" means any of the following events:
(1) prior to the first public offering of common stock of the
Company, the Permitted Holder ceases to be the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of a majority in the aggregate of the total voting power of
the Voting Stock of the Company, whether as a result of issuance of
securities of the Company, any merger, consolidation, liquidation or
dissolution of the Company, or any direct or indirect transfer of
securities or otherwise (for purposes of this clause (1) and clause (2)
below, the Permitted Holder shall be deemed to beneficially own any
Voting Stock of a Person (the "specified person") held by any other
Person (the "parent entity") so long as the Permitted Holder
beneficially owns (as so defined), directly or indirectly, in the
aggregate a majority of the voting power of the Voting Stock of the
parent entity);
(2) after the first public offering of common stock of the
Company, any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act), other than the Permitted Holder, is or becomes
the beneficial owner (as defined in clause (1) above, except that for
purposes of this clause (2) such person shall be deemed to have
"beneficial ownership" of all shares that any such person has the right
to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 35% of the
total voting power of the Voting Stock of the Company; provided,
however, that the Permitted Holder beneficially owns (as defined in
clause (1) above), directly or indirectly, in the aggregate a lesser
percentage of the total voting power of the Voting Stock of the Company
than such other person and does not have the right or ability by voting
power, contract or otherwise to elect or designate for election a
majority of the Board of Directors of the Company (for the purposes of
this clause (2), such other person shall be deemed to beneficially own
any Voting Stock of a specified person held by a parent entity, if such
other person is the beneficial owner (as defined in this
6
clause (2)), directly or indirectly, of more than 35% of the voting
power of the Voting Stock of such parent entity and the Permitted
Holder beneficially owns (as defined in clause (1) above), directly or
indirectly, in the aggregate a lesser percentage of the voting power of
the Voting Stock of such parent entity and does not have the right or
ability by voting power, contract or otherwise to elect or designate
for election a majority of the board of directors of such parent
entity);
(3) individuals who on the Issue Date constituted the Board of
Directors of the Company (together with any new directors whose
election by such Board of Directors of the Company or whose nomination
for election by the shareholders of the Company, was (A) approved by a
vote of 66K% of the directors of the Company then still in office who
were either directors on the Issue Date or whose election or nomination
for election was previously so approved or (B) approved by the
Permitted Holder at a time when the Permitted Holder held, directly or
indirectly, a majority in the aggregate of the total voting power of
the Voting Stock of the Company) cease for any reason to constitute a
majority of the Board of Directors of the Company then in office;
(4) the adoption of a plan relating to the liquidation or
dissolution of the Company; or
(5) the merger or consolidation of the Company with or into
another Person or the merger of another Person with or into the
Company, or the sale of all or substantially all the assets of the
Company (determined on a consolidated basis) to another Person other
than (i) a transaction in which the survivor or transferee is a Person
that is controlled by the Permitted Holder or (ii) a transaction
following which (A) in the case of a merger or consolidation
transaction, holders of securities that represented 100% of the Voting
Stock of the Company immediately prior to such transaction (or other
securities into which such securities are converted as part of such
merger or consolidation transaction) own directly or indirectly at
least a majority of the voting power of the Voting Stock of the
surviving Person in such merger or consolidation transaction
immediately after
7
such transaction and in substantially the same proportion as before the
transaction and (B) in the case of a sale of assets transaction, each
transferee becomes an obligor in respect of the Securities and a
Subsidiary of the transferor of such assets;
provided, however, that none of the events set forth above under paragraphs (1)
through (5) of this definition of "Change of Control" shall constitute a Change
of Control if, immediately following the consummation of any such event and
after giving effect thereto, the Securities have an Investment Grade Rating.
"CITGO Pipeline I" means CITGO Pipeline Holding I, LLC, a
Delaware limited liability company that holds the Company's equity interests in
the Colonial Pipeline.
"CITGO Pipeline II" means CITGO Pipeline Holding II, LLC, a
Delaware limited liability company that holds the Company's equity interests in
the Explorer Pipeline.
"CITGO Puerto Rico" means CITGO International Puerto Rico
Company, a Puerto Rican civil partnership and an indirect wholly owned
subsidiary of the Company.
"CITGO Puerto Rico Credit Agreement" means the 364-day credit
agreement entered into as of May 28, 2002, among CITGO Puerto Rico, the lenders
referred to therein and Mizuho Corporation Bank Limited as Administrative Agent,
together with the related documents thereto (including the revolving loan
facility, note purchase or placement facility, letter of credit facility or
other arrangement for the extension of credit thereunder, any guarantees and
security documents), as amended, extended, renewed, restated, supplemented or
otherwise modified (in whole or in part, and without limitation as to amount,
terms, conditions, covenants and other provisions) from time to time, and any
agreement (and related document) governing Indebtedness Incurred to Refinance,
in whole or in part, the borrowings and commitments then outstanding or
permitted to be outstanding under such credit agreement or a successor credit
agreement, whether by the same or any other lender or group of lenders.
8
"Code" means the Internal Revenue Code of 1986, as amended.
"Commodity Agreement" means any commodity or raw material
futures contract, commodity or raw materials option, or any other agreement
designed to protect against or manage exposure to fluctuations in commodity or
raw materials prices, other than hydrocarbons.
"Company" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor and, for
purposes of any provision contained herein and required by the TIA, each other
obligor on the indenture securities.
"Consolidated Coverage Ratio" as of any date of determination
means the ratio of (x) the aggregate amount of EBITDA for the period of the most
recent four consecutive fiscal quarters ending at least 45 days prior to the
date of such determination to (y) Consolidated Interest Expense for such four
fiscal quarters; provided, however, that:
(1) if the Company or any Restricted Subsidiary has Incurred
any Indebtedness since the beginning of such period that remains
outstanding or if the transaction giving rise to the need to calculate
the Consolidated Coverage Ratio is an Incurrence of Indebtedness, or
both, EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving effect on a pro forma basis to such
Indebtedness as if such Indebtedness had been Incurred on the first day
of such period;
(2) if the Company or any Restricted Subsidiary has repaid,
repurchased, defeased or otherwise discharged any Indebtedness since
the beginning of such period or if any Indebtedness is to be repaid,
repurchased, defeased or otherwise discharged (in each case other than
Indebtedness Incurred under any revolving credit facility unless such
Indebtedness has been permanently repaid and has not been replaced) on
the date of the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio, EBITDA and Consolidated Interest Expense
for such period shall be calculated on a pro forma basis as if such
discharge had occurred on the first day of such period and as if
9
the Company or such Restricted Subsidiary had not earned the interest
income actually earned during such period in respect of cash or
Temporary Cash Investments used to repay, repurchase, defease or
otherwise discharge such Indebtedness;
(3) if since the beginning of such period the Company or any
Restricted Subsidiary shall have made any Asset Disposition, EBITDA for
such period shall be reduced by an amount equal to EBITDA (if positive)
directly attributable to the assets which are the subject of such Asset
Disposition for such period, or increased by an amount equal to EBITDA
(if negative), directly attributable thereto for such period and
Consolidated Interest Expense for such period shall be reduced by an
amount equal to the Consolidated Interest Expense directly attributable
to any Indebtedness of the Company or any Restricted Subsidiary repaid,
repurchased, defeased or otherwise discharged with respect to the
Company and its continuing Restricted Subsidiaries in connection with
such Asset Disposition for such period (or, if the Capital Stock of any
Restricted Subsidiary is sold, the Consolidated Interest Expense for
such period directly attributable to the Indebtedness of such
Restricted Subsidiary to the extent the Company and its continuing
Restricted Subsidiaries are no longer liable for such Indebtedness
after such sale);
(4) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger or otherwise) shall have made a
Material Investment in any Restricted Subsidiary (or any person which
becomes a Restricted Subsidiary) or an acquisition of assets, including
any acquisition of assets occurring in connection with a transaction
requiring a calculation to be made hereunder, which constitutes all or
substantially all of an operating unit of a business, EBITDA and
Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto (including the Incurrence of any
Indebtedness) as if such Material Investment or acquisition occurred on
the first day of such period; and
(5) if since the beginning of such period any Person (that
subsequently became a Restricted
10
Subsidiary or was merged with or into the Company or any Restricted
Subsidiary since the beginning of such period) shall have made any
Asset Disposition, any Investment or acquisition of assets that would
have required an adjustment pursuant to clause (3) or (4) above if made
by the Company or a Restricted Subsidiary during such period, EBITDA
and Consolidated Interest Expense for such period shall be calculated
after giving pro forma effect thereto as if such Asset Disposition,
Investment or acquisition occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be given to an
acquisition of assets, the amount of income or earnings relating thereto and the
amount of Consolidated Interest Expense associated with any Indebtedness
Incurred in connection therewith, the pro forma calculations shall be determined
in good faith by a responsible financial or accounting Officer of the Company.
If any Indebtedness bears a floating rate of interest and is being given pro
forma effect, the interest on such Indebtedness shall be calculated as if the
rate in effect on the date of determination had been the applicable rate for the
entire period (taking into account any Interest Rate Agreement applicable to
such Indebtedness if such Interest Rate Agreement has a remaining term in excess
of 12 months).
"Consolidated Interest Expense" means, for any period, the
total interest expense of the Company and its consolidated Restricted
Subsidiaries, plus, to the extent not included in such total interest expense,
and to the extent incurred by the Company or its Restricted Subsidiaries,
without duplication:
(1) interest component of Capital Lease Obligations;
(2) amortization of debt discount;
(3) capitalized interest;
(4) non-cash interest expense;
(5) commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing;
11
(6) net payments pursuant to Hedging Obligations arising from
Interest Rate Agreements or Currency Agreements;
(7) dividends accrued in respect of all Preferred Stock held
by Persons other than the Company or a Wholly Owned Subsidiary (other
than dividends payable solely in Capital Stock (other than Disqualified
Stock) of the Company); provided, however, that such dividends will be
multiplied by a fraction the numerator of which is one and the
denominator of which is one minus the effective combined tax rate of
the issuer of such Preferred Stock (expressed as decimal) for such
period (as estimated by the Chief Financial Officer of the Company in
good faith); and
(8) interest accruing on any Indebtedness of any other Person
to the extent such Indebtedness is Guaranteed by (or secured by the
assets of) the Company or any Restricted Subsidiary, other than
pursuant to Ordinary Course Guarantees.
"Consolidated Net Income" means, for any period, the net
income of the Company and its consolidated Subsidiaries; provided, however, that
there shall not be included in such Consolidated Net Income:
(1) any net income of any Person (other than the Company) if
such Person is not a Restricted Subsidiary, except that:
(A) subject to the exclusion contained in clause (3)
below, the Company's equity in the net income of any such
Person for such period shall be included in such Consolidated
Net Income up to the aggregate amount of cash actually
distributed by such Person during such period to the Company
or a Restricted Subsidiary as a dividend or other distribution
(subject, in the case of a dividend or other distribution paid
to a Restricted Subsidiary, to the limitations contained in
clause (2) below) less, for purpose of Section 4.04 only, the
aggregate amount of Investments in LCR made pursuant to clause
(13) of the definition of "Permitted Investments"; and
12
(B) the Company's equity in a net loss of any such
Person for such period shall be included in determining such
Consolidated Net Income;
(2) any net income of any Restricted Subsidiary if such
Restricted Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of distributions
by such Restricted Subsidiary, directly or indirectly, to the Company,
except that:
(A) subject to the exclusion contained in clause (3)
below, the Company's equity in the net income of any such
Restricted Subsidiary for such period shall be included in
such Consolidated Net Income up to the aggregate amount of
cash actually distributed by such Restricted Subsidiary during
such period to the Company or another Restricted Subsidiary as
a dividend or other distribution (subject, in the case of a
dividend or other distribution paid to another Restricted
Subsidiary, to the limitation contained in this clause); and
(B) the Company's equity in a net loss of any such
Restricted Subsidiary for such period shall be included in
determining such Consolidated Net Income;
(3) any gain (or loss) realized upon the sale or other
disposition of any assets of the Company, its consolidated Subsidiaries
or any other Person (including pursuant to any sale-and-leaseback
arrangement) which is not sold or otherwise disposed of in the ordinary
course of business and any gain (or loss) realized upon the sale or
other disposition of any Capital Stock of any Person;
(4) extraordinary gains or losses; and
(5) the cumulative effect of a change in accounting
principles; and
(6) the tax effect of any of the items described in clauses
(1) through (5) above;
13
in each case, for such period. Notwithstanding the foregoing, for the purpose of
Section 4.04 only, there shall be excluded from Consolidated Net Income any
repurchases, repayments or redemptions of Investments, proceeds realized on the
sale of Investments or return of capital to the Company or a Restricted
Subsidiary to the extent such repurchases, repayments, redemptions, proceeds or
returns increase the amount of Restricted Payments permitted under such Section
pursuant to clause (a)(3)(D) thereof.
"Consolidated Net Tangible Assets" as of any date of
determination, means the consolidated total assets of the Company and its
Restricted Subsidiaries determined in accordance with GAAP, less the sum of
(1) all current liabilities and current liability items; and
(2) all goodwill, trade names, trademarks, patents,
organization expense, unamortized debt discount and expense and other
similar intangibles properly classified as intangibles in accordance
with GAAP.
"Consolidated Net Worth" means the total of the amounts shown
on the balance sheet of the Company and its consolidated Subsidiaries,
determined on a consolidated basis in accordance with GAAP, as of the end of the
most recent fiscal quarter of the Company ending at least 45 days prior to the
taking of any action for the purpose of which the determination is being made,
as the sum of:
(1) the par or stated value of all outstanding Capital Stock
of the Company plus
(2) paid-in capital or capital surplus relating to such
Capital Stock plus
(3) any retained earnings or earned surplus;
less (A) any accumulated deficit and (B) any amounts attributable to
Disqualified Stock.
"Credit Agreements" means
(1) the Three-Year Credit Agreement;
14
(2) the 364-Day Credit Agreement;
(3) the CITGO Puerto Rico Credit Agreement; and
(4) the New Credit Agreement.
"Currency Agreement" means any foreign exchange contract,
currency swap agreement or other similar agreement designed to protect such
Person against fluctuations in currency values.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Disqualified Stock" means, with respect to any Person, any
Capital Stock which by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable at the option of the holder) or
upon the happening of any event:
(1) matures or is mandatorily redeemable (other than
redeemable only for Capital Stock of such Person which is not itself
Disqualified Stock) pursuant to a sinking fund obligation or otherwise;
(2) is convertible or exchangeable at the option of the holder
for Indebtedness or Disqualified Stock; or
(3) is mandatorily redeemable or must be purchased upon the
occurrence of certain events or otherwise, in whole or in part;
on or prior to the first anniversary of the Stated Maturity of the Securities;
provided, however, that any Capital Stock that would not constitute Disqualified
Stock but for provisions thereof giving holders thereof the right to require
such Person to purchase or redeem such Capital Stock upon the occurrence of an
"asset sale" or "change of control" occurring prior to the first anniversary of
the Stated Maturity of the Securities shall not constitute Disqualified Stock if
(1) the "asset sale" or "change of control" provisions applicable to such
Capital Stock are not more favorable to the holders of such Capital Stock than
the terms applicable to the Securities in Sections 4.06 and 4.09 of this
Indenture and (2) any such
15
requirement only becomes operative after compliance with such terms applicable
to the Securities, including the purchase of any Securities tendered pursuant
thereto.
The amount of any Disqualified Stock that does not have a
fixed redemption, repayment or repurchase price shall be calculated in
accordance with the terms of such Disqualified Stock as if such Disqualified
Stock were redeemed, repaid or repurchased on any date on which the amount of
such Disqualified Stock is to be determined pursuant to the Indenture; provided,
however, that if such Disqualified Stock could not be required to be redeemed,
repaid or repurchased at the time of such determination, the redemption,
repayment or repurchase price shall be the book value of such Disqualified Stock
as reflected in the most recent financial statements of such Person.
"EBITDA" for any period means the sum of Consolidated Net
Income, plus the following to the extent deducted in calculating such
Consolidated Net Income:
(1) all income tax expense of the Company and its consolidated
Restricted Subsidiaries;
(2) Consolidated Interest Expense;
(3) depreciation and amortization expense of the Company and
its consolidated Restricted Subsidiaries (excluding amortization
expense attributable to a prepaid operating activity item that was paid
in cash in a prior period but including amortization of prepaid
turnaround costs); and
(4) all other non-cash charges of the Company and its
consolidated Restricted Subsidiaries (excluding any such non-cash
charge to the extent that it represents an accrual of or reserve for
cash expenditures in any future period);
in each case for such period. Notwithstanding the foregoing, the provision for
taxes based on the income or profits of, and the depreciation and amortization
and non-cash charges of, a Restricted Subsidiary shall be added to Consolidated
Net Income to compute EBITDA only to the extent (and in the same proportion,
including by reason of minority interests) that the net income or loss of such
Restricted Subsidiary was included in calculating
16
Consolidated Net Income and only if a corresponding amount would be permitted at
the date of determination to be dividended to the Company by such Restricted
Subsidiary without prior approval (that has not been obtained), pursuant to the
terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to such
Restricted Subsidiary or its stockholders.
"Equity Offering" means (i) any primary public offering or
private placement to any Person of Capital Stock (other than Disqualified Stock)
of the Company or (ii) any cash capital contribution received by the Company
from any holder of Capital Stock of the Company and which is accounted for as
additional Capital Stock equity (other than Disqualified Stock).
"Exchange Act" means the U.S. Securities Exchange Act of 1934,
as amended.
"Free Cash Flow" for any period means EBITDA less the
following:
(1) all cash payments with respect to income taxes of the
Company and its Restricted Subsidiaries;
(2) all cash payments with respect to Consolidated Interest
Expense; and
(3) all cash capital expenditures of the Company and its
Restricted Subsidiaries;
in each case for such period.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the Issue Date, including those set
forth in:
(1) the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public
Accountants;
(2) statements and pronouncements of the Financial Accounting
Standards Board; and
(3) such other statements by such other entity as approved by
a significant segment of the accounting profession.
17
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness of any Person
and any obligation, direct or indirect, contingent or otherwise, of such Person:
(1) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness of such Person (whether
arising by virtue of partnership arrangements, or by agreements to
keep-well, to purchase assets, goods, securities or services, to
take-or-pay or to maintain financial statement conditions or
otherwise); or
(2) entered into for the purpose of assuring in any other
manner the obligee of such Indebtedness of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in
part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business or any subordination of
claims. The term "Guarantee" used as a verb has a corresponding meaning. The
term "Guarantor" shall mean any Person Guaranteeing any obligation.
"Hedging Obligations" of any Person means the obligations of
such Person pursuant to any Interest Rate Agreement, Currency Agreement,
Hydrocarbon Agreement or Commodity Agreement.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Hydrocarbon Agreement" means any purchase or hedging
agreement of hydrocarbons or refined products therefrom, future contract or
option, or any other agreement designed to protect against or manage exposure to
fluctuations in the price of hydrocarbons or refined products therefrom.
"Incur" means issue, assume, Guarantee, incur or otherwise
become liable for; provided, however, that any Indebtedness or Capital Stock of
a Person existing at the time such Person becomes a Restricted Subsidiary
(whether by merger, consolidation, acquisition or otherwise) shall
18
be deemed to be Incurred by such Person at the time it becomes a Restricted
Subsidiary. The term "Incurrence" when used as a noun shall have a corresponding
meaning. Solely for purposes of determining compliance with Section 4.03:
(1) amortization of debt discount or the accretion of
principal with respect to a non-interest bearing or other discount
security;
(2) the payment of regularly scheduled interest in the form of
additional Indebtedness of the same instrument or the payment of
regularly scheduled dividends on Capital Stock in the form of
additional Capital Stock of the same class and with the same terms; and
(3) the obligation to pay a premium in respect of Indebtedness
arising in connection with the issuance of a notice of redemption or
making of a mandatory offer to purchase such Indebtedness
shall not be deemed to be the Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date
of determination (without duplication):
(1) the principal in respect of (A) indebtedness of such
Person for money borrowed and (B) indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the payment of which
such Person is responsible or liable, including, in each case, any
premium on such indebtedness to the extent such premium has become due
and payable;
(2) all Capital Lease Obligations of such Person and all
Attributable Debt in respect of Sale/Leaseback Transactions entered
into by such Person;
(3) all obligations of such Person issued or assumed as the
deferred purchase price of property, all conditional sale obligations
of such Person and all obligations of such Person under any title
retention agreement (but excluding trade accounts payable arising in
the ordinary course of business);
19
(4) all obligations of such Person for the reimbursement of
any obligor on any letter of credit, bankers' acceptance or similar
credit transaction (other than obligations with respect to letters of
credit securing obligations (other than obligations covered in clauses
(1) through (3) above) entered into in the ordinary course of business
of such Person to the extent such letters of credit are not drawn upon
or, if and to the extent drawn upon, such drawing is reimbursed no
later than the tenth Business Day following payment on the letter of
credit);
(5) the amount of all obligations of such Person that arise
prior to the first anniversary of the Stated Maturity of the Securities
with respect to the redemption, repayment or other repurchase of any
Capital Stock of such Person or any Subsidiary of such Person or that
are determined by the value of such Capital Stock, the amount of such
obligations to be determined in accordance with the Indenture (but
excluding, in each case, any accrued dividends);
(6) all obligations of the type referred to in clauses (1)
through (5) of other Persons and all dividends of other Persons for the
payment of which, in either case, such Person is responsible or liable,
directly or indirectly, as obligor, guarantor or otherwise, including
by means of any Guarantee;
(7) all obligations of the type referred to in clauses (1)
through (6) of other Persons secured by any Lien on any property or
asset of such Person (whether or not such obligation is assumed by such
Person), the amount of such obligation being deemed to be the lesser of
the value of such property or assets and the amount of the obligation
so secured; and
(8) to the extent not otherwise included in this definition,
Hedging Obligations of such Person.
Notwithstanding the foregoing, in connection with the purchase
by the Company or any Restricted Subsidiary of any business, the term
"Indebtedness" shall exclude post-closing payment adjustments to which the
seller may become entitled to the extent such payment is determined by a final
closing balance sheet or such payment depends on the performance of such
business after the closing; provided,
20
however, that, at the time of closing, the amount of any such payment is not
determinable and, to the extent such payment thereafter becomes fixed and
determined, the amount is paid within 30 days thereafter.
The amount of Indebtedness of any Person at any date shall be
the outstanding balance at such date of all unconditional obligations as
described above and the maximum liability, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations at such
date (but excluding penalties, indemnities and costs), provided, however, that
in the case of Indebtedness sold at a discount, the amount of such Indebtedness
at any time will be the accreted value thereof at such time.
"Indenture" means this Indenture as amended or supplemented
from time to time.
"Independent Qualified Party" means an investment banking
firm, accounting firm or appraisal firm of national standing in the United
States of the Company's choice; provided, however, that in each case such firm
is not an Affiliate of the Company.
"Intercompany Trade Arrangements" means transactions between
the Company and the Permitted Holder pursuant to which the Permitted Holder
sells hydrocarbons to the Company in the ordinary course of business and the
Company thereafter transfers the related trade payable to one or more of its
shareholders pending payment thereof and subsequently dividends or otherwise
transfers funds to such shareholder in an amount equal to such trade payable,
which amount is used by such shareholder to discharge such trade payable.
"Interest Rate Agreement" means in respect of a Person any
interest rate swap agreement, interest rate cap agreement or other financial
agreement or arrangement (including caps, swaps, floors, collars and similar
arrangements) designed to protect such Person against fluctuations in interest
rates.
"Investment" in any Person means any direct or indirect
advance, loan (other than advances to customers in the ordinary course of
business that are recorded as accounts receivable on the balance sheet of the
lender) or
21
other extensions of credit (including by way of Guarantee or similar
arrangement) or capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services for the account
or use of others), or any purchase or acquisition of Capital Stock, Indebtedness
or other similar instruments issued by such Person. Except as otherwise provided
for herein, the amount of an Investment shall be its fair value at the time the
Investment is made and without giving effect to subsequent changes in value.
For purposes of the definition of "Unrestricted Subsidiary",
the definition of "Restricted Payment" and Section 4.04,
(1) "Investment" shall include the portion (proportionate to
the Company's equity interest in such Subsidiary) of the fair market
value of the net assets of any Subsidiary of the Company at the time
that such Subsidiary is designated an Unrestricted Subsidiary;
provided, however, that upon a redesignation of such Subsidiary as a
Restricted Subsidiary, the Company shall be deemed to continue to have
a permanent "Investment" in an Unrestricted Subsidiary in an amount (if
positive) equal to (x) the Company's "Investment" in such Subsidiary at
the time of such redesignation less (y) the portion (proportionate to
the Company's equity interest in such Subsidiary) of the fair market
value of the net assets of such Subsidiary at the time of such
redesignation; and
(2) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer, in each case as determined in good faith by the Board of
Directors of the Company.
"Investment Grade Rating" means:
(1) A ▇▇▇▇▇'▇ rating of Baa3 or higher and an S&P rating of at
least BB+ or
(2) A ▇▇▇▇▇'▇ rating of Ba1 or higher and an S&P rating of at
least BBB-;
22
provided, however, that if (i)either Moody's or S&P changes its rating system,
such ratings will be the equivalent ratings after such changes or (ii) if S&P or
Moody's or both shall not make a rating of the Securities publicly available,
the references above to S&P or Moody's or both, as the case may be, shall be to
a nationally recognized U.S. rating agency or agencies, as the case may be,
selected by the Company, and the references to the ratings categories above
shall be to the corresponding rating categories of such rating agency or rating
agencies, as the case may be.
"Investment Grade Rating Event" means the first day on which
the Securities are assigned an Investment Grade Rating.
"Issue Date" means February 27, 2003.
"LCR" means Lyondell-CITGO Refining LP, a Delaware limited
partnership.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions are not required to be open in the State of
New York.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or other
title retention agreement or lease in the nature thereof).
"Material Investment" means an Investment which has, at the
time such Investment is made and without giving effect to subsequent changes in
value, a fair value in excess of $5 million.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. and its
successors.
"Net Available Cash" from an Asset Disposition means cash
payments received therefrom (including any cash payments received by way of
deferred payment of principal pursuant to a note or installment receivable or
otherwise and proceeds from the sale or other disposition of any securities
received as consideration, but only as and when received, but excluding any
other consideration received in the form of assumption by the acquiring Person
of Indebtedness or other obligations relating to such
23
properties or assets or received in any other non-cash form), in each case net
of:
(1) all legal, title and recording tax expenses, commissions
and other fees and expenses incurred, and all Federal, state,
provincial, foreign and local taxes required to be accrued as a
liability under GAAP, as a consequence of such Asset Disposition;
(2) all payments made on any Indebtedness which is secured by
any assets subject to such Asset Disposition, in accordance with the
terms of any Lien upon or other security agreement of any kind with
respect to such assets, or which must by its terms, or in order to
obtain a necessary consent to such Asset Disposition, or by applicable
law, be repaid out of the proceeds from such Asset Disposition;
(3) all distributions and other payments required to be made
to minority interest holders in Restricted Subsidiaries as a result of
such Asset Disposition; and
(4) the deduction of appropriate amounts provided by the
seller as a reserve, in accordance with GAAP, against any liabilities
associated with the property or other assets disposed in such Asset
Disposition and retained by the Company or any Restricted Subsidiary
after such Asset Disposition.
"Net Cash Proceeds", with respect to any issuance or sale of
Capital Stock or Indebtedness, means the cash proceeds of such issuance or sale
net of attorneys' fees, accountants' fees, underwriters' or placement agents'
fees, discounts or commissions and brokerage, consultant and other fees actually
Incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
"New Credit Agreement" means the credit agreement that the
Company expects to enter into on or about the Issue Date or, if the Company does
not enter into such credit agreement, any other credit agreement entered into by
the Company in substitution therefor which has terms equivalent to and, in any
event no less favorable to the Securityholders than, those of the expected
credit agreement, together with the related documents thereto
24
(including the term loan or revolving loan facility, note purchase or placement
facility, letter of credit facility or other arrangement for the extension of
credit thereunder, any guarantees and security documents), as amended, extended,
renewed, restated, supplemented or otherwise modified (in whole or in part, and
without limitation as to amount, terms, conditions, covenants and other
provisions) from time to time, and any agreement (and related document)
governing Indebtedness Incurred to Refinance, in whole or in part, the
borrowings and commitments then outstanding or permitted to be outstanding under
such credit agreement or a successor credit agreement, whether by the same or
any other lender or group of lenders.
"Obligations" means, with respect to any Indebtedness, all
obligations for principal, premium, interest, penalties, fees, indemnifications,
reimbursements, and other amounts payable pursuant to the documentation
governing such Indebtedness.
"Offering Circular" means the Confidential Offering Circular
dated February 20, 2003 relating to the Initial Securities.
"Officer" means the Chairman of the Board, the President, any
Vice President, the Treasurer or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two
Officers.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Ordinary Course Guarantees" means Guarantees issued by the
Company or any Restricted Subsidiary in the ordinary course of business with
respect to Indebtedness of any distributor or customer of the Company's or any
Restricted Subsidiary's products in an amount which, when taken together with
the amount of all other outstanding Ordinary Course Guarantees, does not exceed
$35 million.
"PDV America" means PDV America, Inc., a Delaware corporation.
25
"Permitted Holder" means Petroleos de Venezuela, SA, a
corporation organized in Venezuela, and its wholly owned Subsidiaries.
"Permitted Investment" means an Investment by the Company or
any Restricted Subsidiary in:
(1) the Company, a Restricted Subsidiary, a government or any
agency or political subdivision thereof holding Indebtedness of the
Company or a Restricted Subsidiary in a principal amount equal to, and
Incurred by the Company or such Restricted Subsidiary to provide credit
support for, such Person's issuance of industrial revenue or similar
tax-exempt bonds for the benefit of the Company or such Restricted
Subsidiary or a Person that will, upon the making of such Investment,
become a Restricted Subsidiary; provided, however, that the primary
business of such Restricted Subsidiary is a Related Business;
(2) another Person if, as a result of such Investment, such
other Person is merged or consolidated with or into, or transfers or
conveys all or substantially all its assets to, the Company or a
Restricted Subsidiary; provided, however, that such Person's primary
business is a Related Business;
(3) cash and Temporary Cash Investments;
(4) receivables owing to the Company or any Restricted
Subsidiary if created or acquired in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms;
provided, however, that such trade terms may include such concessionary
trade terms as the Company or any such Restricted Subsidiary deems
reasonable under the circumstances;
(5) payroll, travel and similar advances to cover matters that
are expected at the time of such advances ultimately to be treated as
expenses for accounting purposes and that are made in the ordinary
course of business;
(6) loans or advances to employees made in the ordinary course
of business consistent with past practices of the Company or such
Restricted Subsidiary;
26
(7) stock, obligations or securities received in settlement of
debts created in the ordinary course of business and owing to the
Company or any Restricted Subsidiary or in satisfaction of judgments;
(8) any Person to the extent such Investment represents the
non-cash portion of the consideration received for an Asset Disposition
as permitted pursuant to Section 4.06;
(9) any Person where such Investment was acquired by the
Company or any of its Restricted Subsidiaries (a) in exchange for any
other Investment or accounts receivable held by the Company or any such
Restricted Subsidiary in connection with or as a result of a
bankruptcy, workout, reorganization or recapitalization of the issuer
of such other Investment or accounts receivable or (b) as a result of a
foreclosure by the Company or any of its Restricted Subsidiaries with
respect to any secured Investment or other transfer of title with
respect to any secured Investment in default;
(10) any Person to the extent such Investments consist of
prepaid expenses, negotiable instruments held for collection and lease,
utility and workers' compensation, performance and other similar
deposits made in the ordinary course of business by the Company or any
Restricted Subsidiary;
(11) any Person to the extent such Investments consist of
Hedging Obligations otherwise not prohibited under the covenant
described under Section 4.03;
(12) any Person to the extent such Investments are in
existence on the Issue Date;
(13) LCR to the extent such Investments do not exceed, in the
aggregate, the aggregate amount of cash dividends distributed after the
Issue Date by LCR to the Company; provided, however, that such cash
dividends have not previously served as the basis for
27
a Restricted Payment made pursuant to the covenant described under
Section 4.04;
(14) LCR to the extent such Investments do not exceed $25
million in the aggregate outstanding at any time; and
(15) Persons to the extent such Investments, when taken
together with all other Investments made pursuant to this clause (15)
and then outstanding, do not exceed $75 million.
"Permitted Liens" means, with respect to any Person,
(1) pledges or deposits by such Person under worker's
compensation laws, unemployment insurance laws or similar legislation,
or good faith deposits in connection with bids, tenders, contracts
(other than for the payment of Indebtedness) or leases to which such
Person is a party, or deposits to secure public or statutory
obligations of such Person or deposits of cash or United States
government bonds to secure surety or appeal bonds to which such Person
is a party, or deposits as security for contested taxes or import
duties or for the payment of rent, in each case Incurred in the
ordinary course of business;
(2) Liens imposed by law, such as carriers', warehousemen's,
materialmen's and mechanics' Liens, in each case for sums which are not
overdue by a period of more than 45 days or which are being contested
in good faith by appropriate proceedings or other Liens arising out of
judgments or awards against such Person with respect to which such
Person shall then be proceeding with an appeal or other proceedings for
review and Liens arising solely by virtue of any statutory or common
law provision relating to banker's Liens, rights of set-off or similar
rights and remedies as to deposit accounts or other funds maintained
with a creditor depository institution; provided, however, that (A)
such deposit account is not a dedicated cash collateral account and is
not subject to restrictions against access by the Company in excess of
those set forth by regulations promulgated by the Federal Reserve Board
and (B) such deposit account is not intended by the Company or any
Restricted Subsidiary to provide collateral to the depository
institution;
28
(3) Liens for property taxes not yet subject to penalties for
non-payment or which are being contested in good faith by appropriate
proceedings;
(4) Liens in favor of issuers of surety bonds or letters of
credit issued pursuant to the request of and for the account of such
Person in the ordinary course of its business; provided, however, that
such letters of credit do not constitute Indebtedness;
(5) Liens incidental to the normal conduct of the business of
such Person or any of its Subsidiaries or the ownership of its
properties or the conduct of the ordinary course of its business,
including (A) zoning restrictions, easements, rights of way,
reservations, restrictions on the use of real property and other minor
irregularities of title, (B) rights of lessees under leases, (C) rights
of collecting banks having rights of setoff, revocation, refund or
chargeback with respect to money or instruments of such Person or any
of its Subsidiaries on deposit with or in the possession of such banks,
(D) Liens to secure the performance of statutory obligations, tenders,
bids, leases, progress payments, performance or return-of-money bonds,
performance or other similar bonds or other obligations of a similar
nature incurred in the ordinary course of business; (E) Liens required
by any contract or statute in order to permit such Person or any of its
Subsidiaries to perform any contract or subcontract made by it with or
pursuant to the requirements of a governmental entity, and (F) "first
purchaser" Liens on crude oil, in each case which are not incurred in
connection with the Incurrence of Indebtedness and which do not in the
aggregate impair the use and operation of the assets to which they
relate in the conduct of the business of such Person and its
Subsidiaries taken as a whole;
(6) Liens securing Indebtedness Incurred to finance the
construction, purchase or lease of, or repairs, improvements or
additions to, property, plant or equipment of such Person; provided,
however, that the Lien may not extend to any other property owned by
such Person or any of its Restricted Subsidiaries at
29
the time the Lien is Incurred (other than assets and property affixed
or appurtenant thereto), and the Indebtedness (other than any interest
thereon) secured by the Lien may not be Incurred more than 180 days
after the later of the acquisition, completion of construction, repair,
improvement, addition or commencement of full operation of the property
subject to the Lien;
(7) Liens to secure Indebtedness pursuant to Section
4.03(b)(1) or 4.03(b)(3);
(8) Liens on the Capital Stock of the Pledged Entities to
secure Indebtedness Incurred pursuant to Section 4.03(b)(2);
(9) Liens existing on the Issue Date;
(10) Liens on property or shares of Capital Stock of another
Person at the time such other Person becomes a Subsidiary of such
Person; provided, however, that the Liens may not extend to any other
property owned by such Person or any of its Restricted Subsidiaries
(other than assets affixed or appurtenant thereto);
(11) Liens on property at the time such Person or any of its
Subsidiaries acquires the property, including any acquisition by means
of a merger or consolidation with or into such Person or a Subsidiary
of such Person; provided, however, that the Liens may not extend to any
other property owned by such Person or any of its Restricted
Subsidiaries (other than assets and property affixed or appurtenant
thereto);
(12) Liens securing Indebtedness or other obligations of a
Subsidiary of such Person owing to such Person or a Restricted
Subsidiary;
(13) Liens securing Hedging Obligations permitted to be
Incurred under this Indenture;
(14) customary Liens incurred by the Company or any Restricted
Subsidiary and resulting from a Qualified Receivables Transaction;
30
(15) Liens on properties securing all or part of the costs
incurred in the ordinary course of business of exploration, drilling,
development or operation thereof;
(16) Liens on pipeline or pipeline facilities which arise out
of operation of law;
(17) Liens reserved in oil and gas mineral leases for bonus or
rental payments and for compliance with the terms of such leases;
(18) Liens arising under partnership agreements, oil and gas
leases, farm-out agreements, division orders, contracts for the sale,
purchase, exchange, transportation or processing of oil, gas or other
hydrocarbons, unitization and pooling declarations and agreements,
development agreements, operating agreements, area of mutual interest
agreements, and other agreements which are customary in a Related
Business; and
(19) Liens to secure any Refinancing (or successive
Refinancings) as a whole, or in part, of any Indebtedness secured by
any Lien referred to in the foregoing clause (6), (9) or (11);
provided, however, that:
(A) such new Lien shall be limited to all or part of
the same property and assets that secured or, under the
written agreements pursuant to which the original Lien arose,
could secure the original Lien (plus improvements and
accessions to, such property or proceeds or distributions
thereof); and
(B) the Indebtedness secured by such Lien at such
time is not increased to any amount greater than the sum of
(x) the outstanding principal amount or, if greater, committed
amount of the Indebtedness described under clause (6), (9) or
(11), at the time the original Lien became a Permitted Lien
and (y) an amount necessary to pay any fees and expenses,
including premiums, related to such refinancing, refunding,
extension, renewal or replacement.
31
Notwithstanding the foregoing, "Permitted Liens" shall not include any Lien
described in clauses (6), (9) or (11) above to the extent such Lien applies to
any Additional Assets acquired directly or indirectly from Net Available Cash
pursuant to Section 4.06. For purposes of this definition, the term
"Indebtedness" shall be deemed to include interest on such Indebtedness.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"Pledged Entities" means CITGO Pipeline I and CITGO Pipeline
II.
"Preferred Stock", as applied to the Capital Stock of any
Person, means Capital Stock of any class or classes (however designated) which
is preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over shares of Capital Stock of any other class of
such Person.
"principal" of a Security means the principal of the Security
plus the premium, if any, payable on the Security which is due or overdue or is
to become due at the relevant time.
"Principal Property" means:
(1) any refinery and related pipelines, terminalling and
processing equipment; or
(2) any other real property or marketing assets or related
group of our assets having a fair market value in excess of $20
million.
"Qualified Receivables Transaction" means any transaction or
series of transactions entered into by the Company or any of its Restricted
Subsidiaries pursuant to which the Company or any of its Restricted Subsidiaries
sells, conveys or otherwise transfers to (i) a Receivables Subsidiary (in the
case of a transfer by the Company or any of its Restricted Subsidiaries) and
(ii) any other Person (in the case of a transfer by a Receivables Subsidiary),
or
32
grants a security interest in, any accounts receivable (whether now existing or
arising in the future) of the Company or any of its Restricted Subsidiaries, and
any assets related thereto, including all collateral securing such accounts
receivable, all contracts and all guarantees or other obligations in respect of
such accounts receivable, proceeds of such accounts receivable and other assets
which are customarily transferred or in respect of which security interests are
customarily granted in connection with asset securitization transactions
involving accounts receivable; provided, however, that the accounts receivable
of the Company or any of its Restricted Subsidiaries subject to all Qualified
Receivables Transactions and outstanding on the date any such accounts
receivable are transferred by the Company or a Restricted Subsidiary have,
together with the accounts receivable transferred on such date, a balance that
does not exceed in the aggregate the greater of (A) $400,000,000 and (B) 5% of
net sales of the Company and its Restricted Subsidiaries during the four fiscal
quarter period ending on the last day of the most recent fiscal quarter for
which the Company has issued consolidated financial statements.
"Receivables Subsidiary" means a Subsidiary of the Company
which engages in no activities other than in connection with the financing of
accounts receivables and which is designated by the Board of Directors of the
Company (as provided below) as a Receivables Subsidiary (a) no portion of the
Indebtedness or any other Obligations (contingent or otherwise) of which (i) is
Guaranteed by the Company or any of its Restricted Subsidiaries (but excluding
customary representations, warranties, covenants and indemnities entered into in
the ordinary course of business in connection with a Qualified Receivables
Transaction), (ii) is recourse to or obligates the Company or any of its
Restricted Subsidiaries in any way other than pursuant to customary
representations, warranties, covenants and indemnities entered into in
connection with a Qualified Receivables Transaction or (iii) subjects any
property or asset of the Company or any of its Restricted Subsidiaries (other
than accounts receivable and interests therein and related assets as provided in
the definition of "Qualified Receivables Transaction"), directly or indirectly,
contingently or otherwise, to the satisfaction thereof, other than pursuant to
customary representations, warranties, covenants and indemnities entered into in
the
33
ordinary course of business in connection with a Qualified Receivables
Transaction, (b) with which neither the Company nor any of its Restricted
Subsidiaries has any material contract, agreement, arrangement or understanding
other than on terms no less favorable to the Company or such Restricted
Subsidiary than those that might be obtained at the time from Persons who are
not Affiliates of the Company, other than fees payable in the ordinary course of
business in connection with servicing accounts receivable and (c) with which
neither the Company nor any of its Restricted Subsidiaries has any obligation to
maintain or preserve such Subsidiary's financial condition or cause such
Subsidiary to achieve certain levels of operating results. Any such designation
by the Board of Directors of the Company will be evidenced to the Trustee by
filing with the Trustee a certified copy of the resolution of the Board of
Directors of the Company giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
conditions.
"Reference Period" means, with respect to any Restricted
Payment, the period consisting of the most recent consecutive fiscal quarters
(not to exceed 4) of the Company commencing no earlier than January 1, 2003, and
ending at least 45 days prior to the date such Restricted Payment is made.
"Refinance" means, in respect of any Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue other Indebtedness in exchange or replacement for, such Indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances
any Indebtedness of the Company or any Restricted Subsidiary existing on the
Issue Date or Incurred in compliance with this Indenture, including Indebtedness
that Refinances Refinancing Indebtedness; provided, however, that:
(1) such Refinancing Indebtedness has a Stated Maturity no
earlier than the Stated Maturity of the Indebtedness being Refinanced;
(2) such Refinancing Indebtedness has an Average Life at the
time such Refinancing Indebtedness is
34
Incurred that is equal to or greater than the Average Life of the
Indebtedness being Refinanced;
(3) such Refinancing Indebtedness has an aggregate principal
amount (or if Incurred with original issue discount, an aggregate issue
price) that is equal to or less than the aggregate principal amount (or
if Incurred with original issue discount, the aggregate accreted value)
then outstanding or committed (plus fees and expenses, including any
premium and defeasance costs) under the Indebtedness being Refinanced;
and
(4) if the Indebtedness being Refinanced is subordinated in
right of payment to the Securities, such Refinancing Indebtedness is
subordinated in right of payment to the Securities at least to the same
extent as the Indebtedness being Refinanced;
provided further, however, that Refinancing Indebtedness shall not include (A)
Indebtedness of a Subsidiary that Refinances Indebtedness of the Company or (B)
Indebtedness of the Company or a Restricted Subsidiary that Refinances
Indebtedness of an Unrestricted Subsidiary.
"Related Business" means any business in which the Company was
engaged on the Issue Date and any business related, ancillary or complementary
to any business of the Company in which the Company was engaged on the Issue
Date.
"Restricted Payment" with respect to any Person means
(1) the declaration or payment of any dividends or any other
distributions of any sort in respect of its Capital Stock (including
any payment in connection with any merger or consolidation involving
such Person) or similar payment to the direct or indirect holders of
its Capital Stock (other than dividends or distributions payable solely
in its Capital Stock (other than Disqualified Stock) and dividends or
distributions payable solely to the Company or a Restricted Subsidiary,
and other than pro rata dividends or other distributions made by a
Subsidiary that is not a Wholly Owned Subsidiary to minority
stockholders (or owners of an equivalent interest in the case of a
Subsidiary that is an entity other than a corporation));
35
(2) the purchase, redemption or other acquisition or
retirement for value of any Capital Stock of the Company held by any
Person or of any Capital Stock of a Restricted Subsidiary held by any
Affiliate of the Company (other than a Restricted Subsidiary),
including in connection with any merger or consolidation and including
the exercise of any option to exchange any Capital Stock (other than
into Capital Stock of the Company that is not Disqualified Stock);
(3) the purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value, prior to scheduled maturity,
scheduled repayment or scheduled sinking fund payment of any
Subordinated Obligations of such Person (other than the purchase,
repurchase or other acquisition of Subordinated Obligations purchased
in anticipation of satisfying a sinking fund obligation, principal
installment or final maturity, in each case due within one year of the
date of such purchase, repurchase or other acquisition); or
(4) the making of any Investment (other than a Permitted
Investment) in any Person.
Notwithstanding the foregoing, Intercompany Trade Arrangements shall not be
included in the definition of "Restricted Payment."
"Restricted Subsidiary" means any Subsidiary of the Company
that is not an Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement
relating to property owned the Company or a Restricted Subsidiary on the Issue
Date or thereafter acquired by the Company or a Restricted Subsidiary whereby
the Company or a Restricted Subsidiary transfers such property to a Person and
the Company or a Restricted Subsidiary leases it from such Person.
"S&P" means Standard & Poor's Ratings Group, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., and its successors.
36
"SEC" means the U.S. Securities and Exchange Commission.
"Securities" means the Securities issued under this Indenture,
including the Initial Securities, the Exchange Securities and the Private
Exchange Securities.
"Securities Act" means the U.S. Securities Act of 1933, as
amended.
"Senior Indebtedness" means with respect to any Person:
(1) Indebtedness of such Person, whether outstanding on the
Issue Date or thereafter Incurred; and
(2) all other Obligations of such Person (including interest
accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to such Person whether or not post-filing
interest is allowed in such proceeding) in respect of Indebtedness
described in clause (1) above,
unless, in the case of clauses (1) and (2), in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is provided
that such Indebtedness or other Obligations are subordinate in right of payment
to the Securities; provided, however, that Senior Indebtedness shall not
include:
(1) any obligation of such Person to the Company or any
Subsidiary of the Company;
(2) any liability for Federal, state, local or other taxes
owed or owing by such Person;
(3) any accounts payable or other liability to trade creditors
arising in the ordinary course of business (including guarantees
thereof or instruments evidencing such liabilities);
(4) any Indebtedness or other Obligation of such Person which
is subordinate or junior in any respect to any other Indebtedness or
other Obligation of such Person; or
37
(5) that portion of any Indebtedness which at the time of
Incurrence is Incurred in violation of this Indenture.
"Significant Subsidiary" means any Restricted Subsidiary that
would be a "Significant Subsidiary" of the Company within the meaning of Rule
1-02 under Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency unless such contingency has occurred).
"Subordinated Obligation" means, with respect to any Person,
any Indebtedness of such Person (whether outstanding on the Issue Date or
thereafter Incurred) which is subordinate or junior in right of payment to the
Securities or a Subsidiary Guaranty of such Person, as the case may be, pursuant
to a written agreement to that effect.
"Subsidiary" means, with respect to any Person, any
corporation, association, partnership or other business entity of which more
than 50% of the total voting power of shares of Voting Stock is at the time
owned or controlled, directly or indirectly, by: (1) such Person; (2) such
Person and one or more Subsidiaries of such Person; or (3) one or more
Subsidiaries of such Person.
"Subsidiary Guarantor" means any Restricted Subsidiary of the
Company if and so long as such Restricted Subsidiary guarantees payment of the
Securities on the terms and conditions set forth in the Indenture. As of the
Issue Date there are no Subsidiary Guarantors.
"Subsidiary Guaranty" means a Guarantee by a Subsidiary
Guarantor of the Company's obligations with respect to the Securities.
"Temporary Cash Investments" means any of the following:
38
(1) any investment in direct obligations of the United States
of America or any agency thereof or obligations guaranteed by the
United States of America or any agency thereof;
(2) investments in demand and time deposit accounts,
certificates of deposit, eurodollar time deposits and money market
deposits maturing within 360 days of the date of acquisition thereof
issued by a bank or trust company which is organized under the laws of
the United States of America, any State thereof or any foreign country
recognized by the United States of America, and which bank or trust
company has capital, surplus and undivided profits aggregating in
excess of $50 million (or the foreign currency equivalent thereof) and
has outstanding debt that is rated "A" (or such similar equivalent
rating) or higher by at least one nationally recognized statistical
rating organization (as defined in Rule 436 under the Securities Act)
or any money-market fund sponsored by a registered broker dealer or
mutual fund distributor;
(3) repurchase obligations with a term of not more than 30
days for underlying securities of the types described in clause (1)
above entered into with a bank meeting the qualifications described in
clause (2) above;
(4) investments in commercial paper, maturing not more than
360 days after the date of acquisition, issued by a corporation (other
than an Affiliate of the Company) organized and in existence under the
laws of the United States of America or any foreign country recognized
by the United States of America with a rating at the time as of which
any investment therein is made of "P-2" (or higher) according to
Moody's or "A-2" (or higher) according to S&P; and
(5) investments in securities with maturities of six months or
less from the date of acquisition issued or fully guaranteed by any
state, commonwealth or territory of the United States of America, or by
any political subdivision or taxing authority thereof, and rated at
least "A" by S&P or "A2" by Moody's;
39
provided, however, that if S&P or Moody's or both shall not make ratings of
commercial paper of the type referred to in clause (4) above or securities of
the type referred to in clause (5) above publicly available, the references in
clause (4) or (5) or both, as the case may be, to S&P or Moody's or both, as the
case may be, shall be to a nationally recognized U.S. rating agency or agencies,
as the case may be, selected by the Company, and the references to the ratings
categories in clause (4) or (5) or both, as the case may be, shall be to the
corresponding rating categories of such rating agency or rating agencies, as the
case may be.
"364-Day Credit Agreement" means the 364-day credit agreement
entered into as of December 11, 2002, among the Company, the lenders referred to
therein and Bank of America, N.A. as Administrative Agent, together with the
related documents thereto (including the revolving loan facility, note purchase
or placement facility, letter of credit facility or other arrangement for the
extension of credit thereunder, any guarantees and security documents), as
amended, extended, renewed, restated, supplemented or otherwise modified (in
whole or in part, and without limitation as to amount, terms, conditions,
covenants and other provisions) from time to time, and any agreement (and
related document) governing Indebtedness incurred to Refinance, in whole or in
part, the borrowings and commitments then outstanding or permitted to be
outstanding under such credit agreement or a successor credit agreement, whether
by the same or any other lender or group of lenders.
"Three-Year Credit Agreement" means the three-year credit
agreement entered into as of December 11, 2002, among the Company, the lenders
referred to therein and Bank of America, N.A. as Administrative Agent, together
with the related documents thereto (including the revolving loan facility, note
purchase or placement facility, letter of credit facility or other arrangement
for the extension of credit thereunder, any guarantees and security documents),
as amended, extended, renewed, restated, supplemented or otherwise modified (in
whole or in part, and without limitation as to amount, terms, conditions,
covenants and other provisions) from time to time, and any agreement (and
related document) governing Indebtedness incurred to Refinance, in whole or in
part, the borrowings and
40
commitments then outstanding or permitted to be outstanding under such credit
agreement or a successor credit agreement, whether by the same or any other
lender or group of lenders.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act
of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the Issue Date.
"Trust Officer" means the Chairman of the Board, the President
or any other officer or assistant officer of the Trustee assigned by the Trustee
to administer its corporate trust matters.
"Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor.
"Uniform Commercial Code" means the
New York Uniform
Commercial Code as in effect from time to time.
"Unrestricted Subsidiary" means:
(1) any Subsidiary of the Company that at the time of
determination shall be designated an Unrestricted Subsidiary by the
Board of Directors of the Company in the manner provided below; and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors of the Company may designate any Subsidiary of the
Company (including any newly acquired or newly formed Subsidiary) to be an
Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns
any Capital Stock or Indebtedness of, or holds any Lien on any property of, the
Company or any other Subsidiary of the Company that is not a Subsidiary of the
Subsidiary to be so designated or an Unrestricted Subsidiary; provided, however,
that either (A) the Subsidiary to be so designated has total assets of $1,000 or
less or (B) if such Subsidiary has assets greater than $1,000, such designation
would be permitted under Section 4.04. The Board of Directors of the Company may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided,
however, that immediately after giving effect to such designation (A) the
Company could Incur $1.00 of additional
41
Indebtedness under Section 4.03(a) and (B) no Default shall have occurred and be
continuing. Any such designation by the Board of Directors of the Company shall
be evidenced to the Trustee by promptly filing with the Trustee a copy of the
resolution of the Board of Directors of the Company giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock
or other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all
the Capital Stock of which (other than directors' qualifying shares) is owned by
the Company or one or more Wholly Owned Subsidiaries.
SECTION 1.02. Other Definitions.
Defined in
Term Section
---- ----------
"Affiliate Transaction".............................. 4.07
"Bankruptcy Law"..................................... 6.01
"Custodian".......................................... 6.01
"Event of Default"................................... 6.01
"legal defeasance option"............................ 8.01(b)
"Offer".............................................. 4.06(b)
"Offer Amount"....................................... 4.06(c)(2)
"Offer Period"....................................... 4.06(c)(2)
"Paying Agent"....................................... 2.03
"Purchase Date"...................................... 4.06
"Registrar".......................................... 2.03
"Successor Company".................................. 5.01(1)
42
SECTION 1.02. Incorporation by Reference of Trust Indenture
Act. This Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC;
"indenture securities" means the Securities;
"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the indenture securities means the Company and
any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule have
the meanings assigned to them by such definitions.
SECTION 1.03. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be
subordinate or junior to secured Indebtedness merely by virtue of its
nature as unsecured Indebtedness;
43
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof
that would be shown on a balance sheet of the issuer dated such date
prepared in accordance with GAAP;
(8) the principal amount of any Preferred Stock shall be (i)
the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory redemption or mandatory repurchase price with respect
to such Preferred Stock, whichever is greater; and
(9) all references to the date the Initial Securities were
originally issued shall refer to the Issue Date.
ARTICLE 2
The Securities
SECTION 2.01. Form and Dating. Provisions relating to the
Initial Securities, the Private Exchange Securities and the Exchange Securities
are set forth in the Rule 144A/Regulation S Appendix attached hereto (the
"Appendix") which is hereby incorporated in and expressly made part of this
Indenture. The Initial Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit 1 to the Appendix
which is hereby incorporated in and expressly made a part of this Indenture. The
Exchange Securities, the Private Exchange Securities and the Trustee's
certificate of authentication shall be substantially in the form of Exhibit A,
which is hereby incorporated in and expressly made a part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which the Company is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Company). Each Security shall be dated the date of its authentication.
The terms of the Securities set forth in the Appendix and Exhibit A are part of
the terms of this Indenture.
SECTION 2.02. Execution and Authentication. Two Officers shall
sign the Securities for the Company by manual or facsimile signature.
44
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security.
The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
On the Issue Date, the Trustee shall authenticate and deliver
$550 million of 11 3/8% Senior Notes Due 2011 and, at any time and from time to
time thereafter, the Trustee shall authenticate and deliver Securities for
original issue in an aggregate principal amount specified in such order, in each
case upon a written order of the Company signed by two Officers or by an Officer
and either an Assistant Treasurer or an Assistant Secretary of the Company. Such
order shall specify the amount of the Securities to be authenticated and the
date on which the original issue of Securities is to be authenticated and, in
the case of an issuance of Additional Securities pursuant to Section 2.13 after
the Issue Date, shall certify that such issuance is in compliance with Section
4.03.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, Paying Agent or agent
for service of notices and demands.
SECTION 2.03. Registrar and Paying Agent. The Company shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their registration of transfer
and exchange. The Company may have one or more co-registrars and one or more
additional paying agents. The term "Paying Agent" includes any additional paying
agent.
45
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agency agreement shall
implement the provisions of this Indenture that relate to such agent. The
Company shall notify the Trustee in writing of the name and address of any such
agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee
shall act as such and shall be entitled to appropriate compensation therefor
pursuant to Section 7.07. The Company or any Wholly Owned Subsidiary
incorporated or organized within The United States of America may act as Paying
Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent in connection with the Securities. The Registrar and Paying Agent
shall be entitled to the rights and immunities of the Trustee hereunder.
SECTION 2.04. Paying Agent To Hold Money in Trust. Prior to
11:00 a.m.,
New York time, on or prior to each due date of the principal and
interest on any Security, the Company shall deposit with the Paying Agent a sum
sufficient to pay such principal and interest when so becoming due. The Company
shall require each Paying Agent (other than the Trustee) to agree in writing
that the Paying Agent shall hold in trust for the benefit of Securityholders or
the Trustee all money held by the Paying Agent for the payment of principal of
or interest on the Securities and shall notify the Trustee in writing of any
default by the Company in making any such payment. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate the money held by it as
Paying Agent and hold it as a separate trust fund. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee and to account
for any funds disbursed by the Paying Agent. Upon complying with this Section,
the Paying Agent shall have no further liability for the money delivered to the
Trustee.
SECTION 2.05. Securityholder Lists. The Trustee shall preserve
in as current a form as is reasonably practicable the most recent list available
to it of the names and addresses of Securityholders and shall otherwise comply
with TIA Section 312(a). If the Trustee is not the Registrar, the Company shall
furnish to the Trustee, in
46
writing at least five Business Days before each interest payment date and at
such other times as the Trustee may request in writing, a list in such form and
as of such date as the Trustee may reasonably require of the names and addresses
of Securityholders.
SECTION 2.06. Transfer and Exchange. The Securities shall be
issued in registered form and shall be transferable only upon the surrender of a
Security being transferred for registration of transfer. When a Security is
presented to the Registrar or a co-registrar with a request to register a
transfer, the Registrar shall register the transfer as requested if the
requirements of this Indenture and Section 8-401(a) of the Uniform Commercial
Code are met. When Securities are presented to the Registrar or a co-registrar
with a request to exchange them for an equal principal amount of Securities of
other denominations, the Registrar shall make the exchange as requested if the
same requirements are met. No service charge shall be made for any registration
of transfer or exchange or redemption of the Securities, but the Company may
require payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any such
transfer taxes or other similar governmental charge payable upon exchange
pursuant to Section 2.09 or 9.05).
SECTION 2.07. Replacement Securities. If a mutilated Security
is surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies
any other reasonable requirements of the Trustee. If required by the Trustee or
the Company, such Holder shall furnish an indemnity bond sufficient in the
judgment of the Company and the Trustee to protect the Company, the Trustee, the
Paying Agent, the Registrar and any co-registrar from any loss which any of them
may suffer if a Security is replaced. The Company and the Trustee may charge the
Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Company.
47
SECTION 2.08. Outstanding Securities. Securities outstanding
at any time are all Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation and those described in
this Section as not outstanding. A Security does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases
to be outstanding unless the Trustee and the Company receive proof satisfactory
to them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all principal and interest payable on that date with respect
to the Securities (or portions thereof) to be redeemed or maturing, as the case
may be, then on and after that date such Securities (or portions thereof) cease
to be outstanding and interest on them ceases to accrue.
SECTION 2.09. Temporary Securities. Until definitive
Securities are ready for delivery, the Company may prepare and the Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that the Company
considers appropriate for temporary Securities. Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate definitive Securities
and deliver them in exchange for temporary Securities.
SECTION 2.10. Cancellation. The Company at any time may
deliver Securities to the Trustee for cancellation. The Registrar and the Paying
Agent shall forward to the Trustee any Securities surrendered to them for
registration of transfer, exchange or payment. The Trustee and no one else shall
cancel and destroy (subject to the record retention requirements of the Exchange
Act) all Securities surrendered for registration of transfer, exchange, payment
or cancellation and deliver a certificate of such destruction to the Company
unless the Company directs the Trustee in writing to deliver canceled Securities
to the Company. The Company may not issue new
48
Securities to replace Securities it has redeemed, paid or delivered to the
Trustee for cancellation.
SECTION 2.11. Defaulted Interest. If the Company defaults in a
payment of interest on the Securities, the Company shall pay defaulted interest
(plus interest on such defaulted interest to the extent lawful) in any lawful
manner. The Company may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail to each
Securityholder a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
SECTION 2.12. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption or repurchase as a
convenience to Holders; provided, however, that any such notice may state that
no representation is made as to the correctness of such numbers either as
printed on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers.
SECTION 2.13. Issuance of Additional Securities. The Company
shall be entitled, subject to its compliance with Section 4.03, to issue
Additional Securities under this Indenture which shall have identical terms as
the Initial Securities issued on the Issue Date, other than with respect to the
date of issuance and issue price. The Initial Securities issued on the Issue
Date, any Additional Securities and all Exchange Securities or Private Exchange
Securities issued in exchange therefor shall be treated as a single class for
all purposes under this Indenture.
49
With respect to any Additional Securities, the Company shall
set forth in a resolution of the Board of Directors and an Officers'
Certificate, a copy of each which shall be delivered to the Trustee, the
following information:
(1) the aggregate principal amount of such Additional
Securities to be authenticated and delivered pursuant to this
Indenture;
(2) the issue price, the issue date and the CUSIP number of
such Additional Securities; provided, however, that no Additional
Securities may be issued at a price that would cause such Additional
Securities to have "original issue discount" within the meaning of
Section 1273 of the Code; and
(3) whether such Additional Securities shall be Transfer
Restricted Securities and issued in the form of Initial Securities as
set forth in the Appendix to this Indenture or shall be issued in the
form of Exchange Securities as set forth in Exhibit A.
ARTICLE 3
Redemption
SECTION 3.01. Notices to Trustee. If the Company elects to
redeem Securities pursuant to paragraph 5 of the Securities, it shall notify the
Trustee in writing of the redemption date, the principal amount of Securities to
be redeemed and the paragraph of the Securities pursuant to which the redemption
will occur.
The Company shall give each notice to the Trustee provided for
in this Section at least 60 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Company to the effect that such
redemption will comply with the conditions herein.
SECTION 3.02. Selection of Securities To Be Redeemed. If fewer
than all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed pro rata or by lot or by a method that complies
50
with applicable legal and securities exchange requirements, if any, and that the
Trustee in its sole discretion shall deem to be fair and appropriate and in
accordance with methods generally used at the time of selection by fiduciaries
in similar circumstances. The Trustee shall make the selection from outstanding
Securities not previously called for redemption. The Trustee may select for
redemption portions of the principal of Securities that have denominations
larger than $1,000. Securities and portions of them the Trustee selects shall be
in principal amounts of $1,000 or a whole multiple of $1,000. Provisions of this
Indenture that apply to Securities called for redemption also apply to portions
of Securities called for redemption. The Trustee shall notify the Company
promptly of the Securities or portions of Securities to be redeemed.
SECTION 3.03. Notice of Redemption. At least 30 days but not
more than 60 days before a date for redemption of Securities, the Company shall
mail a notice of redemption by first-class mail to each Holder of Securities to
be redeemed at such Holder's registered address.
The notice shall identify the Securities to be redeemed and
shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be
redeemed, the identification and principal amounts of the particular
Securities to be redeemed;
(6) that, unless the Company defaults in making such
redemption payment, interest on Securities (or portion thereof) called
for redemption ceases to accrue on and after the redemption date; and
51
(7) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date). Failure to give
notice or any defect in the notice to any Holder shall not affect the validity
of the notice to any other Holder.
SECTION 3.05. Deposit of Redemption Price. Prior to the
redemption date, the Company shall deposit with the Paying Agent (or, if the
Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust)
money sufficient to pay the redemption price of and accrued interest on all
Securities to be redeemed on that date other than Securities or portions of
Securities called for redemption which have been delivered by the Company to the
Trustee for cancellation.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in principal amount to the unredeemed portion of the Security surrendered.
ARTICLE 4
Covenants
SECTION 4.01. Payment of Securities. The Company shall
promptly pay the principal of and interest on
52
the Securities on the dates and in the manner provided in the Securities and in
this Indenture. Principal of and interest on the Securities shall be considered
paid on the date due if on such date the Trustee or the Paying Agent holds in
accordance with this Indenture money sufficient to pay all such principal and
interest then due.
The Company shall pay interest on overdue principal at the
rate specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02. SEC Reports. Notwithstanding that the Company
may not be subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, the Company shall file with the SEC (to the extent the SEC will
accept such filings) and provide the Trustee and Securityholders with such
annual reports and such information, documents and other reports as are
specified in Sections 13 and 15(d) of the Exchange Act and applicable to a U.S.
corporation subject to such Sections, such information, documents and other
reports to be so filed and provided at the times specified for the filing of
such information, documents and reports under such Sections.
At any time that any of the Company's Subsidiaries are
Unrestricted Subsidiaries, then the quarterly and annual financial information
required by the preceding paragraph will include a reasonably detailed
presentation, either on the face of the financial statements or in the footnotes
thereto, and in "Management's Discussion and Analysis of Financial Condition and
Results of Operations", of the financial condition and results of operations of
the Company and its Restricted Subsidiaries separate from the financial
condition and result of operations of the Unrestricted Subsidiaries of the
Company.
In addition, the Company shall furnish to the Holders of the
Securities and to prospective investors, upon the requests of such Holders, any
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act so long the Securities are not freely transferable under the
Securities Act.
The Company also shall comply with other provisions of TIA
Section 314(a).
53
SECTION 4.03. Limitation on Indebtedness. (a) The Company
shall not, and shall not permit any Restricted Subsidiary to, Incur, directly or
indirectly, any Indebtedness; provided, however, that the Company and Subsidiary
Guarantors, if any, shall be entitled to Incur Indebtedness if, on the date of
such Incurrence and after giving effect thereto on a pro forma basis, no Default
has occurred and is continuing and the Consolidated Coverage Ratio exceeds 2.0
to 1. The Company shall cause each Restricted Subsidiary that Incurs any
Indebtedness pursuant to this paragraph (a) or clauses (12) or (17) of paragraph
(b) of this Section 4.03 to execute and deliver to the Trustee, no later than
the date of such Incurrence, a supplemental indenture to this Indenture pursuant
to which such Restricted Subsidiary guarantees payment of the Securities on the
same terms and conditions as those set forth in this Indenture.
(b) Notwithstanding the foregoing paragraph (a), the Company
and the Restricted Subsidiaries shall be entitled to Incur any or all of the
following Indebtedness:
(1) Indebtedness Incurred by the Company pursuant to the
Three-Year Credit Agreement or the 364-Day Credit Agreement; provided,
however, that, immediately after giving effect to any such Incurrence,
the aggregate principal amount of all Indebtedness Incurred under this
clause (1) and then outstanding does not exceed the greater of (A) $520
million less the sum of all principal payments with respect to such
Indebtedness pursuant to Section 4.06(a)(3)(A) and (B) 50% of the book
value of the inventory of the Company and its Restricted Subsidiaries;
(2) Indebtedness Incurred by the Company pursuant to the New
Credit Agreement; provided, however, that, immediately after giving
effect to any such Incurrence, the aggregate principal amount of all
Indebtedness Incurred under this clause (2) and then outstanding does
not exceed $200 million less the sum of all principal payments with
respect to such Indebtedness pursuant to Section 4.06(a)(3)(A);
(3) Indebtedness Incurred by CITGO Puerto Rico and the Company
pursuant to the CITGO Puerto Rico Agreement; provided, however, that
the aggregate
54
principal amount of all Indebtedness Incurred by CITGO Puerto Rico and
the Company (without duplication in the case of the Company's Guarantee
of CITGO Puerto Rico's Indebtedness thereunder) pursuant to the CITGO
Puerto Rico Credit Agreement does not exceed $25 million less the sum
of all principal payments with respect to such Indebtedness pursuant to
Section 4.06(a)(3)(A).
(4) Indebtedness owed to and held by the Company or a
Restricted Subsidiary; provided, however, that (A) any subsequent
issuance or transfer of any Capital Stock which results in any such
Restricted Subsidiary ceasing to be a Restricted Subsidiary or any
subsequent transfer of such Indebtedness (other than to the Company or
a Restricted Subsidiary) shall be deemed, in each case, to constitute
the Incurrence of such Indebtedness by the obligor thereon and (B) if
the Company or a Subsidiary Guarantor is the obligor on such
Indebtedness, such Indebtedness is expressly subordinated to the prior
payment in full in cash of all obligations with respect to the
Securities;
(5) the Initial Securities and the Exchange Securities (other
than any Additional Securities);
(6) Indebtedness outstanding on the Issue Date (other than
Indebtedness described in clause (1), (3), (4) or (5) of this Section
4.03(b));
(7) Indebtedness of a Restricted Subsidiary Incurred and
outstanding on or prior to the date on which such Subsidiary was
acquired by the Company (other than Indebtedness Incurred in connection
with, or to provide all or any portion of the funds or credit support
utilized to consummate, the transaction or series of related
transactions pursuant to which such Subsidiary became a Subsidiary or
was acquired by the Company); provided, however, that on the date of
such acquisition and after giving pro forma effect thereto, the Company
would have been able to Incur at least $1.00 of Indebtedness pursuant
to Section 4.03(a);
(8) Refinancing Indebtedness in respect of Indebtedness
Incurred pursuant to Section 4.03(a) or pursuant to clause (5), (6) or
(7) of Section 4.03(b)
55
or this clause (8); provided, however, that to the extent such
Refinancing Indebtedness directly or indirectly Refinances Indebtedness
of a Subsidiary Incurred pursuant to clause (7), such Refinancing
Indebtedness shall be Incurred only by such Subsidiary or the Company;
(9) Hedging Obligations entered into in the ordinary course of
business to purchase any raw material, hydrocarbon, refined product or
other commodity or to hedge risks with respect to the Company's or a
Restricted Subsidiary's interest rate, currency, hydrocarbon or refined
products therefrom or commodity exposure and not for speculative
purposes;
(10) obligations in respect of tender, performance, government
contract, bid and surety or appeal bonds and completion guarantees
provided by the Company or any Restricted Subsidiary in the ordinary
course of business;
(11) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument drawn
against insufficient funds in the ordinary course of business;
provided, however, that such Indebtedness is extinguished within five
Business Days of its Incurrence;
(12) Guarantees by Subsidiary Guarantors of Indebtedness of
the Company or any Restricted Subsidiary permitted to be Incurred under
this Indenture and Liens created by Subsidiary Guarantors that
constitute Indebtedness securing Indebtedness of the Company or any
Restricted Subsidiary permitted to be Incurred under this Indenture;
(13) Indebtedness of a Receivables Subsidiary Incurred
pursuant to a Qualified Receivables Transaction;
(14) Indebtedness of Restricted Subsidiaries in an aggregate
principal amount which, when taken together with all other Indebtedness
of Restricted Subsidiaries outstanding on the date of such Incurrence
(other than Indebtedness permitted by any other clause of this Section
4.03 (b)), does not exceed the greater of (A) $125 million and (B) 5%
of Consolidated Net Worth;
56
(15) Guarantees by the Pledged Entities of Indebtedness of the
Company Incurred pursuant to clause (2) of this Section 4.03(b);
(16) Guarantees by the Company of Indebtedness of Restricted
Subsidiaries Incurred pursuant to clause (14) of this Section 4.03(b);
and
(17) Indebtedness of the Company or any Subsidiary Guarantor
in an aggregate principal amount which, when taken together with all
other Indebtedness of the Company and the Subsidiary Guarantors
outstanding on the date of such Incurrence (other than Indebtedness
permitted by clauses (1) through (16) of this Section 4.03(b) or
Section 4.03(a)), does not exceed $75 million.
(c) Notwithstanding the foregoing, the Company shall not, and
shall not permit any Subsidiary Guarantor to, Incur any Indebtedness pursuant to
Section 4.03(b) if the proceeds thereof are used, directly or indirectly, to
Refinance any Subordinated Obligations of the Company or such Subsidiary
Guarantor unless such Indebtedness shall be subordinated to the Securities or
the Subsidiary Guaranty of such Subsidiary Guarantor, as the case may be, to at
least the same extent as such Subordinated Obligations.
(d) For purposes of determining compliance with this Section
4.03, (1) any Indebtedness remaining outstanding under the Three-Year Credit
Agreement, the 364-Day Credit Agreement or the CITGO Puerto Rico Credit
Agreement after the application of the net proceeds from the sale of the
Securities will be treated as Incurred on the Issue Date under clause (1) or
(3), as applicable, of Section 4.03(b); (2)any Indebtedness Incurred or
outstanding under the New Credit Agreement on the Issue Date will be treated as
Incurred on the Issue Date under clause (2) of paragraph (b) above; (3) in the
event that an item of Indebtedness(or any portion thereof) meets the criteria of
more than one of the types of Indebtedness described herein, the Company, in its
sole discretion, shall classify such item of Indebtedness (or any portion
thereof) at the time of Incurrence and shall only be required to include the
amount and type of such
57
Indebtedness in one of the above clauses; and (4) the Company shall be entitled
to divide and classify an item of Indebtedness in more than one of the types of
Indebtedness described herein.
SECTION 4.04. Limitation on Restricted Payments. (a) The
Company shall not, and shall not permit any Restricted Subsidiary, directly or
indirectly, to make a Restricted Payment if at the time the Company or such
Restricted Subsidiary makes such Restricted Payment:
(1) a Default shall have occurred and be continuing (or would
result therefrom);
(2) the Company is not entitled to Incur an additional $1.00
of Indebtedness under Section 4.03(a);
(3) the aggregate amount of such Restricted Payment and all
other Restricted Payments since the Issue Date would exceed the sum of
(without duplication):
(A) 50% of the Consolidated Net Income accrued during
the period (treated as one accounting period) from the
beginning of the fiscal quarter immediately following the
fiscal quarter ending on December 31, 2002, to the end of the
most recent fiscal quarter ending at least 45 days prior to
the date of such Restricted Payment (or, in case such
Consolidated Net Income shall be a deficit, minus 100% of such
deficit); plus
(B) 100% of the aggregate net proceeds, including
cash and the fair market value of property other than cash (as
determined in good faith by the Board of Directors of the
Company and evidenced by a board resolution) received by the
Company from the issuance or sale of, or as a capital
contribution in respect of, its Capital Stock (other than
Disqualified Stock) subsequent to the Issue Date (other than
an issuance or sale to, or contribution by, a Subsidiary of
the Company and other than an issuance or sale to, or
contribution by, an employee stock ownership plan or to a
trust established by the Company or any of its Subsidiaries
for the benefit of their employees); plus
58
(C) the amount by which Indebtedness of the Company
is reduced on the Company's balance sheet upon the conversion
or exchange subsequent to the Issue Date of any Indebtedness
of the Company convertible or exchangeable for Capital Stock
(other than Disqualified Stock) of the Company (less the
amount of any cash, or the fair value of any other property,
distributed by the Company upon such conversion or exchange);
provided, however, that the foregoing amount shall not exceed
the Net Cash Proceeds received by the Company or any
Restricted Subsidiary from the sale of such Indebtedness
(excluding Net Cash Proceeds from sales to a Subsidiary of the
Company or to an employee stock ownership plan or to a trust
established by the Company or any of its Subsidiaries for the
benefit of their employees); plus
(D) an amount equal to the sum of (x) the net
reduction in the Investments (other than Permitted
Investments) made by the Company or any Restricted Subsidiary
in any Person resulting from repurchases, repayments or
redemptions of such Investments by such Person, proceeds
realized on the sale of such Investment and proceeds
representing the return of capital (excluding dividends and
distributions), in each case received by the Company or any
Restricted Subsidiary and (y) to the extent such Person is an
Unrestricted Subsidiary, the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair
market value of the net assets of such Unrestricted Subsidiary
at the time such Unrestricted Subsidiary is designated a
Restricted Subsidiary; provided, however, that the foregoing
sum shall not exceed, in the case of any Person or
Unrestricted Subsidiary, the amount of Investments (excluding
Permitted Investments) previously made (and treated as a
Restricted Payment) by the Company or any Restricted
Subsidiary in such Person or Unrestricted Subsidiary;
59
(4) after giving pro forma effect to such Restricted Payment,
the Company would not have Available Liquidity in excess of $250
million, and on the date the Company or such Restricted Subsidiary
makes such Restricted Payment, the Chief Financial Officer of the
Company shall deliver to the Trustee a certificate to the effect that
the Company is in compliance with this paragraph (4); or
(5) the aggregate amount of such Restricted Payment and all
other Restricted Payments made since the beginning of the Reference
Period would exceed the Free Cash Flow during the Reference Period.
(b) The provisions of Section 4.04(a) shall not prohibit:
(1) any Restricted Payment made out of the Net Cash Proceeds
of the substantially concurrent sale of, or made by exchange for,
Capital Stock of the Company (other than Disqualified Stock and other
than Capital Stock issued or sold to a Subsidiary of the Company or an
employee stock ownership plan or to a trust established by the Company
or any of its Subsidiaries for the benefit of their employees) or a
substantially concurrent cash capital contribution received by the
Company from or on behalf of one or more of its shareholders; provided,
however, that (A) such Restricted Payment shall be excluded in the
calculation of the amount of Restricted Payments and (B) the Net Cash
Proceeds from such sale or such cash capital contribution (to the
extent so used for such Restricted Payment) shall be excluded from the
calculation of amounts under Section 4.04(a)(3)(B);
(2) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations of the
Company or any Restricted Subsidiary made by exchange for, or out of
the proceeds of the substantially concurrent sale of, Subordinated
Obligations of such Person which is permitted to be Incurred pursuant
to Section 4.03; provided, however, that such purchase, repurchase,
redemption, defeasance or other acquisition or retirement for value
shall be excluded from the calculation of the amount of Restricted
Payments;
60
(3) dividends paid within 60 days after the date of
declaration thereof if at such date of declaration such dividend would
have complied with this Section 4.04; provided, however, that at the
time of payment of such dividend, no other Default shall have occurred
and be continuing (or result therefrom); provided further, however,
that such dividend shall be included in the calculation of the amount
of Restricted Payments;
(4) so long as no Default has occurred and is continuing, the
repurchase or other acquisition of shares of Capital Stock of the
Company or any of its Subsidiaries from employees, former employees,
directors or former directors of the Company or any of its Subsidiaries
(or permitted transferees of such employees, former employees,
directors or former directors), pursuant to the terms of the agreements
(including employment agreements) or plans (or amendments thereto)
approved by the Board of Directors of the Company under which such
individuals purchase or sell or are granted the option to purchase or
sell, shares of such Capital Stock; provided, however, that the
aggregate amount of such repurchases and other acquisitions shall not
exceed $5 million in any calendar year; provided further, however, that
such repurchases and other acquisitions shall be excluded from the
calculation of the amount of Restricted Payments;
(5) dividends or advances to PDV America, the proceeds of
which are used by PDV America to repay its 7O% Senior Notes Due 2003;
provided that (A) the aggregate amount of such dividends or advances
shall not exceed $500 million, (B) such dividends or advances shall
only be declared and paid, as applicable, on or after the seventh day
immediately prior to the maturity date of the 7O% Senior Notes Due 2003
of PDV America, (C) on the date of payment of any such dividends or
advances, the Chief Financial Officer of the Company shall have
delivered to the Trustee a certificate to the effect that immediately
after giving pro forma effect to such dividends or advances the Company
will have Available Liquidity in excess of $350 million and (D) such
dividends or
61
advances shall be excluded from the calculation of the amount of
Restricted Payments; or
(6) other Restricted Payments in an aggregate amount not to
exceed $25 million; provided, however, that such Restricted Payments
shall be excluded from the calculation of the amount of Restricted
Payments.
SECTION 4.05. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company shall not, and shall not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to (a) pay dividends or make any other distributions on
its Capital Stock to the Company or a Restricted Subsidiary or pay any
Indebtedness owed to the Company, (b) make any loans or advances to the Company
or (c) transfer any of its property or assets to the Company, except:
(1) with respect to clauses (a),(b) and (c),
(i) any encumbrance or restriction pursuant
to an agreement in effect at or entered into on the
Issue Date, including the Credit Agreements (other
than the New Credit Agreement);
(ii) (A) any encumbrance or restriction
pursuant to the New Credit Agreement that is
substantially similar to, and no less favorable to
the Securityholders than, encumbrances or
restrictions in effect at or entered into on the
Issue Date pursuant to the Credit Agreements (other
than the New Credit Agreement), (B) any encumbrance
or restriction on the ability of the Pledged Entities
to pay dividends, make distributions, loans or
advances, or transfer assets to the Company imposed
pursuant to the New Credit Agreement and (C) Liens on
the Capital Stock of the Pledged Entities imposed
pursuant to the New Credit Agreement;
(iii) any encumbrance or restriction with
respect to a Restricted Subsidiary pursuant to an
agreement relating to any Indebtedness
62
Incurred by such Restricted Subsidiary on or prior to
the date on which such Restricted Subsidiary was
acquired by the Company (other than Indebtedness
Incurred as consideration in, or to provide all or
any portion of the funds or credit support utilized
to consummate the transaction or series of related
transactions pursuant to which such Restricted
Subsidiary became a Restricted Subsidiary or was
acquired by the Company) and outstanding on such
date;
(iv) any encumbrance or restriction pursuant
to an agreement effecting a Refinancing of
Indebtedness Incurred pursuant to an agreement
referred to in clause (i), (ii) or (iii) of clause
(1) of this Section 4.05 or this clause (iv) or
contained in any amendment to an agreement referred
to in clause (i), (ii) or (iii) of clause (1) of this
Section 4.05 or this clause (iv); provided, however,
that the encumbrances and restrictions with respect
to such Restricted Subsidiary contained in any such
refinancing agreement or amendment are no less
favorable to the Securityholders than encumbrances
and restrictions with respect to such Restricted
Subsidiary contained in such predecessor agreements;
(v) any encumbrance or restriction with
respect to a Restricted Subsidiary imposed pursuant
to an agreement entered into for the sale or
disposition of all or substantially all the Capital
Stock or assets of such Restricted Subsidiary pending
the closing of such sale or disposition;
(vi) any encumbrance or restriction arising
under any applicable law, rule, regulation or order;
(vii) any encumbrance or restriction
pursuant to any merger agreement, stock purchase
agreement, asset sale agreement or similar agreement
limiting the transfer of properties and assets
subject to such
63
agreement or distributions of assets subject to such
agreement pending consummation of the transactions
contemplated thereby;
(viii) any encumbrance or restriction
applicable to a Receivables Subsidiary; and
(2) with respect to clause (c) only,
(A) any encumbrance or restriction consisting of
customary nonassignment provisions in leases governing
leasehold interests to the extent such provisions restrict the
transfer of the lease or the property leased thereunder; and
(B) any encumbrance or restriction contained in
security agreements or mortgages securing Indebtedness of a
Restricted Subsidiary to the extent such encumbrance or
restriction restricts the transfer of the property subject to
such security agreements or mortgages.
SECTION 4.06. Limitation on Sales of Assets and Subsidiary
Stock. (a) The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, consummate any Asset Disposition unless:
(1) the Company or such Restricted Subsidiary receives
consideration at the time of such Asset Disposition at least equal to
the fair market value (including as to the value of all non-cash
consideration), as determined in good faith by the Board of Directors
of the Company, of the shares and assets subject to such Asset
Disposition;
(2) other than with respect to any assets contributed by the
Company or a Restricted Subsidiary to a joint venture formed by the
Company or such Restricted Subsidiary, respectively, at least 75% of
the consideration thereof received by the Company or such Restricted
Subsidiary is in the form of cash or cash equivalents; provided,
however, that the 75% limitation also will not apply to any disposition
of assets in exchange for assets used in a Related Business, or a
combination of such assets and cash or cash equivalents, in each case
having a fair market value comparable to the fair market value of the
64
assets disposed of by the Company or a Restricted Subsidiary; provided
further, however, that in any such exchange of the Company's or a
Restricted Subsidiary's assets with a fair market value in excess of
$20 million, the Company must obtain an opinion or report from an
Independent Qualified Party confirming that the assets, and cash and
cash equivalents, if any, received in such exchange have a fair market
value at least equal to the assets so exchanged; and
(3) an amount equal to 100% of the Net Available Cash from
such Asset Disposition is applied by the Company (or such Restricted
Subsidiary, as the case may be)
(A) first, to the extent the Company elects (or is
required by the terms of any Indebtedness), to prepay, repay,
redeem or purchase Senior Indebtedness of the Company or
Indebtedness (other than any Disqualified Stock) of a Wholly
Owned Subsidiary (in each case other than Indebtedness owed to
the Company or an Affiliate of the Company) within one year
from the later of the date of such Asset Disposition or the
receipt of such Net Available Cash;
(B) second, to the extent of the balance of such Net
Available Cash after application in accordance with clause
(A), to the extent the Company elects, to acquire Additional
Assets within one year from the later of the date of such
Asset Disposition or the receipt of such Net Available Cash;
and
(C) third, to the extent of the balance of such Net
Available Cash after application in accordance with clauses
(A) and (B), to make an Offer to the holders of the Securities
(and to holders of other Senior Indebtedness of the Company
designated by the Company) to purchase Securities (and such
other Senior Indebtedness of the Company) pursuant to and
subject to the conditions of this Indenture;
provided, however, that in connection with any prepayment, repayment or purchase
of Indebtedness pursuant to clause (A) or (C) above, the Company or such
Restricted
65
Subsidiary shall permanently retire such Indebtedness and shall cause the
related loan commitment (if any) to be permanently reduced in an amount equal to
the principal amount so prepaid, repaid or purchased.
Notwithstanding the foregoing provisions of this Section 4.06,
the Company and the Restricted Subsidiaries shall not be required to apply any
Net Available Cash in accordance with this Section 4.06(a) except to the extent
that the aggregate Net Available Cash from all Asset Dispositions which is not
applied in accordance with this Section 4.06(a) exceeds $20 million. Pending
application of Net Available Cash pursuant to this Section 4.06(a), such Net
Available Cash shall be invested in Temporary Cash Investments or applied to
temporarily reduce revolving credit indebtedness.
For the purposes of this Section 4.06(a), the following are
deemed to be cash or cash equivalents:
(1) the assumption of Indebtedness of the Company (other than
obligations in respect of Disqualified Stock of the Company) or any
Restricted Subsidiary and the release of the Company or such Restricted
Subsidiary from all liability on such Indebtedness in connection with
such Asset Disposition; and
(2) securities received by the Company or any Restricted
Subsidiary from the transferee that are promptly converted by the
Company or such Restricted Subsidiary into cash, to the extent of cash
received in that conversion.
(b) In the event of an Asset Disposition that requires the
purchase of Securities (and other Senior Indebtedness of the Company) pursuant
to Section 4.06(a)(3)(C), the Company shall purchase Securities tendered
pursuant to an offer by the Company for the Securities (and such other Senior
Indebtedness) (the "Offer") at a purchase price of 100% of their principal
amount (or, in the event such other Senior Indebtedness was issued with
significant original issue discount, 100% of the accreted value thereof),
without premium, plus accrued but unpaid interest (or, in respect of such other
Senior Indebtedness of the Company, such lesser price, if any, as may be
provided for by the terms of such Senior
66
Indebtedness) in accordance with the procedures (including prorating in the
event of oversubscription) set forth in Section 4.06(c). If the aggregate
purchase price of Securities (and any other Senior Indebtedness of the Company)
tendered exceeds the Net Available Cash allotted to their purchase, the Company
shall select the Securities and other Senior Indebtedness to be purchased on a
pro rata basis but in round denominations, which in the case of the Securities
will be denominations of $1,000 principal amount or multiples thereof. The
Company shall not be required to make such an Offer to purchase Securities (and
other Senior Indebtedness of the Company) pursuant to this Section 4.06 if the
Net Available Cash available therefor is less than $20 million (which lesser
amount shall be carried forward for purposes of determining whether such an
Offer is required with respect to the Net Available Cash from any subsequent
Asset Disposition). Upon completion of such an offer to purchase, Net Available
Cash shall be deemed to be reduced by the aggregate amount of such offer.
(c) (1) Promptly, and in any event within 10 days after the
Company becomes obligated to make an Offer, the Company shall deliver to the
Trustee and send, by first-class mail to each Holder, a written notice stating
that the Holder may elect to have his Securities purchased by the Company either
in whole or in part (subject to prorating as described in Section 4.06(b) in the
event the Offer is oversubscribed) in integral multiples of $1,000 of principal
amount, at the applicable purchase price. The notice shall specify a purchase
date not less than 30 days nor more than 60 days from the date such notice is
mailed (the "Purchase Date") and shall contain such information concerning the
business of the Company which the Company in good faith believes will enable
such Holders to make an informed decision (which at a minimum will include (A)
the most recently filed Annual Report on Form 10-K (including audited
consolidated financial statements) of the Company, the most recent subsequently
filed Quarterly Report on Form 10-Q and any Current Report on Form 8-K of the
Company filed subsequent to such Quarterly Report, other than Current Reports
describing Asset Dispositions otherwise described in the offering materials (or
corresponding successor reports), (B) a description of material developments in
the Company's business subsequent to the date of the latest of such Reports, and
(C) if material, appropriate pro forma
67
financial information) and all instructions and materials necessary to tender
Securities pursuant to the Offer, together with the information contained in
clause (3).
(2) Not later than the date upon which written notice of an
Offer is delivered to the Trustee as provided below, the Company shall deliver
to the Trustee an Officers' Certificate as to (A) the amount of the Offer (the
"Offer Amount"), including information as to any other Senior Indebtedness
included in the Offer, (B) the allocation of the Net Available Cash from the
Asset Dispositions pursuant to which such Offer is being made and (C) the
compliance of such allocation with the provisions of Section 4.06(a) and (b). On
such date, the Company shall also irrevocably deposit with the Trustee or with a
Paying Agent (or, if the Company is acting as its own Paying Agent, segregate
and hold in trust) in Temporary Cash Investments, maturing on the last day prior
to the Purchase Date or on the Purchase Date if funds are immediately available
by open of business, an amount equal to the Offer Amount to be held for payment
in accordance with the provisions of this Section. If the Offer includes other
Senior Indebtedness, the deposit described in the preceding sentence may be made
with any other paying agent pursuant to arrangements satisfactory to the
Trustee. Upon the expiration of the period for which the Offer remains open (the
"Offer Period"), the Company shall deliver to the Trustee for cancellation the
Securities or portions thereof which have been properly tendered to and are to
be accepted by the Company. The Trustee shall, on the Purchase Date, mail or
deliver payment (or cause the delivery of payment) to each tendering Holder in
the amount of the purchase price. In the event that the aggregate purchase price
of the Securities (and other Senior Indebtedness of the Company) delivered by
the Company to the Trustee is less than the Offer Amount applicable to the
Securities, the Trustee shall deliver the excess to the Company immediately
after the expiration of the Offer Period for application in accordance with this
Section 4.06.
(3) Holders electing to have a Security purchased shall be
required to surrender the Security, with an appropriate form duly completed, to
the Company at the address specified in the notice at least three Business Days
prior to the Purchase Date. Holders shall be entitled to withdraw their election
if the Trustee or the Company
68
receives not later than one Business Day prior to the Purchase Date, a telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Security which was delivered for purchase by the Holder
and a statement that such Holder is withdrawing his election to have such
Security purchased. Holders whose Securities are purchased only in part shall be
issued new Securities equal in principal amount to the unpurchased portion of
the Securities surrendered.
(4) At the time the Company delivers Securities to the Trustee
which are to be accepted for purchase, the Company shall also deliver an
Officers' Certificate stating that such Securities are to be accepted by the
Company pursuant to and in accordance with the terms of this Section. A Security
shall be deemed to have been accepted for purchase at the time the Trustee,
directly or through an agent, mails or delivers payment therefor to the
surrendering Holder.
(d) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section by virtue of its compliance
with such securities laws or regulations.
SECTION 4.07. Limitation on Affiliate Transactions. (a) The
Company shall not, and shall not permit any Restricted Subsidiary to, enter into
or permit to exist any transaction (including the purchase, sale, lease or
exchange of any property, employee compensation arrangements or the rendering of
any service) with, or for benefit of, any Affiliate of the Company (an
"Affiliate Transaction") unless:
(1) the terms of the Affiliate Transactions are no less
favorable to the Company or such Restricted Subsidiary than those that
could be obtained at the time of such transaction in arm's-length
dealings with a Person who is not an Affiliate;
69
(2) if such Affiliate Transaction involves an amount in excess
of $10 million, the terms of the Affiliate Transaction are set forth in
writing and a majority of the directors of the Company disinterested
with respect to such Affiliate Transaction have determined in good
faith that the criteria set forth in clause (1) are satisfied and have
approved the relevant Affiliate Transaction as evidenced by a
resolution of the Board of Directors of the Company; provided, however,
that in the event that at the time such Affiliate Transaction is
entered into or permitted to exist, no director of the Company is
disinterested with respect to such Affiliate Transaction, the Board of
Directors of the Company shall have received with respect to such
Affiliate Transaction the opinion referred to in paragraph (3) below;
and
(3) if such Affiliate Transaction involves an amount in excess
of $20 million, the Board of Directors of the Company shall also have
received a written opinion from an Independent Qualified Party to the
effect that such Affiliate Transaction is fair, from a financial
standpoint, to the Company and its Restricted Subsidiaries or is not
less favorable to the Company and its Restricted Subsidiaries than
could reasonably be expected to be obtained at the time in an
arm's-length transaction with a Person who was not an Affiliate.
(b) The provisions of Section 4.07(a) shall not prohibit:
(1) any Investment (other than a Permitted Investment) or
other Restricted Payment, in each case permitted to be made pursuant to
Section 4.04;
(2) any issuance of securities, or other payments, awards or
grants in cash, securities or otherwise pursuant to, or the funding of,
employment arrangements, stock options and stock ownership plans
approved by the Board of Directors of the Company;
(3) loans or advances to employees in the ordinary course of
business in accordance with the past practices of the Company or its
Restricted Subsidiaries, but in any event not to exceed $5 million in
the aggregate outstanding at any one time;
70
(4) the payment of reasonable fees to directors of the Company
and its Restricted Subsidiaries who are not employees of the Company or
its Restricted Subsidiaries;
(5) any transaction with a Restricted Subsidiary or joint
venture or similar entity which would constitute an Affiliate
Transaction solely because the Company or a Restricted Subsidiary owns
an equity interest in or otherwise controls such Restricted Subsidiary,
joint venture or similar entity;
(6) the issuance or sale of any Capital Stock (other than
Disqualified Stock) of the Company;
(7) any agreement in effect on the Issue Date and described in
the Offering Circular or in any of the SEC filings of the Company
incorporated by reference in the Offering Circular or any amendments,
renewals, extensions or substitutions of any such agreement (so long as
such amendments, renewals, extensions or substitutions are not less
favorable to the Company or the Restricted Subsidiaries) and the
transactions evidenced thereby;
(8) any transactions with the Permitted Holder or any of its
Affiliates involving the purchase or sale of hydrocarbons, or refined
products therefrom, in the ordinary course of business, so long as such
transactions are priced based on industry accepted benchmark prices and
the pricing of such transactions is no worse to the Company or any
Restricted Subsidiary, as applicable, than the pricing of comparable
transactions with unrelated third parties; and
(9) any Intercompany Trade Arrangements.
SECTION 4.08. Limitation on Issuance of Guarantees of
Indebtedness. The Company shall not permit any of its Restricted Subsidiaries,
directly or indirectly, to Guarantee or create any Lien to secure the payment of
any Indebtedness of the Company or any other Restricted Subsidiary unless such
Restricted Subsidiary simultaneously
71
executes and delivers a supplemental indenture to the Indenture providing for
the Guarantee or security of the payment of the Securities by such Restricted
Subsidiary; provided, however, that the following Guarantees and Liens will not
require a Restricted Subsidiary to execute and deliver such a supplemental
indenture: (i) any Guarantee by any Pledged Entity of Indebtedness Incurred
under the New Credit Agreement; or (ii) any Lien created by any Restricted
Subsidiary to secure Indebtedness Incurred pursuant to Section 4.03(b)(1) or
(b)(3). If the Indebtedness to be Guaranteed or secured is subordinated to the
Securities, the Guarantee or security of such Indebtedness shall be subordinated
to the Guarantee or security of the Securities to the same extent as the
Indebtedness to be Guaranteed or secured is subordinated to the Securities.
Notwithstanding the foregoing, any such Guarantee or security by a Restricted
Subsidiary of the Securities shall provide by its terms that it will be
automatically and unconditionally released and discharged upon either:
(1) the release or discharge of such Guarantee or security of
payment of such other Indebtedness, except a discharge by or as a
result of payment under such Guarantee or security;
(2) any sale (including by way of merger or consolidation),
exchange or transfer, to any Person not an Affiliate of the Company, of
all of the Capital Stock owned by the Company and its Restricted
Subsidiaries of, or all or substantially all the assets of, such
Restricted Subsidiary, which sale, exchange or transfer is made in
compliance with the applicable provisions of this Indenture; or
(3) the designation by the Company of such Restricted
Subsidiary as an Unrestricted Subsidiary in accordance with the terms
of this Indenture.
SECTION 4.09. Change of Control. (a) Upon the occurrence of a
Change of Control, each Holder shall have the right to require that the Company
repurchase such Holder's Securities at a purchase price in cash equal to 101% of
the principal amount thereof on the date of purchase plus accrued and unpaid
interest, if any, to the date of purchase (subject to the right of holders of
record
72
on the relevant record date to receive interest due on the relevant interest
payment date).
Within 30 days following any Change of Control, the Company
shall mail a notice to each Holder with a copy to the Trustee (the "Change of
Control Offer") stating:
(1) that a Change of Control has occurred and that such Holder
has the right to require the Company to purchase such Holder's
Securities at a purchase price in cash equal to 101% of the principal
amount thereof on the date of purchase, plus accrued and unpaid
interest, if any, to the date of purchase (subject to the right of
Holders of record on the relevant record date to receive interest on
the relevant interest payment date);
(2) the circumstances and relevant facts regarding such Change
of Control;
(3) the purchase date (which shall be no earlier than 30 days
nor later than 60 days from the date such notice is mailed); and
(4) the instructions, as determined by the Company, consistent
with this Section, that a Holder must follow in order to have its
Securities purchased.
(b) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly completed, to
the Company at the address specified in the notice at least three Business Days
prior to the purchase date. Holders will be entitled to withdraw their election
if the Trustee or the Company receives not later than one Business Day prior to
the purchase date, a facsimile transmission or letter setting forth the name of
the Holder, the principal amount of the Security which was delivered for
purchase by the Holder and a statement that such Holder is withdrawing his
election to have such Security purchased.
(c) On the purchase date, all Securities purchased by the
Company under this Section shall be delivered by the Company to the Trustee for
cancellation, and the Company shall pay the purchase price plus accrued and
unpaid interest, if any, to the Holders entitled thereto.
73
(d) Notwithstanding the foregoing provisions of this Section,
the Company shall not be required to make a Change of Control Offer following a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in this Section 4.09 applicable to a Change of Control Offer made by the Company
and purchases all Securities validly tendered and not withdrawn under such
Change of Control Offer.
(e) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities as a result
of a Change of Control. To the extent that the provisions of any securities laws
or regulations conflict with provisions of this Section 4.09, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 4.09 by virtue of its
compliance with such securities laws or regulations.
SECTION 4.10. Limitation on Liens. The Company shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly, Incur or
permit to exist any Lien (the "Initial Lien") of any nature whatsoever on any of
its properties (including Capital Stock of a Restricted Subsidiary), whether
owned at the Issue Date or thereafter acquired, securing any Indebtedness, other
than Permitted Liens, without effectively providing that the Securities shall be
secured equally and ratably with (or prior to) the obligations so secured for so
long as such obligations are so secured; provided, however, that the Company or
any Restricted Subsidiary shall be entitled to Incur other Liens to secure
Indebtedness as long as the amount of outstanding Indebtedness secured by Liens
Incurred pursuant to this proviso does not exceed 5% of Consolidated Net
Tangible Assets, as determined based on the consolidated balance sheet of the
Company as of the end of the most recent fiscal quarter ending at least 45 days
prior thereto; provided, further, however, that the aggregate amount of
outstanding Indebtedness secured by Liens on assets of Restricted Subsidiaries
pursuant to the foregoing proviso shall in no event exceed the greater of (A)
$125 million and (B) 5% of Consolidated Net Worth.
74
Any Lien created for the benefit of the Holders of the
Securities pursuant to the preceding sentence shall provide by its terms that
such Lien shall be automatically and unconditionally released and discharged
upon the release and discharge of the Initial Lien.
SECTION 4.11. Limitation on Sale/Leaseback Transactions. The
Company shall not, and shall not permit any Restricted Subsidiary to, enter into
any Sale/Leaseback Transaction with respect to any property unless:
(1) the Company or such Restricted Subsidiary would be
entitled to (A) Incur Indebtedness in an amount equal to the
Attributable Debt with respect to such Sale/Leaseback Transaction
pursuant to Section 4.03 and (B) create a Lien on such property
securing such Attributable Debt without equally and ratably securing
the Securities pursuant to Section 4.10;
(2) the net proceeds received by the Company or any Restricted
Subsidiary in connection with such Sale/Leaseback Transaction are at
least equal to the fair value (as determined by the Board of Directors)
of such property; and
(3) the Company applies the proceeds of such transaction in
compliance with Section 4.06.
SECTION 4.12. Business Activities of Pledged Entities. So long
as there are Liens on the equity interests of the Pledged Entities to secure, or
the Pledged Entities have otherwise secured, Indebtedness Incurred pursuant to
clause (b)(2) of Section 4.03, the Company shall not permit any of the Pledged
Entities to engage in any business or activity other than the ownership,
directly or indirectly, of, in the case of CITGO Pipeline I, the Company's
equity interests in the Colonial Pipeline, and in the case of CITGO Pipeline II,
the Company's equity interests in the Explorer Pipeline and, in each case,
activities incidental thereto. So long as there are Liens on the equity
interests of the Pledged Entities to secure, or the Pledged Entities have
otherwise secured, Indebtedness Incurred pursuant to clause (b)(2) of Section
4.03, the Company shall not permit the Pledged Entities to own or acquire any
assets (other than, in case of CITGO Pipeline I, all the equity interests in the
Colonial
75
Pipeline and in the case of CITGO Pipeline II, all the equity interests in the
Explorer Pipeline and, in each case, cash incidental to their permitted
activities).
SECTION 4.13. Compliance Certificate. The Company shall
deliver to the Trustee within 120 days after the end of each fiscal year of the
Company an Officers' Certificate stating that in the course of the performance
by the signers of their duties as Officers of the Company they would normally
have knowledge of any Default and whether or not the signers know of any Default
that occurred during such period. If they do, the certificate shall describe the
Default, its status and what action the Company is taking or proposes to take
with respect thereto. The Company also shall comply with TIA Section 314(a)(4).
SECTION 4.14. Further Instruments and Acts. Upon request of
the Trustee, the Company will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 4.15. Investment Grade Covenants. Upon the occurrence
of an Investment Grade Rating Event, the Company and its Restricted Subsidiaries
shall no longer be subject to the provisions of Sections 4.03, 4.04, 4.05, 4.06,
4.07, 4.08, 4.10, 4.11 and 4.12 and clauses (2), (3) and (4) of Section 5.01 and
clause 2 of Section 5.02. Instead, the provisions of the following clauses (1)
and (2) of this Section 4.15 shall apply to the Company and its Restricted
Subsidiaries only upon and after the occurrence of an Investment Grade Rating
Event:
(1) Restrictions on Secured Indebtedness. If the Company or
any Restricted Subsidiary Incurs any Indebtedness secured by a Lien (other than
a Permitted Lien) on any Principal Property or on any share of stock or
Indebtedness of a Restricted Subsidiary, the Company or such Restricted
Subsidiary shall secure the Securities equally and ratable with (or, at the
Company's option, prior to) such secured Indebtedness so long as such
Indebtedness is so secured, unless the aggregate amount of all such secured
Indebtedness, together with all Attributable Debt of the Company and the
Restricted Subsidiaries with respect to any Sale/Leaseback Transactions
involving Principal Properties (with the exception of such transactions which
are excluded as
76
described in clauses (i) through (v) of Section 4.15(2), would not exceed 10% of
Consolidated Net Tangible Assets.
(2) Restrictions on Sale/Leaseback Transactions. The Company
shall not, and shall not permit any Restricted Subsidiary to, enter into any
Sale/Leaseback Transaction involving any Principal Property, unless the
aggregate amount of all Attributable Debt with respect to such transaction plus
all secured Indebtedness of the Company and the Restricted Subsidiaries (with
the exception of Indebtedness secured by Permitted Liens) would not exceed 10%
of Consolidated Net Tangible Assets. This restriction shall not apply to, and
there shall be excluded from Attributable Debt in any computation under such
restriction, any Sale/Leaseback Transaction if:
(i) the lease is for a period, including renewal rights, not
in excess of three years;
(ii) the sale of the Principal Property is made within 270
days after its acquisition, construction or improvements;
(iii) the lease secures or relates to industrial revenue or
pollution control bonds;
(iv) the transaction is between the Company and a Restricted
Subsidiary; or
(v) the Company, within 270 days after the sale is completed,
applies to the retirement of its Indebtedness or that of a Restricted
Subsidiary, or to the purchase of other property which will constitute
a Principal Property, an amount not less than the greater of:
(A) the net proceeds of the sale of the Principal
Property leased; or
(B) the fair market value (as determined by the
Company in good faith) of the Principal Property leased.
77
The amount to be applied to the retirement of Indebtedness
shall be reduced by:
(a) the principal amount of any of the Company's debentures or
notes (including the Securities) or those of a Restricted Subsidiary
surrendered within 270 days after such sale to the applicable trustee
for retirement and cancelation;
(b) the principal amount of Indebtedness, other than the items
referred to in the preceding clause (i), voluntarily retired by the
Company or a Restricted Subsidiary within 270 days after such sale; and
(c) associated transaction expenses.
ARTICLE 5
Successor Company
SECTION 5.01. When Company May Merge or Transfer Assets. The
Company shall not consolidate with or merge with or into, or convey, transfer or
lease, in one transaction or a series of transactions, directly or indirectly,
all or substantially all its assets to, any Person, unless:
(1) the resulting, surviving or transferee Person (the
"Successor Company") shall be a Person organized and existing under the
laws of the United States of America, any State thereof or the District
of Columbia and the Successor Company (if not the Company) shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, all the
obligations of the Company under the Securities and this Indenture;
(2) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Company or any Subsidiary as a result of such transaction as having
been Incurred by such Successor Company or such Subsidiary at the time
of such transaction), no Default shall have occurred and be continuing;
78
(3) immediately after giving pro forma effect to such
transaction, the Successor Company would be able to Incur an additional
$1.00 of Indebtedness pursuant to Section 4.03(a); and
(4) immediately after giving pro forma effect to such
transaction, the Successor Company shall have Consolidated Net Worth in
an amount that is not less than the Consolidated Net Worth of the
Company immediately prior to such transaction;
provided, however, that clauses (3) and (4) will not be applicable to (A) a
Restricted Subsidiary consolidating with, merging into or transferring all or
part of its properties and assets to the Company or (B) the Company merging with
an Affiliate of the Company solely for the purpose and with the sole effect of
reincorporating the Company in another jurisdiction.
For purposes of this covenant, the sale, lease, conveyance,
assignment, transfer or other disposition of all or substantially all of the
properties and assets of one or more Subsidiaries of the Company, which
properties and assets, if held by the Company instead of such Subsidiaries,
would constitute all or substantially all of the properties and assets of the
Company on a consolidated basis, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.
The Successor Company shall be the successor to the Company
and shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture, and the predecessor Company, except
in the case of a lease, shall be released from the obligation to pay the
principal of and interest on the Securities.
SECTION 5.02. When Subsidiary Guarantor May Merge or Transfer
Assets. The Company shall not permit any Subsidiary Guarantor to consolidate
with or merge with or into, or convey, transfer or lease, in one transaction or
series of transactions, all or substantially all of its assets to any Person
unless:
(1) the resulting, surviving or transferee Person (if not such
Subsidiary) shall be a Person
79
organized and existing under the laws of the jurisdiction under which
such Subsidiary was organized or under the laws of the United States of
America, or any State hereof or the District of Columbia, and such
Person shall expressly assume, by an amendment or supplemental
indenture to this Indenture, in a form acceptable to the Trustee, all
the obligations of such Subsidiary, if any, under its Subsidiary
Guaranty; provided, however, that the provisions of this Section
5.02(1) shall not apply in the case of a Subsidiary Guarantor that has
been disposed of in its entirety to another Person (other than to the
Company or an Affiliate of the Company), whether through a merger,
consolidation or sale of Capital Stock or assets, if in connection
therewith the Company provides an Officers' Certificate to the Trustee
to the effect that the Company will comply with its obligations under
Section 4.06, if then applicable, in respect of such disposition;
(2) immediately after giving effect to such transaction or
transactions on a pro forma basis (and treating any Indebtedness which
becomes an obligation of the resulting, surviving or transferee Person
as a result of such transaction as having been issued by such Person at
the time of such transaction), no Default shall have occurred and be
continuing; and
(3) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such amendment or supplemental
indenture, if any, complies with this Indenture.
ARTICLE 6
Defaults and Remedies
SECTION 6.01. Events of Default. An "Event of Default" occurs
if:
(1) the Company defaults in any payment of interest on any
Security when the same becomes due and payable, and such default
continues for a period of 30 days;
80
(2) the Company defaults in the payment of the principal of
any Security when the same becomes due and payable at its Stated
Maturity, upon optional redemption, upon required purchase, upon
declaration of acceleration or otherwise;
(3) the Company fails to comply with Section 5.01;
(4) the Company fails to comply with its obligations, if then
applicable, in Section 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09,
4.10, 4.11, 4.12 or 4.15 (other than a failure to purchase Securities
when required under Section 4.06 or 4.09) and such failure continues
for 30 days after the notice specified below;
(5) the Company or any Subsidiary Guarantor fails to comply
with any of its other agreements in this Indenture and such failure
continues for 60 days after the notice specified below;
(6) Indebtedness of the Company or any Significant Subsidiary
is not paid within any applicable grace period after final maturity or
is accelerated by the holders thereof because of a default and the
total amount of such Indebtedness unpaid or accelerated exceeds $35
million;
(7) the Company or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
(C) consents to the appointment of a Custodian of it
or for any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
81
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any
Significant Subsidiary or for any substantial part of its
property; or
(C) orders the winding up or liquidation of the
Company or any Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order
or decree remains unstayed and in effect for 60 days;
(9) any judgment or decree for the payment of money in excess
of $35 million is entered against the Company or any Significant
Subsidiary, remains outstanding for a period of 60 consecutive days
following such judgment or decree and is not discharged, waived or
stayed; or
(10) any Subsidiary Guaranty ceases to be in full force and
effect (other than in accordance with the terms of this Indenture and
such Subsidiary Guaranty) or any Subsidiary Guarantor denies or
disaffirms its obligations under its Subsidiary Guaranty.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
The term "Bankruptcy Law" means ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code,
or any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clauses (4) or (5) shall not constitute an
Event of Default until the Trustee or the
82
Holders of at least 25% in principal amount of the outstanding Securities notify
the Company in writing of the Default and the Company does not cure such Default
within the time specified after receipt of such notice; provided, however, that
in the case of a Default under clause (4) constituting a failure to comply with
Section 4.04, the Holders of at least 12.5% in principal amount of the
outstanding Securities may effectuate such written notice. Such notice must
specify the Default, demand that it be remedied and state that such notice is a
"Notice of Default".
The Company shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any Event of Default under clause (6) or (9) and any event which with the
giving of notice or the lapse of time would become an Event of Default under
clause (4) or (5), its status and what action the Company is taking or proposes
to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than
an Event of Default specified in Section 6.01(7) or (8) with respect to the
Company) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in principal amount of the Securities by notice to the
Company and the Trustee, may declare the principal of and accrued but unpaid
interest on all the Securities to be due and payable; provided, however, that,
if such Event of Default results from a failure to comply with Section 4.04, the
Holders of at least 12.5% in principal amount of then outstanding Securities may
make the foregoing declaration. Upon such a declaration, such principal and
interest shall be due and payable immediately. If an Event of Default specified
in Section 6.01(7) or (8) with respect to the Company occurs and is continuing,
the principal of and interest on all the Securities shall ipso facto become and
be immediately due and payable without any declaration or other act on the part
of the Trustee or any Securityholders. The Holders of a majority in principal
amount of the Securities by notice to the Trustee may rescind an acceleration
and its consequences if the rescission would not conflict with any judgment or
decree and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of
83
acceleration. No such rescission shall affect any subsequent Default or impair
any right consequent thereto.
SECTION 6.03. Other Remedies. If an Event of Default occurs
and is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a
majority in principal amount of the Securities by written notice to the Trustee
may waive an existing Default and its consequences except: (i) a Default in the
payment of the principal of or interest on a Security; (ii) a Default arising
from the failure to redeem or purchase any Security when required pursuant to
this Indenture; or (iii) a Default in respect of a provision that under Section
9.02 cannot be amended without the consent of each Securityholder affected. When
a Default is waived, it is deemed cured and the Company, the Trustee and the
Securityholders shall be restored to their former positions and rights
hereunder, but no such waiver shall extend to any subsequent or other Default or
impair any consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority
in principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such
84
direction. Prior to taking any action hereunder, the Trustee shall be entitled
to indemnification satisfactory to it in its sole discretion against all losses
and expenses caused by taking or not taking such action.
SECTION 6.06. Limitation on Suits. Except to enforce the right
to receive payment of principal, premium (if any) or interest when due, no
Securityholder may pursue any remedy with respect to this Indenture or the
Securities unless:
(1) the Holder has previously given the Trustee written notice
stating that an Event of Default is continuing;
(2) the Holders of at least 25% (or 12.5% in the case of a
failure to comply with Section 4.04) in principal amount of the
Securities have made a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders have offered the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee has not complied with the request within 60
days after receipt of the request and the offer of security or
indemnity; and
(5) the Holders of a majority in principal amount of the
Securities have not given the Trustee a direction inconsistent with the
request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
SECTION 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of and interest on the Securities held by such
Holder, on or after the respective due dates expressed in the Securities, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
85
SECTION 6.08. Collection Suit by Trustee. If an Event of
Default specified in Section 6.01(1) or (2) occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company for the whole amount then due and owing (together with
interest on any unpaid interest to the extent lawful) and the amounts provided
for in Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee
may file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its creditors or
its property and, unless prohibited by law or applicable regulations, may vote
on behalf of the Holders in any election of a trustee in bankruptcy or other
Person performing similar functions, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and its counsel, and any other amounts due the Trustee under Section
7.07.
SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article 6, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Company shall mail to each Securityholder and the Trustee
a notice that states the record date, the payment date and amount to be paid.
86
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by
Holders of more than 10% in principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. The Company
(to the extent it may lawfully do so) shall not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of this Indenture; and
the Company (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and shall not hinder, delay or impede
the execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law had been enacted.
ARTICLE 7
Trustee
SECTION 7.01. Duties of Trustee. (a) If an Event of Default
has occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs.
87
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements
of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b)
of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may, at its sole option, agree in writing
with the Company.
(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
88
(g) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. Subject to TIA Sections
315(a) through (d): (a) The Trustee may rely, and shall be protected in acting
or refraining from acting, upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel, which shall conform
to Section 11.04. The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on the Officers' Certificate or Opinion
of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Trustee's conduct does not
constitute willful misconduct or negligence.
(e) The Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
89
(f) The Trustee shall not be bound to make any investigation
into facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture or other paper or document, but the Trustee in its discretion may make
such further inquiry into such facts or matters as it may see fit.
(g) The Trustee shall not be required to take notice or be
deemed to have taken notice of any Default hereunder unless the Trustee shall be
specifically notified in writing of such Default by the Company or otherwise
have actual knowledge of such default, or by the Holders of at least 25% (or
12.5% in the case of a failure to comply with Section 4.04) in aggregate
principal amount of the outstanding Securities.
(h) The permissive right of the Trustee to act hereunder will
not be construed as a duty.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in the Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the Default within 90 days after it occurs; provided,
however, that if such Default constitutes a failure to comply with
90
Section 4.04, the Trustee must mail to each Holder of the Securities notice of
such Default within 40 days after it occurs. Except in the case of a Default in
payment of principal of or interest on any Security (including payments pursuant
to the mandatory redemption provisions of such Security, if any), the Trustee
may withhold the notice if and so long as a committee of its Trust Officers in
good faith determines that withholding the notice is in the interests of
Securityholders.
SECTION 7.06. Reports by Trustee to Holders. As promptly as
practicable after each May 15 beginning with the May 15 following the date of
this Indenture, and in any event prior to July 15 in each year, the Trustee
shall mail to each Securityholder, as provided in TIA Section 313(c), a brief
report dated as of May 15 that complies with TIA Section 313(a). The Trustee
also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to
Securityholders shall be mailed to the Company and filed with the SEC and each
stock exchange (if any) on which the Securities are listed. The Company agrees
to notify promptly the Trustee whenever the Securities become listed on any
stock exchange and of any delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Company shall
pay to the Trustee such compensation as shall be agreed upon in writing for its
services hereunder. The Trustee's compensation shall not be limited by any law
on compensation of a trustee of an express trust. The Company shall reimburse
the Trustee upon request for all reasonable out-of-pocket expenses incurred or
made by it, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and expenses, disbursements and
advances of the Trustee's agents, counsel, accountants and experts. The Company
shall indemnify the Trustee against any and all loss, liability or expense
(including attorneys' fees) incurred by it in connection with the administration
of this trust and the performance of its duties hereunder. The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Company shall not relieve the Company of
its obligations hereunder. The Company shall defend the claim and the Trustee
shall cooperate in the defense. The Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel. The Company
91
need not pay for any settlement made without its consent, which consent shall
not be unreasonably withheld. The Company need not reimburse any expense or
indemnify against any loss, liability or expense incurred by the Trustee through
the Trustee's own wilful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest on particular Securities.
The Company's payment obligations pursuant to this Section
shall survive the discharge of this Indenture. When the Trustee incurs expenses
after the occurrence of a Default specified in Section 6.01(7) or (8) with
respect to the Company, the expenses are intended to constitute expenses of
administration under the Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section
313(b)(2) to the extent applicable.
SECTION 7.08. Replacement of Trustee. The Trustee may resign
at any time by so notifying the Company in writing at least 30 days prior to the
date of the proposed resignation. The Holders of a majority in principal amount
of the Securities may remove the Trustee by so notifying the Trustee and may
appoint a successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the
Holders of a majority in principal amount of the Securities and such Holders do
not reasonably promptly appoint a successor Trustee, or if a vacancy exists in
the
92
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the Company or the Holders of
a majority in principal amount of the Securities may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10 or shall fail
to comply with TIA Section 310(b), any Securityholder may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
If the Trustee is removed without cause, all fees and expenses
of the Trustee incurred in the administration of the trusts or in performing the
duties hereunder shall be paid to the Trustee prior to the effective date of
such removal.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee with the same effect as if the
successor Trustee
93
has been named the Trustee herein, provided such corporation shall be otherwise
qualified and eligible under this Article.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall
at all times satisfy the requirements of TIA Section 310(a). The Trustee shall
always have a combined capital and surplus of at least $50,000,000 as set forth
in its most recent published annual report of condition. The Trustee shall
comply with TIA Section 310(b); provided, however, that there shall be excluded
from the operation of TIA Section 310(b)(1) any indenture or indentures under
which other securities or certificates of interest or participation in other
securities of the Company are outstanding if the requirements for such exclusion
set forth in TIA Section 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against
Company. The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
ARTICLE 8
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities;
Defeasance. (a) When (1) the Company delivers to the Trustee all outstanding
Securities (other than Securities replaced pursuant to Section 2.07) for
94
cancellation or (2) all outstanding Securities have become due and payable,
whether at maturity or on a redemption date as a result of the mailing of a
notice of redemption pursuant to Article 3 hereof and the Company irrevocably
deposits with the Trustee funds sufficient to pay at maturity or upon redemption
all outstanding Securities, including interest thereon to maturity or such
redemption date (other than Securities replaced pursuant to Section 2.07), and
if in either case the Company pays all other sums payable hereunder by the
Company, then this Indenture shall, subject to Section 8.01(c), cease to be of
further effect. The Trustee shall acknowledge satisfaction and discharge of this
Indenture on demand of the Company accompanied by an Officers' Certificate and
an Opinion of Counsel and at the cost and expense of the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any
time may terminate (1) all its obligations under the Securities and this
Indenture ("legal defeasance option") or (2) its obligations under Sections
4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12 and 4.15 and
the operation of Sections 6.01(4), 6.01(6), 6.01(7), 6.01(8) and 6.01(9) (but,
in the case of Sections 6.01(7) and (8), with respect only to Significant
Subsidiaries) and the limitations contained in Sections 5.01(3) and (4)
("covenant defeasance option"). The Company may exercise its legal defeasance
option notwithstanding its prior exercise of its covenant defeasance option. If
the Company exercises its legal defeasance option or its covenant defeasance
option, each Subsidiary Guarantor, if any, shall be released from all its
obligations with respect to its Subsidiary Guaranty.
If the Company exercises its legal defeasance option, payment
of the Securities may not be accelerated because of an Event of Default with
respect thereto. If the Company exercises its covenant defeasance option,
payment of the Securities may not be accelerated because of an Event of Default
specified in Sections 6.01(4), 6.01(6), 6.01(7), 6.01(8) and 6.01(9) (but, in
the case of Sections 6.01(7) and (8), with respect only to Significant
Subsidiaries) or because of the failure of the Company to comply with Section
5.01(3) or (4).
Upon satisfaction of the conditions set forth herein and upon
the written request of the Company, the
95
Trustee shall acknowledge in writing the discharge of those obligations that the
Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 7.07 and 7.08 and in
this Article 8 shall survive until the Securities have been paid in full.
Thereafter, the Company's obligations in Sections 7.07, 8.04 and 8.05 shall
survive.
SECTION 8.02. Conditions to Defeasance. The Company may
exercise its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations for the payment of principal of
and interest on the Securities to maturity or redemption, as the case
may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus
any deposited money without investment will provide cash at such times
and in such amounts as will be sufficient to pay principal and interest
when due on all the Securities to maturity or redemption, as the case
may be;
(3) 123 days pass after the deposit is made and during the
123-day period no Default specified in Sections 6.01(7) or (8) with
respect to the Company occurs which is continuing at the end of the
period;
(4) the deposit does not constitute a default under any other
agreement binding on the Company;
(5) the Company delivers to the Trustee an Opinion of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940;
(6) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an
96
Opinion of Counsel stating that (A) the Company has received from, or
there has been published by, the Internal Revenue Service a ruling, or
(B) since the date of this Indenture there has been a change in the
applicable Federal income tax law, in either case to the effect that,
and based thereon such Opinion of Counsel shall confirm that, the
Securityholders will not recognize income, gain or loss for Federal
income tax purposes as a result of such defeasance and will be subject
to Federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such defeasance had not
occurred;
(7) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Securityholders will not recognize income, gain or loss for
Federal income tax purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
covenant defeasance had not occurred; and
(8) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance and discharge of the Securities as
contemplated by this Article 8 have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article 3.
SECTION 8.03. Application of Trust Money. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant to
this Article 8. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities.
SECTION 8.04. Repayment to Company. The Trustee and the Paying
Agent shall promptly turn over to the Company upon written request any excess
money or securities held by them at any time.
97
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Company upon request any money held by
them for the payment of principal of or interest on the Securities that remains
unclaimed for two years, and, thereafter, Securityholders entitled to the money
must look to the Company for payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations. The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations or
the principal and interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with this
Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article 8; provided, however, that, if the
Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9
Amendments
SECTION 9.01. Without Consent of Holders. The Company, the
Subsidiary Guarantors, if any, and the Trustee may amend this Indenture or the
Securities without notice to or consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
98
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or
in place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to add Guarantees with respect to the Securities,
including Subsidiary Guaranties, or to secure the Securities;
(5) to add to the covenants of the Company or any Subsidiary
Guarantors for the benefit of the Holders or to surrender any right or
power herein conferred upon the Company or any Subsidiary Guarantor;
(6) to make any change that does not adversely affect the
rights of any Securityholder; or
(7) to comply with any requirements of the SEC in connection
with qualifying, or maintaining the qualification of, this Indenture
under the TIA.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 9.02. With Consent of Holders. The Company, the
Subsidiary Guarantors, if any, and the Trustee may amend this Indenture or the
Securities without notice to any Securityholder but with the written consent of
the Holders of at least a majority in principal amount of the Securities then
outstanding (including consents obtained in connection with a tender offer or
exchange for the Securities). However, without the consent of each
Securityholder affected thereby, an amendment or waiver, including a waiver
pursuant to Section 6.04, may not:
(1) reduce the amount of Securities whose Holders must consent
to an amendment;
99
(2) reduce the rate of or extend the time for payment of
interest on any Security;
(3) reduce the principal amount of or extend the Stated
Maturity of any Security;
(4) change the provisions applicable to the redemption of any
Security set forth in such Security or Article 3;
(5) make any Security payable in money other than that stated
in the Security;
(6) impair the right of any Holder to receive payment of
principal of and interest on such Holder's Securities on or after the
due dates therefor or to institute suit for the enforcement of any
payment on or with respect to such Holder's Securities;
(7) make any change in Section 6.04 or 6.07 or the second
sentence of this Section;
(8) make any changes in the ranking or priority of any
Security that would adversely affect the Securityholders; or
(9) make any change in any Subsidiary Guaranty that would
adversely affect the Securityholders.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every
100
subsequent Holder of that Security or portion of the Security that evidences the
same debt as the consenting Holder's Security, even if notation of the consent
or waiver is not made on the Security. However, any such Holder or subsequent
Holder may revoke the consent or waiver as to such Holder's Security or portion
of the Security if the Trustee receives the notice of revocation before the date
the amendment or waiver becomes effective. After an amendment or waiver becomes
effective, it shall bind every Securityholder. An amendment or waiver becomes
effective upon the execution of such amendment or waiver by the Trustee.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an
amendment or waiver changes the terms of a Security, the Trustee may require the
Holder of the Security to deliver it to the Trustee. The Trustee may place an
appropriate notation on the Security regarding the changed terms and return it
to the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms. Failure to make the
appropriate notation or to issue a new Security shall not affect the validity of
such amendment or waiver.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall
sign any amendment authorized pursuant to this Article 9 if the amendment does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may but need not sign it. In signing such
amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to
101
receive, and (subject to Section 7.01) shall be fully protected in relying upon,
an Officers' Certificate and an Opinion of Counsel stating that such amendment
is authorized or permitted by this Indenture.
SECTION 9.07. Payment for Consent. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE 10
Subsidiary Guaranties
SECTION 10.01. Guaranties. Each Subsidiary Guarantor hereby
unconditionally and irrevocably guarantees, jointly and severally, to each
Holder and to the Trustee and its successors and assigns (a) the full and
punctual payment of principal of and interest on the Securities when due,
whether at maturity, by acceleration, by redemption or otherwise, and all other
monetary obligations of the Company under this Indenture and the Securities and
(b) the full and punctual performance within applicable grace periods of all
other obligations of the Company under this Indenture and the Securities (all
the foregoing being hereinafter collectively called the "Guarantied
Obligations"). Each Subsidiary Guarantor further agrees that the Guarantied
Obligations may be extended or renewed, in whole or in part, without notice or
further assent from such Subsidiary Guarantor and that such Subsidiary Guarantor
will remain bound under this Article 10 notwithstanding any extension or renewal
of any Guarantied Obligation.
Each Subsidiary Guarantor waives presentation to, demand of,
payment from and protest to the Company of any of the Guarantied Obligations and
also waives notice of protest for nonpayment. Each Subsidiary Guarantor waives
notice of any default under the Securities or the Guarantied Obligations. The
obligations of each Subsidiary
102
Guarantor hereunder shall not be affected by (a) the failure of any Holder or
the Trustee to assert any claim or demand or to enforce any right or remedy
against the Company or any other Person under this Indenture, the Securities or
any other agreement or otherwise; (b) any extension or renewal of any thereof;
(c) any rescission, waiver, amendment or modification of any of the terms or
provisions of this Indenture, the Securities or any other agreement; (d) the
release of any security held by any Holder or the Trustee for the Guarantied
Obligations or any of them; (e) the failure of any Holder or the Trustee to
exercise any right or remedy against any other guarantor of the Guarantied
Obligations; or (f) except as set forth in Section 10.06, any change in the
ownership of such Subsidiary Guarantor.
Each Subsidiary Guarantor further agrees that its Subsidiary
Guaranty herein constitutes a guarantee of payment, performance and compliance
when due (and not a guarantee of collection) and waives any right to require
that any resort be had by any Holder or the Trustee to any security held for
payment of the Guarantied Obligations.
Except as expressly set forth in Sections 8.01(b), 10.02 and
10.06, the obligations of each Subsidiary Guarantor hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason,
including any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to any defense of setoff, counterclaim, recoupment or
termination whatsoever or by reason of the invalidity, illegality or
unenforceability of the Guarantied Obligations or otherwise. Without limiting
the generality of the foregoing, the obligations of each Subsidiary Guarantor
herein shall not be discharged or impaired or otherwise affected by the failure
of any Holder or the Trustee to assert any claim or demand or to enforce any
remedy under this Indenture, the Securities or any other agreement, by any
waiver or modification of any thereof, by any default, failure or delay, willful
or otherwise, in the performance of the obligations, or by any other act or
thing or omission or delay to do any other act or thing which may or might in
any manner or to any extent vary the risk of such Subsidiary Guarantor or would
otherwise operate as a discharge of such Subsidiary Guarantor as a matter of law
or equity.
103
Each Subsidiary Guarantor further agrees that its Guarantee
herein shall continue to be effective or be reinstated, as the case may be, if
at any time payment, or any part thereof, of principal of or interest on any
Obligation is rescinded or must otherwise be restored by any Holder or the
Trustee upon the bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any
other right which any Holder or the Trustee has at law or in equity against any
Subsidiary Guarantor by virtue hereof, upon the failure of the Company to pay
the principal of or interest on any Obligation when and as the same shall become
due, whether at maturity, by acceleration, by redemption or otherwise, or to
perform or comply with any other Guarantied Obligation, each Subsidiary
Guarantor hereby promises to and shall, upon receipt of written demand by the
Trustee, forthwith pay, or cause to be paid, in cash, to the Holders or the
Trustee an amount equal to the sum of (1) the unpaid amount of such Guarantied
Obligations, (2) accrued and unpaid interest on such Guarantied Obligations (but
only to the extent not prohibited by law) and (3) all other monetary Guarantied
Obligations of the Company to the Holders and the Trustee.
Each Subsidiary Guarantor further agrees that, as between it,
on the one hand, and the Holders and the Trustee, on the other hand, (x) the
maturity of the Guarantied Obligations hereby may be accelerated as provided in
Article 6 for the purposes of such Subsidiary Guarantor's Subsidiary Guaranty
herein, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the Guarantied Obligations, and (y) in the event
of any declaration of acceleration of such Guarantied Obligations as provided in
Article 6, such Guarantied Obligations (whether or not due and payable) shall
forthwith become due and payable by such Subsidiary Guarantor for the purposes
of this Section.
Each Subsidiary Guarantor also agrees to pay any and all costs
and expenses (including reasonable attorneys' fees and expenses) incurred by the
Trustee or any Holder in enforcing any rights under this Section.
SECTION 10.02. Limitation on Liability. Any term or provision
of this Indenture to the contrary notwithstanding, the maximum aggregate amount
of the
104
Guarantied Obligations by any Subsidiary Guarantor shall not exceed the maximum
amount that can be hereby guaranteed without rendering this Indenture, as it
relates to such Subsidiary Guarantor, voidable under applicable law relating to
fraudulent conveyance or fraudulent transfer or similar laws affecting the
rights of creditors generally.
SECTION 10.03. Successors and Assigns. This Article 10 shall
be binding upon each Subsidiary Guarantor and its successors and assigns and
shall enure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges conferred upon that party in this
Indenture and in the Securities shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions of this
Indenture.
SECTION 10.04. No Waiver. Neither a failure nor a delay on the
part of either the Trustee or the Holders in exercising any right, power or
privilege under this Article 10 shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise of any
right, power or privilege. The rights, remedies and benefits of the Trustee and
the Holders herein expressly specified are cumulative and not exclusive of any
other rights, remedies or benefits which either may have under this Article 10
at law, in equity, by statute or otherwise.
SECTION 10.05. Modification. No modification, amendment or
waiver of any provision of this Article 10, nor the consent to any departure by
any Subsidiary Guarantor therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Trustee, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. No notice to or demand on any Subsidiary Guarantor in any case
shall entitle such Subsidiary Guarantor to any other or further notice or demand
in the same, similar or other circumstances.
SECTION 10.06. Release of Subsidiary Guarantor. (a) Upon (i)
the sale or other disposition (including by way of consolidation or merger) of
any Subsidiary Guarantor (other than to the Company or an Affiliate of the
Company), (ii) the sale or disposition of all or substantially all
105
the assets of such Subsidiary Guarantor (other than to the Company or an
Affiliate of the Company) or (iii) the designation of such Subsidiary Guarantor
as an Unrestricted Subsidiary, in each case in accordance with the provisions of
this Indenture,(b) if a Subsidiary Guarantor originally became a Subsidiary
Guarantor pursuant to the requirements of Section 4.08 in connection with such
Subsidiary Guarantor's Guarantee of other Indebtedness or creation of a Lien to
secure the payment of other Indebtedness, upon the release or discharge of the
Guarantee or security of payment of other Indebtedness (other than a discharge
by or as a result of payment under such Guarantee or security), subject to
paragraph 5 of Section 10.01, when all the Guarantied Obligations shall have
been irrevocably paid in full, such Subsidiary Guarantor shall be deemed
released from all obligations under such Subsidiary Guaranty, this Indenture and
the Securities without any further action required on the part of the Trustee or
any Holder. At the request of the Company, the Trustee shall execute and deliver
an appropriate instrument evidencing such release.
SECTION 10.07. Form of Supplemental Indenture. Where this
Indenture requires that any Restricted Subsidiary execute and deliver a
supplemental indenture to this Indenture pursuant to which such Restricted
Subsidiary guarantees payment of the Securities, such Restricted Subsidiary
shall execute and deliver a supplemental indenture in the form attached to this
Indenture as Exhibit I.
ARTICLE 11
Miscellaneous
SECTION 11.01. Trust Indenture Act Controls. If any provision
of this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
106
SECTION 11.02. Notices. Any notice or communication shall be
in writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company:
CITGO Petroleum Corporation
One ▇▇▇▇▇▇ Place,
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
if to the Trustee:
The Bank of
New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administrator
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Securityholder shall
be mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Any notice or communication shall also be so mailed to any
Person described in TIA Section 313(c), to the extent required by the TIA.
Copies of any such communication or notice to a Holder shall also be mailed to
the Trustee, the Registrar, co-registrar, Paying Agent and transfer agent at the
same time.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the
107
event, and such waiver shall be the equivalent of such notice. Waiver of notice
by Holders shall be filed with the Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in reliance upon such
waiver.
In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
SECTION 11.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
SECTION 11.04. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to take
or refrain from taking any action under this Indenture, the Company shall
furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 11.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
108
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
provided, however, that, with respect to matters of fact, an Opinion of Counsel
may rely on an Officers' Certificate or certificates of public officials.
SECTION 11.06. When Securities Disregarded. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by the Company
or by any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company shall be disregarded and
deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities which the Trustee knows are so owned shall be so
disregarded. Also, subject to the foregoing, only Securities outstanding at the
time shall be considered in any such determination.
SECTION 11.07. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
SECTION 11.08. Legal Holidays. If a payment date is a Legal
Holiday, payment shall be made on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period. If a regular
record date is a Legal Holiday, the record date shall not be affected.
109
SECTION 11.09. Governing Law. This Indenture and the
Securities shall be governed by, and construed in accordance with, the laws of
the State of
New York but without giving effect to applicable principles of
conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby.
SECTION 11.10. No Recourse Against Others. A director,
officer, employee, controlling person, stockholder or other equity holder as
such, of the Company shall not have any liability for any obligations, covenants
or agreements of the Company under the Securities or this Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder shall waive and release
all such liability. The waiver and release shall be part of the consideration
for the issue of the Securities.
SECTION 11.11. Successors. All agreements of the Company in
this Indenture and the Securities shall bind its successors. All agreements of
the Trustee in this Indenture shall bind its successors.
SECTION 11.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Indenture.
SECTION 11.13. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
110
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
CITGO PETROLEUM CORPORATION
by
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President
Finance Administration &
Chief Financial Officer
BANK OF
NEW YORK, as Trustee
by
/s/ VAN ▇. ▇▇▇▇▇
--------------------------
Name: Van ▇. ▇▇▇▇▇
Title: Vice President