FIRST SUPPLEMENTAL INDENTURE

Exhibit 4.2

 

FRONTIER OIL CORPORATION,

as Issuer,

THE GUARANTORS NAMED HEREIN

and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee

FIRST SUPPLEMENTAL INDENTURE

dated as of September 17, 2008

to Indenture dated as of September 17, 2008

Providing for Issuance of

8.5% Senior Notes due 2016

 

TABLE OF CONTENTS

 

 

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THIS FIRST SUPPLEMENTAL INDENTURE , dated as of September 17, 2008 (this “First Supplemental Indenture”), supplements and amends the Indenture dated as of September 17, 2008 (the “Original Indenture”) among FRONTIER OIL CORPORATION , a Wyoming corporation, as issuer (the “Company”), the GUARANTORS (as defined hereinafter) named therein and WELLS FARGO BANK, NATIONAL ASSOCIATION , a national banking association, as trustee (the “Trustee”).

RECITATIONS OF THE COMPANY

WHEREAS, the Company, the Guarantors and the Trustee have heretofore executed and delivered the Original Indenture to provide for the issuance by the Company of its senior debt securities in one or more series;

WHEREAS, Section 9.1 of the Original Indenture provides, among other things, that the Company, the Guarantors and the Trustee may without the consent of any Holders enter into one or more indentures supplemental to the Original Indenture to, among other things, (a) change or eliminate any of the provisions of the Original Indenture, provided that any such change or elimination shall become effective only when there is no Security outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision and (b) establish the form or terms of Securities of any series as permitted by Sections 2.1 and 3.1;

WHEREAS, the Company desires to provide for the issuance of an initial series of Securities to be designated as the “8.5% Senior Notes due 2016” (the “8.5% Notes”), to set forth the terms that will be applicable thereto, including the guarantee thereof by the Guarantors, to establish the form thereof and in this connection to change or eliminate certain provisions of the Original Indenture, but only in relation to the 8.5% Notes;

WHEREAS, all action on the part of the Company and the Guarantors necessary to authorize the issuance by the Company of the 8.5% Notes under the Original Indenture and this First Supplemental Indenture (the Original Indenture, as amended and supplemented by this First Supplemental Indenture, being hereinafter called the “Indenture”) and the guarantee thereof by each of the Guarantors has been duly taken; and

WHEREAS, all acts and things necessary to make the 8.5% Notes, when executed by the Company and authenticated and delivered by the Trustee as provided in the Original Indenture, the legal, valid and binding obligations of the Company, and to constitute these presents a valid and binding supplemental indenture of the Company and the Guarantors, have been done and performed, and the execution of this First Supplemental Indenture and the creation and issuance under the Indenture of the 8.5% Notes and the related Subsidiary Guarantees have in all respects been duly authorized, the Company in the exercise of the legal right and power vested in it, executes this First Supplemental Indenture and proposes to create, execute, issue and deliver the 8.5% Notes and each Guarantor in the exercise of the legal right and power vested in it, likewise executes this First Supplemental Indenture and proposes to guarantee the 8.5% Notes on the terms set forth herein.

 

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NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:

That, in order to establish the designation, form, terms and provisions of, and to authorize the authentication and delivery of the 8.5% Notes, and in consideration of the acceptance of the 8.5% Notes by the Holders thereof and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

SECTION 1. Creation of 8.5% Notes .

Pursuant to Sections 2.1 and 3.1 of the Original Indenture, there is hereby created a new series of Securities designated as the “8.5% Senior Notes due 2016” (which are hereinafter referred to as the “8.5% Notes” for purposes of this First Supplemental Indenture). The Trustee shall authenticate 8.5% Notes for original issue on the Issue Date in the aggregate principal amount of $200,000,000 (the “Original 8.5% Notes”). The Original 8.5% Notes shall be in substantially the form specified in Exhibit A to this First Supplemental Indenture, shall have the terms set forth therein and shall be entitled to the benefits of the other provisions of the Original Indenture as modified by this First Supplemental Indenture and specified herein.

With respect to any 8.5% Notes issued after the Issue Date (except for 8.5% Notes authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other 8.5% Notes pursuant to Section 3.4, 3.5, 3.6, 9.6 or 11.7) (the “Additional 8.5% Notes”), there shall be established in or pursuant to a Board Resolution or supplemental indenture:

(a) that such Additional 8.5% Notes shall be issued as part of the same or a different series as the Original 8.5% Notes;

(b) the aggregate principal amount of such Additional 8.5% Notes which may be authenticated and delivered under the Indenture, which may be in an unlimited aggregate principal amount or which may be in a limited principal amount (except for Additional 8.5% Notes authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other 8.5% Notes pursuant to Section 3.4, 3.5, 3.6, 9.6 or 11.7 and except for Additional 8.5% Notes which, pursuant to Section 3.3, are deemed never to have been authenticated and delivered hereunder);

(c) the issue price and issuance date of such Additional 8.5% Notes, including the date from which interest on such Additional 8.5% Notes shall accrue;

(d) if applicable, that such Additional 8.5% Notes shall be issuable in whole or in part in the form of one or more Global Securities and, in such case, the respective Depositaries for such Global Securities, the form of any legend or legends that shall be borne by any such Global Security in addition to or in lieu of that set forth in Exhibit A and any circumstances in addition to or in lieu of those set forth in the Indenture in which any such Global Security may be exchanged in whole or in part for 8.5% Notes registered, and any transfer of such Global Security in whole or in part may be registered, in the name or names of Persons other than the Depositary for such Global Security or a nominee thereof; and

 

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(e) if applicable, that such Additional 8.5% Notes shall not be registered under the Securities Act, but shall be issued pursuant to an exemption from registration under the Securities Act, shall bear additional appropriate legends and shall have the benefit of registration rights.

Except as set forth above, such Additional 8.5% Notes shall have the terms set forth in Exhibit A to this First Supplemental Indenture, such Additional 8.5% Notes shall be entitled to the benefits of the other provisions of the Original Indenture as modified by this First Supplemental Indenture, and the Original 8.5% Notes and such Additional 8.5% Notes shall be treated as a single class under the Indenture for all purposes, including waivers, amendments, redemptions and offers to purchase.

SECTION 2. Definitions and Rules of Construction .

(a) Capitalized terms used herein and not otherwise defined shall have the respective meanings assigned thereto in the Original Indenture.

(b) Section 1.1 of the Original Indenture is amended and supplemented in relation to the 8.5% Notes by inserting or restating, as the case may be, in their appropriate alphabetical position, the following definitions:

“Additional 8.5% Notes” has the meaning attributed thereto in Section 1 of the First Supplemental Indenture.

“ Adjusted Net Assets ” of a Guarantor at any date means the amount by which the fair value of the properties and assets of such Guarantor exceeds the total amount of liabilities, including contingent liabilities (after giving effect to all other fixed and contingent liabilities incurred or assumed on such date), but excluding liabilities under its Subsidiary Guarantee, of such Guarantor at such date.

“ Affiliate ” of any specified Person means an “affiliate” of such Person, as such term is defined for purposes of Rule 144 under the Securities Act.

“ Asset Sale ” means:

(1) the sale, lease, conveyance or other disposition (a “disposition”) of any assets or rights (including by way of a sale and leaseback), excluding dispositions in the ordinary course of business (provided that the disposition of all or substantially all of the assets of the Company and its Subsidiaries taken as a whole will be governed by the provisions of Sections 8.1 and 10.16 and not by the provisions of Section 10.14;

(2) the issue or sale by the Company or any of its Restricted Subsidiaries of Equity Interests of any 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); and

(3) any Event of Loss,

 

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whether, in the case of clause (1), (2) or (3), in a single transaction or a series of related transactions, provided that such transaction or series of transactions (a) has a fair market value in excess of $2.0 million or (b) results in the payment of net proceeds in excess of $2.0 million. Notwithstanding the preceding, the following transactions will not be deemed to be Asset Sales:

(1) any sale, assignment, lease, license, transfer, abandonment or other disposition of (A) damaged, worn-out, unserviceable or other obsolete or excess equipment or other property or (B) other property no longer necessary for the proper conduct of the business of the Company or any of its Subsidiaries;

(2) a disposition of assets by the Company to a Restricted Subsidiary or by a Restricted Subsidiary to the Company or to another Restricted Subsidiary;

(3) a disposition of Equity Interests by a Restricted Subsidiary to the Company or to another Restricted Subsidiary or by the Company to a Restricted Subsidiary;

(4) the consummation of (A) any Permitted Investment or (B) any Restricted Payment that is permitted by this Indenture;

(5) any lease of any equipment or other assets entered into in the ordinary course of business and with respect to which the Company or any Restricted Subsidiary thereof is the lessor, except any such lease that provides for the acquisition of such assets by the lessee during or at the end of the term thereof for an amount that is less than the fair market value thereof at the time the right to acquire such assets occurs;

(6) any sale of inventory or hydrocarbons or other products (including crude oil and refined products), in each case in the ordinary course of business of the Company’s operations;

(7) the sale or other disposition of cash or Cash Equivalents;

(8) any trade or exchange by the Company or any Restricted Subsidiary of any inventory or hydrocarbons or other products (including crude oil and refined products) for similar products owned or held by another Person; provided that the fair market value of the properties traded or exchanged by the Company or such Restricted Subsidiary is reasonably equivalent to the fair market value of the properties to be received by the Company or such Restricted Subsidiary (as determined in good faith by the Board of Directors, an officer of the Company or of such Restricted Subsidiary with responsibility for such transaction, which determination shall be conclusive evidence of compliance with this provision);

(9) the creation of a Permitted Lien and dispositions in connection with Permitted Liens;

(10) surrender or waiver of contract rights or the settlement, release or surrender of contract, tort or other claims of any kind; and

 

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(11) any disposition of defaulted receivables that arose in the ordinary course of business for collection.

“ Attributable Indebtedness ” in respect of a sale-and-leaseback transaction means, at the time of determination, the present value (discounted at the rate of interest implicit in such transaction, determined in accordance with GAAP) of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale-and-leaseback transaction (including any period for which such lease has been extended or may, at the option of the lessor, be extended). As used in the preceding sentence, “net rental payments” under any lease for any such period shall mean the sum of rental and other payments required to be paid with respect to such period by the lessee thereunder, excluding any amounts required to be paid by such lessee on account of maintenance and repairs, insurance, taxes, assessments, water rates or similar charges. In the case of any lease that is terminable by the lessee upon payment of penalty, such net rental payment shall also include the amount of such penalty, but no rent shall be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated.

“ Board of Directors ” means the board of directors of the Company or any committee thereof duly authorized to act on behalf of such board.

“ 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, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized on a balance sheet in accordance with GAAP.

“ Capital Stock ” means:

(1) in the case of a corporation, corporate stock;

(2) in the case of a limited liability company or similar entity, any membership or similar interest therein;

(3) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

(4) in the case of a partnership, partnership interests (whether general or limited); and

(5) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

“ Cash Equivalents ” means:

(1) United States dollars or up to $2.0 million of Canadian dollars;

 

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(2) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof having maturities of not more than six months from the date of acquisition;

(3) certificates of deposit and Eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one year and overnight bank deposits, in each case with any commercial bank organized under the laws of any country that is a member of the Organization for Economic Cooperation and Development having capital and surplus in excess of $500 million;

(4) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above;

(5) commercial paper having the highest rating obtainable from Moody’s or Standard & Poor’s and in each case maturing within 180 days after the date of acquisition;

(6) commercial paper, maturing not more than 180 days after the date of acquisition, issued by a corporation 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-1” (or higher) according to Moody’s or “A-1” (or higher) according to S&P;

(7) deposits available for withdrawal on demand with any commercial bank not meeting the qualifications specified in clause (3) above, provided all such deposits do not exceed $2.0 million in the aggregate at any one time; and

(8) money-market mutual funds substantially all of the assets of which are of the type described in the preceding clauses (1) through (6) above.

“ Change of Control ” means the occurrence of one or more of the following:

(1) the sale, lease, transfer, conveyance or other disposition (other than by merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole;

(2) the adoption of a plan relating to the liquidation or dissolution of the Company;

(3) the consummation of any transaction (including any merger or consolidation) the result of which is that any “person” (as such term is used in Section 13(d)(3) of the Exchange Act) becomes the “beneficial owner” (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly through one or more intermediaries, of more than 50% of the voting power of the outstanding voting stock of the Company; or

 

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(4) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors;

provided , however , that a transaction in which the Company becomes a Subsidiary of another Person (other than a Person that is an individual) shall not constitute a Change of Control if (a) the shareholders of the Company immediately prior to such transaction “beneficially own” (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly through one or more intermediaries, at least a majority of the voting power of the outstanding voting stock of the Company, immediately following the consummation of such transaction and (b) immediately following the consummation of such transaction, no “person” (as such term is defined above), other than such other Person (but including the holders of the Equity Interests of such other Person), “beneficially owns” (as such term is defined above), directly or indirectly through one or more intermediaries, more than 50% of the voting power of the outstanding voting stock of the Company.

“Company” means the party named as such in the First Supplemental Indenture until a successor replaces it and, thereafter, means the successor.

“ Consolidated Cash Flow ” means, with respect to any specified Person for any reference period, the Consolidated Net Income of such Person for such period plus, without duplication:

(1) an amount equal to any extraordinary loss plus any net loss realized by such Person or any of its Restricted Subsidiaries in connection with an Asset Sale, to the extent such losses were deducted in computing such Consolidated Net Income; plus

(2) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus

(3) the Consolidated Interest Expense of such Person and its Restricted Subsidiaries for such period, to the extent that such Consolidated Interest Expense was deducted in computing such Consolidated Net Income; plus

(4) depreciation, amortization (including amortization of intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income; minus

(5) non-cash items increasing such Consolidated Net Income for such period, other than the accrual of revenue in the ordinary course of business,

in each case, on a consolidated basis and determined in accordance with GAAP.

 

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“ Consolidated Interest Coverage Ratio ” means with respect to any specified Person for any period, the ratio of the Consolidated Cash Flow of such Person for such period to the Consolidated Interest Expense of such Person for such period; provided , however , that the Consolidated Interest Coverage Ratio shall be calculated giving pro forma effect to each of the following transactions as if each such transaction had occurred at the beginning of the applicable four-quarter reference period:

(1) any incurrence, assumption, guarantee or redemption by such Person or any of its Restricted Subsidiaries of any Indebtedness (other than revolving credit borrowings) subsequent to the commencement of the period for which the Consolidated Interest Coverage Ratio is being calculated but prior to the date on which the event for which the calculation of the Consolidated Interest Coverage Ratio is made (the “Calculation Date”);

(2) any acquisition that has been made by such Person or any of its Restricted Subsidiaries, or approved and expected to be consummated within 30 days of the Calculation Date, including, in each case, through a merger or consolidation, and including any related financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date; provided that pro forma effect shall be given to the Consolidated Cash Flow of the Person which is the subject of any such acquisition, and any cost savings or expense reductions attributable at the time of such computation or to be attributable in the future to such acquisition, shall be included in such computation; provided further that the pro forma calculations shall be determined in good faith on a reasonable basis by a responsible financial or accounting officer of the Company); and

(3) any other transaction that may be given pro forma effect as determined in good faith by a responsible financial or accounting officer of the Company;

provided , further , that (a) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, (b) the Consolidated Interest Expense attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, but only to the extent that the obligations giving rise to such Consolidated Interest Expense will not be obligations of the referent Person or any of its Restricted Subsidiaries following the Calculation Date and (c) the Consolidated Interest Expense attributable to interest on any Indebtedness bearing a floating interest rate shall be computed on a pro forma basis as if the average rate in effect from the beginning of the reference period to the Calculation Date had been the applicable rate for the entire period, unless such Person or any of its Subsidiaries is a party to an applicable Hedging Obligation (which shall remain in effect for the 12-month period immediately following the Calculation Date) that has the effect of fixing the interest rate on the date of computation, in which case such rate (whether higher or lower) shall be used.

“ Consolidated Interest Expense ” means, with respect to any Person for any period, determined on a consolidated basis in accordance with GAAP, the sum of, without duplication:

(1) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (including amortization of original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings, and net payments (if any) pursuant to interest rate Hedging Obligations but excluding amortization of debt issuance costs); and

 

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(2) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period.

“ Consolidated Net Income ” means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP, provided that:

(1) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the specified Person or a Restricted Subsidiary thereof;

(2) the Net Income of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its equityholders; and

(3) the cumulative effect of a change in accounting principles shall be excluded; and

(4) any non-cash compensation charge arising from any grant of stock, stock options or other equity-based awards shall be excluded.

“ Consolidated Net Tangible Assets ” means, with respect to any Person at any date of determination, the aggregate amount of total assets included in such Person’s most recent quarterly or annual consolidated balance sheet prepared in accordance with GAAP less applicable reserves reflected in such balance sheet, after deducting the following amounts: (a) all current liabilities reflected in such balance sheet, and (b) all goodwill, trademarks, patents, unamortized debt discounts and expenses and other like intangibles reflected in such balance sheet.

“ Continuing Director ” means, as of any date of determination, any member of the Board of Directors, who:

(1) was a member of the Board of Directors on the Issue Date; or

 

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(2) was nominated for election to the Board of Directors with the approval of, or whose election to the Board of Directors was ratified by, a majority of the Continuing Directors who were members of the Board of Directors at the time of such nomination or election.

“ Credit Agreement ” means that certain Fourth Amended and Restated Credit Agreement, dated as of August 19, 2008, among Frontier Oil and Refining Company, as Borrower, the Company, the lenders named therein, Union Bank of California, N.A., as Administrative Agent, and BNP Paribas, as Syndication Agent, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and in each case as amended, restated, supplemented, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time, including increases in the principal amount thereof.

“ Credit Facilities ” means one or more debt facilities (including the Credit Agreement) or commercial paper facilities, in each case with banks, investment funds or other lenders providing for revolving credit loans, term loans, receivables financings, including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables or letters of credit, in each case, as amended, restated, supplemented, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time, including increases in the principal amount thereof.

“ Default ” means, with respect to the 8.5% Notes, any event that is, or after notice or the lapse of time or both would be, an Event of Default.

“ Disqualified Stock ” means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures (excluding any maturity as a result of an optional redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is 91 days after the date on which the 8.5% Notes mature or are redeemed or retired in full; provided , however , that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof (or of any security into which it is convertible or for which it is exchangeable) have the right to require the issuer to repurchase such Capital Stock (or such security into which it is convertible or for which it is exchangeable) upon the occurrence of any of the events constituting an Asset Sale or a Change of Control shall not constitute Disqualified Stock if such Capital Stock (and all such securities into which it is convertible or for which it is exchangeable) provides that the issuer thereof will not repurchase or redeem any such Capital Stock (or any such security into which it is convertible or for which it is exchangeable) pursuant to such provisions prior to compliance by the Company with the provisions of Section 10.14 or Section 10.16, as the case may be. The amount of Disqualified Stock deemed to be outstanding at any time for purposes of this Indenture will be the maximum amount that the Company and its Restricted Subsidiaries may become obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock, exclusive of accrued dividends.

 

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“ Domestic Restricted Subsidiary ” means any Restricted Subsidiary of the Company that was formed under the laws of the United States or any state of the United States or the District of Columbia or that guarantees or otherwise provides direct credit support for any Indebtedness of the Company.

“8.5% Notes” means the Original 8.5% Notes and the Additional 8.5% Notes.

“ Equity Interests ” means Capital Stock and all warrants, options or other rights to acquire Capital Stock, but excluding any debt security that is convertible into, or exchangeable for, Capital Stock.

“ Equity Offering ” means any contribution to the equity capital of the Company, or any sale of Equity Interests (other than Disqualified Stock) of the Company either pursuant to an offering registered under the Securities Act or a private placement.

“ Event of Loss ” means, with respect to any property or asset of the Company or any Restricted Subsidiary, (a) any damage to such property or asset that results in an insurance settlement with respect thereto on the basis of a total loss or a constructive or compromised total loss or (b) the confiscation, condemnation or requisition of title to such property or asset by any government or instrumentality or agency thereof. An Event of Loss shall be deemed to occur as of the date of the insurance settlement, confiscation, condemnation or requisition of title, as applicable.

“ Existing Indebtedness ” means Indebtedness of the Company and its Restricted Subsidiaries (other than Indebtedness under a Credit Facility) in existence on the Issue Date, until such amounts are repaid.

“ fair market value ” means, with respect to any asset or Investment, the fair market value of such asset or Investment at the time of the event requiring such determination, as determined (except as otherwise permitted by this Indenture) in good faith by the Board of Directors or, with respect to any asset or Investment in excess of $10.0 million (other than cash or Cash Equivalents), as determined by a reputable appraisal firm that is, in the judgment of such Board of Directors, qualified to perform the task for which such firm has been engaged and independent with respect to the Company.

“First Supplemental Indenture” means the First Supplemental Indenture, dated as of the Issue Date, among the Company, the Guarantors named therein and the Trustee relating to the 8.5% Notes.

“ Foreign Subsidiary ” means any Restricted Subsidiary of the Company that is not organized under the laws of the United States of America or any state thereof or the District of Columbia.

“ GAAP ” means accounting principles generally accepted in the United States of America set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the

 

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Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession in the United States of America, which are in effect from time to time.

“ Government Securities ” means direct obligations of, or obligations guaranteed by, the United States of America, and the payment for which the United States pledges its full faith and credit.

“ Guarantor ” means each of (1) Frontier Holdings Inc., Frontier Refining and Marketing Inc., Frontier Refining Inc., Frontier Oil & Refining Company, Frontier Pipeline Inc., Frontier El Dorado Refining Company, Ethanol Management Company and (2) any other Person that becomes a guarantor of any 8.5% Notes pursuant to the provisions of Article Fourteen of this Indenture.

“ Hedging Obligations ” means, with respect to any Person, the obligations (to the extent they are incurred in the ordinary course of business) of such Person under:

(1) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements, but only to the extent that the notional amounts of such agreements do not exceed 105% of the aggregate principal amount of such Indebtedness to which such agreement relates;

(2) other agreements or arrangements designed to protect such Person against fluctuations in interest rates;

(3) any hedging agreement or other arrangement, in each case that is designed to provide protection against fluctuations in the price of crude oil, gasoline and other refined products and natural gas (in the ordinary course of business and not for speculative purposes); and

(4) any foreign currency futures contract, option or similar agreement or arrangement designed to protect such Person against fluctuations in foreign currency rates.

“Holder” or “Noteholder” means the Person in whose name an 8.5% Note is registered in the Security Register for the 8.5% Notes.

“ Immaterial Subsidiary ” means, as of any date, any Restricted Subsidiary whose total assets, as of that date, are less than $500,000 and whose total revenues for the most recent 12-month period do not exceed $500,000; provided that a Restricted Subsidiary will not be considered to be an Immaterial Subsidiary if it, directly or indirectly, guarantees or otherwise provides direct credit support for any Indebtedness of the Company.

“ Indebtedness ” means, with respect to any Person, any indebtedness of such Person, whether or not contingent, in respect of borrowed money or evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof) or banker’s acceptances or representing Capital Lease Obligations or the balance

 

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deferred and unpaid of the purchase price of any property due more than six months after such property is acquired or such services are completed, except any such balance that constitutes an accrued expense or trade payable, or representing any Hedging Obligation, if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP. Notwithstanding the foregoing, the following shall not constitute Indebtedness:

(a) accrued expenses and trade accounts payable arising in the ordinary course of business;

(b) any indebtedness that has been defeased in accordance with GAAP or defeased pursuant to the deposit of cash or Cash Equivalents (in an amount sufficient to satisfy all obligations relating thereto at maturity or redemption, as applicable, including all payments of interest and premium, if any) in a trust or account created or pledged for the sole benefit of the holders of such indebtedness, and subject to no other Liens, and in accordance with the other applicable terms of the instrument governing such indebtedness;

(c) any obligation arising from any agreement providing for indemnities, guarantees, purchase price adjustments, holdbacks, contingency payment obligations based on the performance of the acquired or disposed assets or similar obligations (other than guarantees of Indebtedness) incurred by any Person in connection with the acquisition or disposition of assets; and

(d) any obligation in respect of any agreement or arrangement described in clause (3) of the definition of “Hedging Obligation.”

“ Investment Grade Rating ” of the 8.5% Notes, means that the 8.5% Notes shall have been assigned a Moody’s rating of Baa3 or higher and an S&P rating of BBB– or higher, or if one of such rating agencies shall not make a rating on the 8.5% Notes publicly available for reasons outside the control of the Company, then “Investment Grade Rating” shall mean that the 8.5% Notes shall have been assigned such a rating by one of such rating agencies and an equivalent investment grade credit rating from any other “nationally recognized statistical rating organization” within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act selected by the Company.

“ Investments ” means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of direct or indirect loans (including guarantees by the referent Person of, and Liens on any assets of the referent Person securing, Indebtedness or other obligations of other Persons), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP; provided , however , that the following shall not constitute Investments:

(1) extensions of trade credit or other advances to customers on commercially reasonable terms in accordance with normal trade practices or otherwise in the ordinary course of business;

 

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(2) Hedging Obligations; and

(3) endorsements of negotiable instruments and documents in the ordinary course of business.

If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of the Company, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Equity Interests of such Restricted Subsidiary not sold or disposed of in an amount determined as provided in Section 10.11(c).

“ Issue Date ” means the first date on which the 8.5% Notes are originally issued under this Indenture.

“ Lien ” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction other than a precautionary financing statement respecting a lease not intended as a security agreement.

“Make-Whole Amount” with respect to a 8.5% Note means an amount equal to the excess, if any, of:

(1) the present value of the remaining interest, premium, if any, and principal payments due on such note as if such 8.5% Note were redeemed on September 15, 2012 computed using a discount rate equal to the Treasury Rate plus 50 basis points, over

(2) the outstanding principal amount of such 8.5% Note.

“Make-Whole Average Life” means the number of years (calculated to the nearest one-twelfth) between the Redemption Date and September 15, 2012.

“Make-Whole Price” with respect to a 8.5% Note means the greater of:

(1) the sum of the outstanding principal amount and Make-Whole Amount of such 8.5% Note; and

(2) the redemption price of such 8.5% Note on September 15, 2012, determined pursuant to Section 11.8(b) of this Indenture (104.250% of the principal amount).

 

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“ Moody’s ” means Moody’s Investors Service, Inc. or any successor to the rating agency business thereof.

“ Net Income ” means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however:

(1) any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with (a) any Asset Sale (including dispositions pursuant to sale-and-leaseback transactions) or (b) the disposition of any securities by such Person or the extinguishment of any Indebtedness of such Person; and

(2) any extraordinary or nonrecurring gain or loss, together with any related provision for taxes on such extraordinary or nonrecurring gain or loss.

“ Net Proceeds ” means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including any cash received upon the sale or other disposition of any non-Cash Consideration received in any Asset Sale), net of, without duplication:

(1) the direct costs relating to such Asset Sale (including legal, accounting and investment banking fees, sales commissions, recording fees, title transfer fees, title insurance premiums, appraiser fees and costs incurred in connection with preparing such asset for sale) and any relocation expenses incurred as a result thereof,

(2) taxes paid or estimated to be payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements);

(3) amounts required to be applied to the repayment of Indebtedness (other than under a revolving credit facility) secured by a Lien on the asset or assets that were the subject of such Asset Sale;

(4) any reserve established in accordance with GAAP or any amount placed in escrow, in either case for adjustment in respect of the sale price of such asset or assets, until such time as such reserve is reversed or such escrow arrangement is terminated, in which case Net Proceeds shall include only the amount of the reserve so reversed or the amount returned to the Company or its Restricted Subsidiaries from such escrow arrangement, as the case may be; and

(5) all distributions and other payments required to be made to minority interest holders in Restricted Subsidiaries as a result of such Asset Sale.

“ Non-Recourse Debt ” means Indebtedness:

(1) as to which neither the Company nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness) or is otherwise directly or indirectly liable (as a guarantor or otherwise) or (b) constitutes the lender; and

 

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(2) no default with respect to which (including any rights the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) the holders of other Indebtedness of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its Stated Maturity.

“Original 8.5% Notes” has the meaning attributed thereto in Section 1 of the First Supplemental Indenture.

“ Pari Passu Indebtedness ” means, with respect to any Net Proceeds from Asset Sales, Indebtedness of the Company and its Restricted Subsidiaries, excluding any Subordinated Indebtedness, the terms of which require the Company or such Restricted Subsidiary to apply such Net Proceeds to offer to repurchase such Indebtedness.

“ Permitted Indebtedness ” means:

(1) the incurrence by the Company or a Restricted Subsidiary of additional Indebtedness under any Credit Facility so long as the aggregate principal amount at any time outstanding of all Indebtedness incurred under this clause (1) does not exceed the greater of (a) $500.0 million and (b) an amount equal to the sum of 95% of the book value of accounts receivable (less allowance for doubtful accounts) and 90% of the inventory (less applicable reserves) of the Company and its Restricted Subsidiaries, calculated on a consolidated basis and in accordance with GAAP, plus $10.0 million and any fees, premiums, expenses (including costs of collection), indemnities and similar amounts payable in connection with such Indebtedness, and less any amounts repaid permanently in accordance with Section 10.14;

(2) the incurrence by the Company and its Restricted Subsidiaries of Existing Indebtedness;

(3) the incurrence by the Company and its Restricted Subsidiaries of Hedging Obligations;

(4) the incurrence by the Company and the Guarantors of Indebtedness represented by the Original 8.5% Notes and the related Subsidiary Guarantees;

(5) the incurrence or issuance by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness or Disqualified Stock between or among the Company and any of its Restricted Subsidiaries or between or among any Restricted Subsidiaries; provided , however , that (a) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all obligations then due with respect to the 8.5% Notes, in the case of the Company, or the

 

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Subsidiary Guarantee, in the case of a Guarantor; and (b) (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness or Disqualified Stock being held by a Person other than the Company or a Restricted Subsidiary of the Company and (ii) any sale or other transfer of any such Indebtedness or Disqualified Stock to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in the case of each of clause (i) and (ii), to constitute an incurrence or issuance of such Indebtedness or Disqualified Stock, as the case may be, by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (5);

(6) the incurrence by Foreign Subsidiaries of Indebtedness in an aggregate principal amount at any time outstanding under this clause (6) not to exceed $15.0 million;

(7) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, self-insurance obligations, bankers’ acceptances, performance bonds, completion bonds, bid bonds, appeal bonds and surety bonds or other similar bonds or obligations, in each case incurred in the ordinary course of business, and any guarantees or letters of credit functioning as or supporting any of the foregoing;

(8) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund Indebtedness or Disqualified Stock that was permitted by this Indenture to be incurred (other than pursuant to clause (1), (5) or (6) of this definition);

(9) incurrence by any Subsidiary of the Company of a Subsidiary Guarantee;

(10) incurrence of Non-Recourse Debt;

(11) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Subsidiary of the Company that was permitted to be incurred by the provisions of Section 10.10;

(12) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within ten Business Days;

(13) unrealized losses or charges in respect of Hedging Obligations;

(14) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement of

 

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property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed $20.0 million at any time outstanding; and

(15) incurrence by the Company or any Restricted Subsidiary of any additional Indebtedness (measured by principal amount or accreted value, as applicable) or Disqualified Stock (measured by the greater of its voluntary or involuntary maximum fixed repurchase or redemption price plus accrued and unpaid dividends (if not included in such redemption price)), not to exceed $30.0 million at any time outstanding.

“ Permitted Investments ” means:

(1) any Investment in the Company or in a Restricted Subsidiary of the Company, including any Investment in the 8.5% Notes;

(2) any Investment in cash or Cash Equivalents;

(3) any Investment by the Company or any Restricted Subsidiary of the Company in a Person if as a result of such Investment (a) such Person becomes a Restricted Subsidiary of the Company or (b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys all or substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company;

(4) any Investment made as a result of the receipt of non-cash consideration from (a) an Asset Sale that was made pursuant to and in compliance with Section 10.14 or (b) a disposition of assets that does not constitute an Asset Sale;

(5) acquisition of assets solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company;

(6) any Investments received in compromise of obligations of trade creditors or customers that were incurred in the ordinary course of business, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer;

(7) Hedging Obligations;

(8) Investments in a Person engaged in the Principal Business, provided that the aggregate amount of such Investments pursuant to this clause (8) in Persons that are not Restricted Subsidiaries of the Company shall not exceed the greater of (a) $50.0 million and (b) 5.0% of the Consolidated Net Tangible Assets of the Company at any one time;

(9) Investment in any Person to the extent such Investment consists 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; and

 

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(10) Investments existing on the Issue Date.

“ Permitted Liens ” means:

(1) Liens securing Indebtedness incurred pursuant to clause (1) of the definition of “Permitted Indebtedness”; provided , however , that during any period when the covenant in Section 10.10 is suspended pursuant to Section 10.20, the clause (1) listed under the definition of “Permitted Indebtedness” shall be deemed to be in effect solely for purposes of determining compliance with this clause (1);

(2) Liens in favor of the Company or any of the Guarantors;

(3) Liens on property of a Person existing at the time such Person is merged into or consolidated with the Company or any Restricted Subsidiary of the Company, provided that such Liens were in existence prior to its contemplation of such merger or consolidation and do not extend to any property other than those of the Person merged into or consolidated with the Company or any of its Restricted Subsidiaries;

(4) Liens on property existing at the time of acquisition thereof by the Company or any Restricted Subsidiary of the Company, provided that such Liens were in existence prior to its contemplation of such acquisition and do not extend to any other property;

(5) Liens to secure the performance of statutory obligations, surety or appeal bonds, bid or performance bonds, insurance obligations or other obligations of a like nature incurred in the ordinary course of business;

(6) Liens securing Hedging Obligations;

(7) Liens existing on the Issue Date;

(8) Liens securing Non-Recourse Debt;

(9) any interest or title of a lessor under, or Liens that secure, a Capital Lease Obligation or an operating lease;

(10) Liens arising by reason of deposits necessary to obtain standby letters of credit in the ordinary course of business (including deposits necessary to obtain standby letters of credit);

(11) Liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security and related benefits;

 

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(12) easements, rights of way restrictions and other similar charges or encumbrances not interfering in any material respect with the business of the Company or any Restricted Subsidiary;

(13) any other Liens imposed by operation of law which do not materially affect the Company’s or any Guarantor’s ability to perform its obligations under the 8.5% Notes or any Subsidiary Guarantee;

(14) any attachment or judgment Lien, unless the judgment it secures shall not, within 60 days after the entry thereof, have been discharged or execution thereof stayed pending appeal, or shall not have been discharged within 60 days after the expiration of any such stay;

(15) Liens to secure Purchase Money Indebtedness, which Liens shall not extend to any other property or assets of the Company or a Restricted Subsidiary (other than any associated accounts, contracts and insurance proceeds);

(16) Liens securing Permitted Refinancing Indebtedness with respect to any Indebtedness referred to in clause (15) above;

(17) Liens incurred in the ordinary course of business of the Company or any Restricted Subsidiary of the Company with respect to Indebtedness that does not exceed $5.0 million at any one time outstanding and that (a) are not incurred in connection with the borrowing of money or the obtaining of advances or credit (other than trade credit in the ordinary course of business) and (b) do not in the aggregate materially detract from the value of the property or materially impair the use thereof in the operation of business by the Company or such Restricted Subsidiary;

(18) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded, provided that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor;

(19) statutory liens of landlords, mechanics, suppliers, vendors, warehousemen, carriers or other like Liens arising in the ordinary course of business;

(20) Liens securing the 8.5% Notes or Subsidiary Guarantees; and

(21) Liens to secure Indebtedness having an aggregate principal amount which, when added together with all other Indebtedness secured by Liens incurred pursuant to this clause (21) and then outstanding, does not exceed $25.0 million.

“ Permitted Refinancing Indebtedness ” means any Indebtedness of the Company or any of its Restricted Subsidiaries or any Disqualified Stock of the Company of its Restricted Subsidiaries issued (a) in exchange for, or the net proceeds of which are used to extend, renew, refund, refinance, replace, defease, discharge or otherwise retire for value, in whole or in part, or

 

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(b) constituting an amendment, modification or supplement to or a deferral or renewal of ((a) and (b) above, collectively, a “Refinancing”), any other Indebtedness or preferred stock of the Company or any of its Restricted Subsidiaries (other than intercompany Indebtedness), in a principal amount or, in the case of Disqualified Stock, liquidation preference, not to exceed (after deduction of reasonable and customary fees and expenses incurred in connection with the Refinancing) the lesser of:

(1) the principal amount or, in the case of preferred stock, liquidation preference, of the Indebtedness, or preferred stock so Refinanced (plus, in the case of Indebtedness, the amount of premium, if any, paid in connection therewith), and

(2) if the Indebtedness being Refinanced was issued with any original issue discount, the accreted value of such Indebtedness (as determined in accordance with GAAP) at the time of such Refinancing.

Notwithstanding the preceding, no Indebtedness or Disqualified Stock will be deemed to be Permitted Refinancing Indebtedness, unless:

(1) such Indebtedness or Disqualified Stock has a final maturity date or redemption date, as applicable, later than the final maturity date or redemption date, as applicable, of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness or preferred stock being Refinanced;

(2) if the Indebtedness being Refinanced is Subordinated Indebtedness, such Indebtedness has a final maturity date or redemption date, as applicable, later than the final maturity date or redemption date, as applicable, of, and is contractually subordinated in right of payment to, the 8.5% Notes or the Subsidiary Guarantees, as the case may be, on terms at least as favorable, taken as a whole, to the Holders of 8.5% Notes as those contained in the documentation governing the Subordinated Indebtedness being Refinanced at the time of the Refinancing; and

(3) such Indebtedness or Disqualified Stock is incurred or issued by the Company or such Indebtedness or Disqualified Stock is incurred or issued by the Restricted Subsidiary who is the primary obligor on the Indebtedness being Refinanced or the issuer of the preferred stock being Refinanced.

“ Principal Business ” means:

(1) the business of the exploration for, and development, acquisition, production, processing, marketing, refining, storage and transportation of, hydrocarbons;

(2) any related energy and natural resource business;

(3) any business currently engaged in by the Company or its Subsidiaries;

 

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(4) convenience stores, retail service stations, truck stops and other public accommodations in connection therewith; and

(5) any activity or business that is a reasonable extension, development or expansion of any of the activities or businesses described in clauses (1) through (4) of this definition or that is ancillary or necessary or desirable to facilitate such activities or businesses.

“ Purchase Money Indebtedness ” means Indebtedness incurred for the purpose of (1) financing all or any part of the purchase price of any real or personal property or assets incurred prior to, at the time of, or within 120 days after, the acquisition of such property or assets or (2) financing all or any part of the cost of construction of, or repairs, improvements or additions to, any such property or assets, provided that the amount of any such financing shall not exceed the amount expended in the acquisition of, or the construction of, or repairs, improvements or additions to, such property or assets.

“ Restricted Investment ” means an Investment other than a Permitted Investment.

“ Restricted Subsidiary ” of a Person means any Subsidiary of such Person that is not an Unrestricted Subsidiary.

“ S&P ” means Standard & Poor’s Ratings Services or any successor to the rating agency business thereof.

“ SEC ” or “ Commission ” means the Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended.

“Securities Custodian” means the Trustee, as custodian with respect to the 8.5% Notes in global form, or any successor thereto.

“ Secured Indebtedness ” means, with respect to any specified Person, any Indebtedness of such Person that is secured by a Lien on the assets of such Person, plus any Indebtedness of any other Person to the extent that such Indebtedness is secured by a Lien on the assets of the specified Person.

“ Significant Subsidiary ” means any Subsidiary that would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date of this Indenture.

“ Stated Maturity ” means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.

 

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“ Subordinated Indebtedness ” means Indebtedness of the Company or a Guarantor that is contractually subordinated in right of payment to the 8.5% Notes or the Subsidiary Guarantee of such Guarantor, as applicable.

“ Subsidiary ” means, with respect to any Person, (1) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof) and (2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or of one or more Subsidiaries of such Person (or any combination thereof).

“ Subsidiary Guarantee ” or “ Guarantee ” means a guarantee, included in Article Fourteen of this Indenture, of the Company’s obligations under the 8.5% Notes and this Indenture.

“Treasury Rate” means the yield to maturity at the time of the computation of United States Treasury securities with a constant maturity (as compiled by and published in the most recent Federal Reserve Statistical Release H.15(519), which has become publicly available at least two Business Days prior to the date of the redemption notice or, if such Statistical Release is no longer published, any publicly available source of similar market date) most nearly equal to the then remaining maturity of the 8.5% Notes assuming redemption of the 8.5% Notes on September 23, 2012; provided , however , that if the Make-Whole Average Life of such 8.5% Note is not equal to the constant maturity of the United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the Make-Whole Average Life of such 8.5% Notes is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used.

“ Unrestricted Subsidiary ” means (i) Wainoco Resources, Inc. and Wainoco Oil & Gas Company and (ii) any Subsidiary that is designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution, but only to the extent that such Subsidiary at the time of such designation:

(1) has no Indebtedness other than Non-Recourse Debt;

(2) is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless such agreement, contract, arrangement or understanding does not violate the terms of Section 10.15; and

(3) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results, in each case, except to the extent otherwise permitted by this Indenture.

 

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Any such designation by the Board of Directors shall be evidenced to the Trustee by filing with the Trustee the Board Resolution giving effect to such designation and an Officer’s Certificate certifying that such designation complied with the preceding conditions and was permitted by Section 10.11. If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Company as of such date (and, if such Indebtedness is not permitted to be incurred as of such date under the covenant in Section 10.10, the Company shall be in default of such covenant). The Board of Directors may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary, provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if (1) such Indebtedness is permitted under the covenant in Section 10.10, calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period, and (2) no Default or Event of Default would be in existence following such designation.

“ Weighted Average Life to Maturity ” means, when applied to any security or instrument at any date, the number of years obtained by dividing (1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal (or redemption payments), including payment at final maturity (or mandatory redemption), in respect of such security to instrument, by (b) the number of years (calculated to the nearest one twelfth) that will elapse between such date and the making of such payment, by (2) the then outstanding principal amount or liquidation preference of such security or instrument.

(c) The definition of the term “corporations” set forth in Section 1.1 of the Original Indenture shall have no application to the 8.5% Notes.

(d) Certain other capitalized terms, used principally in Article Ten, are defined in other Articles of this Indenture.

(e) In addition to the rules of construction set forth in clauses (1) – (6) of the first paragraph of Section 1.1 of the Original Indenture, for purposes of this First Supplemental Indenture, unless the context otherwise requires:

(1) “will” shall be interpreted to express a command synonymously with “shall”;

(2) no difference is intended by references to either the “principal amount” or the “aggregate principal amount’ of the Securities of any series necessary to undertake any Act; and

(3) references to sections or rules under the Exchange Act or the Securities Act shall be deemed to include substitute, replacement or successor sections or rules adopted by the SEC from time to time.

 

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SECTION 3. Amendments to Articles One and Four of the Original Indenture .

(a) Section 1.18 of the Original Indenture is amended with respect to the 8.5% Notes to read as follows:

Section 1.18. Incorporators, Shareholders, Officers and Directors of the Company and the Guarantors Exempt from Individual Liability .

No director, officer, member, manager, incorporator or shareholder of the Company or any Guarantor, as such, shall have any liability for any obligations of the Company or the Guarantors under the 8.5% Notes, this Indenture, the Subsidiary Guarantees or for any claim based on, or otherwise in respect of, such obligations or their creation. Each Holder by accepting a 8.5% Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the 8.5% Notes.

(b) Section 4.1 of the Original Indenture is amended with respect to the 8.5% Notes to read as follows:

Section 4.1. Satisfaction and Discharge of Indenture .

This Indenture shall cease to be of further effect with respect to the 8.5% Notes (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for), and the Trustee, upon Company Request and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture with respect to the 8.5% Notes, when:

(1) either

(A) all 8.5% Notes theretofore authenticated and delivered (other than (i) 8.5% Notes which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 3.6, and (ii) 8.5% Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 10.3) have been delivered to the Trustee for cancellation; or

(B) all 8.5% Notes not theretofore delivered to the Trustee for cancellation

(i) have become due and payable, or

(ii) will become due and payable within one year by reason of the mailing of a notice of redemption or otherwise,

and the Company or any Guarantor, in the case of (i) or (ii) above, has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders, cash in Dollars, non-callable Government Securities, or a

 

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combination of cash in Dollars and non-callable Government Securities, in amounts as will be sufficient, without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on the 8.5% Notes not theretofore delivered to the Trustee for cancellation, for principal (and premium, if any) and interest to the date of final maturity or the Redemption Date, as the case may be;

(2) no Default or Event of Default with respect to the 8.5% Notes has occurred and is continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit);

(3) such deposit will not result in a breach or violation of, or con statute a default under, any material agreement or instrument (other than this Indenture) to which the Company or any Guarantor is a party or by which the Company or any Guarantor is bound;

(4) the Company or any Guarantor has paid or caused to be paid all other sums payable hereunder by the Company with respect to the 8.5% Notes;

(5) the Company has delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of the 8.5% Notes at the Date of Final Maturity or on the Redemption Date, as the case may be; and

(6) the Company has delivered to the Trustee (i) an Officer’s Certificate stating that all conditions precedent provided for in clauses (1) – (5) above relating to the satisfaction and discharge of this Indenture with respect to the 8.5% Notes have been complied with and (ii) an Opinion of Counsel (which Opinion of Counsel may be subject to customary assumptions and qualifications), stating that all conditions precedent set forth in clauses (3) and (5) above have been satisfied; provided that the Opinion of Counsel with respect to clause (3) above may be to the knowledge of such counsel.

Notwithstanding the satisfaction and discharge of this Indenture with respect to the 8.5% Notes, (x) the obligations of the Company to the Trustee under Section 6.7, the obligations of the Trustee to any Authenticating Agent under Section 6.14 and the right of the Trustee to resign under Section 6.10 shall survive, and (y) if funds shall have been deposited with the Trustee pursuant to clause (1) of this Section, the obligations of the Company and the Trustee under Section 4.2, 6.6 and 10.2 and the last paragraph of Section 10.3 shall survive.

SECTION 4. Amendments to Articles Five and Six of the Original Indenture .

(a) The Events of Default are amended in Section 5.1 of the Original Indenture with respect to the 8.5% Notes to read as follows:

(1) default for 30 days in the payment when due of interest on the 8.5% Notes;

(2) default in payment when due of the principal of, or premium, if any, on, the 8.5% Notes;

 

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(3) failure by the Company to comply with its obligations under Section 8.1 of this Indenture or to consummate a purchase of 8.5% Notes when required pursuant to Section 10.14 or Section 10.16 of this Indenture;

(4) failure by the Company or any of its Subsidiaries to comply with any of the other covenants applicable to the Company or its Subsidiaries in this Indenture or the 8.5% Notes, continued for 60 days after the giving of written notice to the Company from the Trustee or the Holders of at least 25% in aggregate principal amount of the Outstanding 8.5% Notes;

(5) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries), whether such Indebtedness or guarantee now exists or is created after the Issue Date, which default (a) is caused by a failure to pay principal of or premium or interest on such Indebtedness prior to the expiration of any grace period provided in such Indebtedness (a “ Payment Default ”) or (b) results in the acceleration of such Indebtedness prior to its express maturity, in each case, unless being contested in good faith by appropriate proceedings and the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $20.0 million or more and provided, further , that if any such default is cured or waived or any such acceleration rescinded, or such Indebtedness is repaid, within a period of ten days from the continuation of such default beyond the applicable grace period or the occurrence of such acceleration, as the case may be, such Event of Default and any consequential acceleration of the 8.5% Notes shall be automatically rescinded, so long as such rescission does not conflict with any judgment or decree;

(6) any final judgment or decree (to the extent not covered by insurance) for the payment of money in excess of $20.0 million is entered against the Company or any of its Restricted Subsidiaries and is not paid or discharged, and there is any period of 60 consecutive days following entry of such final judgment or decree during which a stay of enforcement of such final judgment or decree, by reason of pending appeal or otherwise, is not in effect;

(7) except as permitted by this Indenture, any Subsidiary Guarantee is held in any judicial proceeding to be unenforceable or invalid or ceases for any reason to be in full force and effect or any Guarantor, or any Person acting on behalf of any Guarantor, denies or disaffirms its obligations under its Subsidiary Guarantee;

(8) the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law:

(A) commences a voluntary case,

 

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(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 all or substantially all of its property,

(D) makes a general assignment for the benefit of its creditors, or

(E) generally is not paying its debts as they become due; and

(9) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

(A) is for relief against the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary in an involuntary case;

(B) appoints a custodian of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary or for all or substantially all of the property of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary; or

(C) orders the liquidation of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary;

and the order or decree remains unstayed and in effect for 60 consecutive days.

(b) The first paragraph of Section 5.2 of the Original Indenture is amended in its entirety with respect to the 8.5% Notes to read as follows:

Section 5.2. Acceleration of Maturity; Rescission and Annulment .

If an Event of Default (other than an Event of Default specified in Section 5.1(8) or 5.1(9)) with respect to the 8.5% Notes occurs and is continuing, then in every such case the Trustee or the Holders of not less than 25% in aggregate principal amount of the Outstanding 8.5% Notes may declare the principal amount of all the 8.5% Notes, together with all accrued but unpaid interest thereon, to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount, together with all accrued but unpaid interest thereon, shall become immediately due and

 

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payable. If an Event of Default specified in Section 5.1(8) or 5.1(9) with respect to the 8.5% Notes occurs, the principal amount of all the 8.5% Notes, together with all accrued but unpaid interest thereon, shall automatically, and without any declaration or other actio