-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BYeMFt7OBJ2dvx8U1Q8DDEMU5XHGRcmIKWKuS8hznU3DgZz9BN8byl8gKbZWvpL1 XSWlX2XsXoGwl8Oa4dtaLg== 0000899243-02-000030.txt : 20020413 0000899243-02-000030.hdr.sgml : 20020413 ACCESSION NUMBER: 0000899243-02-000030 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 22 FILED AS OF DATE: 20020110 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARCO CHEMICAL TECHNOLOGY LP CENTRAL INDEX KEY: 0001164464 STANDARD INDUSTRIAL CLASSIFICATION: PETROLEUM REFINING [2911] IRS NUMBER: 541613415 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-76536-01 FILM NUMBER: 2506662 BUSINESS ADDRESS: STREET 1: 1221 MCKINNEY ST STREET 2: STE 700 CITY: HOUSTON STATE: TX ZIP: 77010 BUSINESS PHONE: 7136527200 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARCO CHEMICAL TECHNOLOGY INC CENTRAL INDEX KEY: 0001164463 STANDARD INDUSTRIAL CLASSIFICATION: PETROLEUM REFINING [2911] IRS NUMBER: 942400836 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-76536-02 FILM NUMBER: 2506663 BUSINESS ADDRESS: STREET 1: 1221 MCKINNEY ST STREET 2: STE 700 CITY: HOUSTON STATE: TX ZIP: 77010 BUSINESS PHONE: 7136527200 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LYONDELL CHEMICAL CO CENTRAL INDEX KEY: 0000842635 STANDARD INDUSTRIAL CLASSIFICATION: PETROLEUM REFINING [2911] IRS NUMBER: 954160558 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-76536 FILM NUMBER: 2506661 BUSINESS ADDRESS: STREET 1: 1221 MCKINNEY ST STREET 2: STE 700 CITY: HOUSTON STATE: TX ZIP: 77010 BUSINESS PHONE: 7136527200 MAIL ADDRESS: STREET 1: 1221 MCKINNEY ST STREET 2: SUITE 700 CITY: HOUSTON STATE: TX ZIP: 77010 FORMER COMPANY: FORMER CONFORMED NAME: LYONDELL PETROCHEMICAL CO DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LYONDELL CHEMICAL NEDERLAND LTD CENTRAL INDEX KEY: 0001087715 STANDARD INDUSTRIAL CLASSIFICATION: PETROLEUM REFINING [2911] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-76536-03 FILM NUMBER: 2506664 BUSINESS ADDRESS: STREET 1: 1221 MCKINNEY ST STREET 2: STE 700 CITY: HOUSTON STATE: TX ZIP: 77010 BUSINESS PHONE: 7136527200 MAIL ADDRESS: STREET 1: 1221 MCKINNEY ST STREET 2: SUITE 1600 CITY: HOUSTON STATE: TX ZIP: 77010 S-4 1 ds4.txt FORM S-4 As filed with the Securities and Exchange Commission on January 10, 2002 Registration No. 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------- FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ---------------- LYONDELL CHEMICAL COMPANY LYONDELL CHEMICAL NEDERLAND, LTD. ARCO CHEMICAL TECHNOLOGY, INC. ARCO CHEMICAL TECHNOLOGY, L.P. (Exact name of registrant as specified in its charter) Delaware 2869 95-4160558 Delaware 2869 51-0110124 Delaware 2869 94-2400836 Delaware 2869 54-1613415 (State or other (Primary Standard (I.R.S. Employer jurisdiction Industrial Identification No.) of incorporation or Classification Code organization) Number) Kerry A. Galvin Vice President, General Counsel & Secretary 1221 McKinney Street, Suite 700 Lyondell Chemical Company Houston, Texas 77010 1221 McKinney Street, Suite 700 (713) 652-7200 Houston, Texas 77010 (Address, including zip code, and (713) 652-7200 telephone number, including (Name, address, including zip code, area code, of each registrants' and telephone number, principal executive offices) including area code, of agent for service for each registrant) Copy to: Stephen A. Massad Baker Botts L.L.P. 3000 One Shell Plaza Houston, Texas 77002 (713) 229-1234 Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable following the effectiveness of this Registration Statement. If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [_] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the "Securities Act"), check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] ---------------- CALCULATION OF REGISTRATION FEE - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Proposed Proposed maximum aggregate Title of each class of Amount to be maximum offering offering price Amount of securities to be registered registered price per share (1) (1)(2) registration fee - ----------------------------------------------------------------------------------------------------------- 9 1/2% Senior Secured Notes due 2008.. $393,000,000 100% $393,000,000 $93,927 - ----------------------------------------------------------------------------------------------------------- Guarantees of 9 1/2% Senior Secured Notes due 2008....................... -- -- -- -- - ----------------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(f) under the Securities Act of 1933, as amended. (2) Pursuant to Rule 457(n) of the Securities Act, no separate registration fee is payable for the guarantees. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the Commission, acting pursuant to said section 8(a), may determine. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +The information in this prospectus is not complete and may be changed. We may + +not sell these securities until the registration statement filed with the + +Securities and Exchange Commission is effective. This Prospectus is not an + +offer to sell these securities and it is not soliciting an offer to buy these + +securities in any state where the offer or sale is not permitted. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ SUBJECT TO COMPLETION, DATED JANUARY 10, 2002 PROSPECTUS Lyondell Chemical Company $393,000,000 Offer to Exchange Registered 9 1/2% Senior Secured Notes due 2008 in exchange for All Outstanding 9 1/2% Senior Secured Notes due 2008 The new notes: . will be freely tradeable; . are otherwise substantially identical to the outstanding notes; . will accrue interest at the same rate per annum as the outstanding notes payable semiannually in arrears on each June 15 and December 15, beginning June 15, 2002; . will be secured and will rank equally with outstanding notes that are not exchanged; . will not be listed on any securities exchange or on any automated dealer quotation system; and . will be guaranteed by our subsidiaries Lyondell Chemical Nederland, Ltd., ARCO Chemical Technology, Inc. and ARCO Chemical Technology, L.P. The exchange offer: . expires at 5:00 p.m., New York City time, on , 2002, unless extended or sooner terminated; and . is not conditioned on any minimum aggregate principal amount of outstanding notes being tendered. In addition, you should note that: . all outstanding notes that are validly tendered and not validly withdrawn will be exchanged for an equal principal amount of new notes that are registered under the Securities Act of 1933; . tenders of outstanding notes may be withdrawn any time before the expiration of the exchange offer; and . the exchange of outstanding notes for new notes in the exchange offer will not be a taxable event for U.S. federal income tax purposes. You should consider carefully the risk factors beginning on page 10 of this prospectus before participating in the exchange offer. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the new notes or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2002. TABLE OF CONTENTS PROSPECTUS SUMMARY.......................................................... 1 RISK FACTORS................................................................ 10 FORWARD-LOOKING STATEMENTS.................................................. 24 USE OF PROCEEDS............................................................. 24 CAPITALIZATION.............................................................. 25 THE EXCHANGE OFFER.......................................................... 26 DESCRIPTION OF OTHER INDEBTEDNESS........................................... 36 DESCRIPTION OF NEW NOTES.................................................... 40 UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO NON-U.S. HOLDERS........... 84 PLAN OF DISTRIBUTION........................................................ 87 LEGAL MATTERS............................................................... 88 EXPERTS..................................................................... 88 WHERE YOU CAN FIND MORE INFORMATION......................................... 89
This prospectus incorporates important business and financial information about us from documents that are not included in or delivered with this prospectus. This information is available to holders of the notes without charge upon written or oral request. You can obtain documents incorporated by reference in this prospectus by requesting them in writing or by telephone from us at the following address and telephone number: Lyondell Chemical Company 1221 McKinney, Suite 700 Houston, Texas 77010 Telephone: (713) 652-7200 Attention: Investor Relations To obtain timely delivery of any of our filings, agreements or other documents, you must make your request to us no later than five business days before the expiration date of the exchange offer. See "Where You Can Find More Information" for additional information concerning access to our public disclosures. The exchange offer will expire at 5:00 p.m., New York City time, on [ ], 2002. The exchange offer can be extended by us in our sole discretion. See "The Exchange Offer" for more detailed information. MARKET, RANKING AND INDUSTRY DATA The data included or incorporated by reference in this prospectus regarding markets and ranking, including the size of certain markets and our position and the position of our competitors within these markets, are based on independent industry publications, reports from government agencies or other published industry sources and our estimates. Our estimates are based on information obtained from our customers, distributors, suppliers, trade and business organizations and other contacts in the markets in which we operate and our management's knowledge and experience. We believe these estimates to be accurate as of the date of the document in which the estimates were made or as of the date specified in such document. However, this information may prove to be inaccurate because of the methods by which we obtained some of the data for our estimates or because this information cannot always be verified with complete certainty due to the limits on availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in a survey of market size. i PROSPECTUS SUMMARY Our Business Lyondell Chemical Company is a global chemical company with low-cost operations and leading producer positions in all of its major products. Lyondell manufactures and markets a variety of intermediate and performance chemicals, including propylene oxide (PO), propylene glycol (PG), propylene glycol ethers (PGE), butanediol (BDO), toluene diisocyanate (TDI), styrene monomer (SM), and tertiary butyl alcohol (TBA) and its derivative methyl tertiary butyl ether (MTBE), which are collectively known as our intermediate chemicals and derivatives business. We own 41% of Equistar Chemicals, LP, a Delaware limited partnership, which operates petrochemicals and polymers businesses. Equistar's petrochemicals business manufactures and markets olefins, oxygenated products, aromatics and specialty products. Equistar's olefins are ethylene, propylene and butadiene, and its oxygenated products include ethylene oxide, ethylene glycol, ethanol and MTBE. Equistar's aromatics are benzene and toluene. Equistar's polymers business manufactures and markets polyolefins, including high density polyethylene, low density polyethylene, linear low density polyethylene, polypropylene and performance polymers. Equistar's performance polymers include enhanced grades of polyethylene, such as wire and cable insulating resins, and polymeric powders. We also own 58.75% of LYONDELL-CITGO Refining LP, a Delaware limited partnership (LCR), which produces refined petroleum products, including gasoline, low sulfur diesel, jet fuel, aromatics and lubricants. LCR sells its principal refined products primarily to CITGO Petroleum Corporation (CITGO). In addition, we own 75% of Lyondell Methanol Company, L.P., a Texas limited partnership (LMC), which produces methanol. Lyondell is a Delaware corporation with principal executive offices located at 1221 McKinney Street, Suite 700, Houston, Texas 77010 (Telephone: (713) 652- 7200). 1 Summary of the Exchange Offer On December 4, 2001, we completed a private offering of the outstanding notes. We entered into a registration rights agreement with the initial purchasers in the private offering. We agreed to file a registration statement with the Securities and Exchange Commission, or SEC, within 90 days after the date we issued the outstanding notes and to use our best efforts to have it declared effective within 210 days after the date we issued the outstanding notes. You are entitled to new registered notes with substantially identical terms as your outstanding notes in exchange for your outstanding notes. You should read the discussion under the headings "--Summary of Terms of the New Notes" and "Description of New Notes" for further information regarding the new notes. We summarize the terms of the exchange offer below. You should read the discussion under the heading "The Exchange Offer" for further information regarding the exchange offer and resale of the new notes. The Exchange Offer.......... We are offering to issue to you new registered 9 1/2% senior secured notes due 2008 in exchange for your outstanding 9 1/2% senior secured notes due 2008. Expiration Date............. Unless sooner terminated, the exchange offer will expire at 5:00 p.m., New York City time, on [ ], 2002, or at a later date and time to which we extend it. Conditions to the Exchange We will not be required to accept outstanding Offer....................... notes for exchange if the exchange offer would violate applicable law or if any legal action has been instituted or threatened that would impair our ability to proceed with the exchange offer. The exchange offer is not conditioned on any minimum aggregate principal amount of outstanding notes being tendered. Please read the section "The Exchange Offer--Conditions to the Exchange Offer" for more information regarding the conditions to the exchange offer. Procedures for Tendering Outstanding Notes........... If you wish to participate in the exchange offer, you must complete, sign and date the letter of transmittal and mail or deliver the letter of transmittal, together with your outstanding notes, to the exchange agent. If your outstanding notes are held through The Depository Trust Company, or DTC, you may deliver your outstanding notes by book-entry transfer. In the alternative, if your outstanding notes are held through DTC and you wish to participate in the exchange offer, you may do so through the automated tender offer program of DTC. If you tender under this program, you will agree to be bound by the letter of transmittal that we are providing with this prospectus as though you had signed the letter of transmittal. By signing or agreeing to be bound by the letter of transmittal, you will represent to us, among other things, that: . you are not an "affiliate," as defined in Rule 405 of the Securities Act of 1933, of us or a broker-dealer tendering outstanding notes acquired directly from us for your own account; 2 . if you are not a broker-dealer or are a broker- dealer but will not receive new notes for your own account, you are not engaged in and do not intend to participate in a distribution of the new notes; . you have no arrangement or understanding with any person to participate in the distribution of the new notes or the outstanding notes within the meaning of the Securities Act; . any new notes you receive will be acquired in the ordinary course of your business; and . if you are a broker-dealer that will receive new notes for your own account in exchange for outstanding notes, those outstanding notes were acquired as a result of market-making activities or other trading activities, and you will deliver a prospectus, as required by law, in connection with any resale of those new notes. Please see "The Exchange Offer--Purpose and Effect of the Exchange Offer" and "The Exchange Offer--Your Representations to Us." Procedures for Beneficial If you beneficially own outstanding notes Owners...................... registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your outstanding notes in the exchange offer, you should promptly contact the registered holder and instruct it to tender the outstanding notes on your behalf. If you wish to tender your outstanding notes on your own behalf, you must either arrange to have your outstanding notes registered in your name or obtain a properly completed bond power from the registered holder before completing and executing the letter of transmittal and delivering your outstanding notes. The transfer of registered ownership may take considerable time. Guaranteed Delivery If you wish to tender your outstanding notes and Procedures.................. cannot comply before the expiration date with the requirement to deliver the letter of transmittal and notes or use the applicable procedures under the automated tender offer program of DTC, you must tender your outstanding notes according to the guaranteed delivery procedures described in "The Exchange Offer--Guaranteed Delivery Procedures." U.S. Federal Income Tax Considerations.............. The exchange of new notes for outstanding notes in the exchange offer will not be a taxable event for U.S. federal income tax purposes. Use of Proceeds............. We will not receive any cash proceeds from the issuance of new notes. 3 Plan of Distribution........ All broker-dealers who receive new notes in the exchange offer have a prospectus delivery obligation. Based on SEC no-action letters, broker-dealers who acquired the outstanding notes as a result of market-making or other trading activities may use this exchange offer prospectus, as supplemented or amended, in connection with the resales of the new notes. Broker-dealers who acquired the outstanding notes from us may not rely on SEC staff interpretations in no-action letters. Broker-dealers who acquired the outstanding notes from us must comply with the registration and prospectus delivery requirements of the Securities Act, including being named as selling noteholders, in order to resell the outstanding notes or the new notes. The Exchange Agent We have appointed The Bank of New York as exchange agent for the exchange offer. You should direct questions and requests for assistance, requests for additional copies of this prospectus or of the letter of transmittal and requests for the notice of guaranteed delivery to the exchange agent addressed as follows: For Delivery by Mail, Overnight Delivery or by Hand: The Bank of New York 15 Broad Street 16th Floor New York, NY 10005 Attn.: Enrique Lopez--Reorganization Unit By Facsimile Transmission (for eligible institutions only): (212) 235-2261 Attn.: Enrique Lopez To Confirm Receipt: (212) 235-2360 4 Summary of Terms of the New Notes The new notes will be freely tradeable and otherwise substantially identical to the outstanding notes. The new notes will not have registration rights. The new notes will evidence the same debt as the outstanding notes, and the outstanding notes and the new notes will be governed by the same indenture. Issuer...................... Lyondell Chemical Company. Notes Offered............... $393,000,000 principal amount of 9 1/2% Senior Secured Notes due 2008. Maturity Date............... The new notes mature on December 15, 2008. Interest Payment Dates...... The new notes bear interest at an annual rate equal to 9 1/2%. Interest payments will be made annually on each June 15 and December 15, beginning June 15, 2002. Guarantees.................. The new notes will be unconditionally guaranteed by our subsidiaries Lyondell Chemical Nederland, Ltd., ARCO Chemical Technology, Inc. and ARCO Chemical Technology, L.P. The guarantees of the new notes will be general obligations of each guarantor and will rank equally with all existing and future unsubordinated debt of each guarantor. These subsidiaries are also guarantors of our obligations under our credit facility and under our existing senior secured notes and senior subordinated notes. You should read "Description of New Notes--Subsidiary Guarantees" for a description of the guarantees. Collateral.................. The new notes will be secured by a lien equally and ratably with all secured debt outstanding under our credit facility and our existing senior secured notes and, with respect to certain of our manufacturing plants, the debentures that we assumed when we acquired ARCO Chemical Company, which we call the Lyondell debentures. The liens will constitute first-priority liens, subject to certain exceptions and permitted liens, on: . our personal property; . substantially all the equity interests of domestic subsidiaries directly owned by us and 65% of the stock of foreign subsidiaries directly owned by us; . the rights of certain of our subsidiaries to receive distributions from certain of our existing joint ventures in which they own equity interests; and . mortgages on our facilities located in Bayport, Texas, Channelview, Texas and Lake Charles, Louisiana. If and when the liens no longer secure amounts under our credit facility, the new notes, as well as the existing senior secured notes and the Lyondell debentures, will automatically cease to be secured by the liens. The liens that secure amounts under our credit facility 5 would be released if such a release were approved by the requisite lenders under the credit facility, and the consent of the holders of the new notes would not be required for such a release. In addition, the collateral agent and Lyondell may amend the provisions of the security documents with the consent of the requisite lenders and without the consent of the holders of the new notes. The lenders under our credit facility will have the sole ability to control remedies (including any sale or liquidation after acceleration of the new notes or the debt under the credit facility) with respect to the collateral. See "Risk Factors--Risk Factors Relating to Our Debt and the New Notes--You may not be able to fully realize the value of your liens--The security for your benefit can be released without your consent." You should read "Description of New Notes--Security" for a more complete description of the security granted to the holders of the new notes. Ranking..................... The new notes will rank equally with all our existing and future unsecured senior debt and prior to all such debt to the extent of the value of the collateral available to the holders of the new notes, which collateral is shared by such holders on a ratable basis with the holders of our other senior secured debt, including the debt under the credit facility, debt under our existing senior secured notes and, with respect to the mortgages, the Lyondell debentures. The new notes will also effectively rank junior to all liabilities of our subsidiaries that have not guaranteed the new notes and all liabilities of our joint ventures. After giving effect to the sale of the outstanding notes and the exchange offer, at September 30, 2001: . We and the guarantors would have had outstanding approximately $3.4 billion of unsubordinated debt that was secured by the same assets, including the new notes; . Our joint ventures, which have not guaranteed the new notes, would have had approximately $3.6 billion of outstanding liabilities, including trade payables, that are effectively senior to the new notes; and . Our subsidiaries that have not guaranteed the new notes would have had less than $1 million of outstanding liabilities, principally trade payables, that are effectively senior to the new notes. Optional Redemption......... We may redeem any of the new notes at any time on or after December 15, 2005 at the redemption prices described in "Description of New Notes-- Optional Redemption." Change of Control........... Upon the occurrence of certain change of control events described in "Description of New Notes-- Repurchase at the Option of Holders--Change of Control" you may require us to repurchase some or all of your notes at 101% of their principal amount, plus 6 accrued interest. The occurrence of those events will impose similar repurchase requirements for our other senior secured notes and our senior subordinated notes and may also be an event of default under our credit facility. We cannot assure you that we will have sufficient resources to satisfy our repurchase obligation in such circumstances. You should read carefully the sections called "Risk Factors--Risk Factors Relating to Our Debt and the New Notes--We may not be able to repurchase your notes upon a change of control" and "Description of New Notes." Covenants................... The new notes will be issued under the same indenture as the outstanding notes. The indenture contains certain covenants limiting or prohibiting our ability and our subsidiaries' ability to: . incur additional debt or issue subsidiary preferred stock; . increase dividends on our capital stock; . redeem or repurchase capital stock or repurchase subordinated debt; . engage in transactions with affiliates, except on an arm's-length basis; . create liens or engage in sale and leaseback transactions; . make some types of investments and sell assets; and . consolidate or merge with, or sell substantially all our assets to, another person. Certain of these covenants will no longer apply if the new notes are rated "BBB-" by Standard & Poor's or "Baa3" by Moody's, even if the new notes are subsequently downgraded to a lower rating. You should read "Description of New Notes--Certain Covenants" for a description of these covenants. If we fail to complete the exchange offer in accordance with the requirements of the registration rights agreement, we may be required to pay liquidated damages to the initial purchasers of the outstanding notes. You should read "Description of New Notes--Registration Rights; Liquidated Damages" for a description of our registration obligations. Risk Factors Please read "Risk Factors" beginning on page 10 and carefully consider the risk factors before participating in the exchange offer. 7 SUMMARY CONSOLIDATED FINANCIAL DATA The following table presents our summary consolidated financial data. The historical financial data has been derived from our audited consolidated financial statements for the years ended December 31, 1998, 1999 and 2000 and from our unaudited consolidated financial statements for the nine months ended September 30, 2000 and 2001. You should read this summary consolidated financial data in connection with the business and financial information contained in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q that are incorporated by reference in this prospectus, including "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes thereto.
For the nine For the year ended months ended December 31, September 30, ---------------------- ------------- 1998(a) 1999 2000 2000 2001 ------- ------ ------ ------ ------ (in millions) Income statement data: Sales and other operating revenues...... $1,447 $3,693 $4,036 $3,087 $2,509 Cost of sales........................... 1,089 2,891 3,371 2,514 2,149 Selling, general and administrative and research and development expenses...... 152 298 225 166 136 Income from equity investments.......... 235 76 199 199 61 Net income (loss)....................... 52 (115) 437 485 (97) Balance sheet data (at end of period): Property, plant and equipment, net...... 4,511 4,291 2,429 2,417 2,374 Total assets............................ 9,156 9,498 7,047 7,414 6,947 Total debt (b).......................... 6,994 6,271 3,854 4,207 3,846 Total stockholders' equity.............. 574 1,007 1,145 1,177 955 Other financial data: EBITDA before net unusual charges (c)... 292 728 636 547 335 Net cash distributions from joint ventures (d)........................... 337 154 240 160 107 Adjusted EBITDA (e)..................... 629 882 876 707 442 Cash interest expense (f)............... 264 586 496 389 281 Depreciation and amortization (g)....... 138 330 279 219 199 Capital expenditures (h)................ 64 131 104 78 52 Ratio of earnings to fixed charges (i).. 1.2x .9x 2.0x 2.5x 6x
8 Notes To Summary Consolidated Financial Data (a) Financial information for 1998 includes five months of operating results for ARCO Chemical on a consolidated basis. (b) Does not include $3.1 billion in joint venture debt as of September 30, 2001, $431 million of which is Equistar debt for which Lyondell remains contingently liable. (c) EBITDA before net unusual charges is calculated as net income before (1) equity income from Equistar, LCR and LMC, (2) net interest expense, (3) taxes, (4) depreciation and amortization, (5) net unusual charges and (6) gain on sale of assets. While EBITDA should not be construed as a substitute for operating income or a better indicator of liquidity than cash flows from operating activities, which are determined in accordance with generally accepted accounting principles, it is included herein to provide additional information with respect to our ability to meet our future debt service, capital expenditure and working capital requirements. EBITDA is not necessarily a measure of our ability to fund our cash needs. EBITDA is included herein because management believes that certain investors find it to be a useful tool for measuring our ability to service debt. In addition, it should be noted that companies calculate EBITDA differently and therefore EBITDA as presented for us may not be comparable to EBITDA reported by other companies. Net unusual charges were $61 million in 1998, $15 million in 1999 and $78 million for the nine months ended September 30, 2001. Gain on sale of assets was $590 million for 2000 and the nine months ended September 30, 2000. (d) Net cash distributions from joint ventures include cash distributions from Equistar, LCR and LMC, other than extraordinary distributions and net of investments and loans to Equistar, LCR and LMC to finance capital expenditures. (e) Adjusted EBITDA is calculated as EBITDA before net unusual charges plus net cash distributions from joint ventures as defined in (c) above. (f) Cash interest expense is calculated as interest expense less amortization of debt issuance costs as set forth in (g) below. (g) Includes amortization of debt issuance costs of $23 million for 1998, $30 million for 1999, $18 million for 2000, $14 million for the nine months ended September 30, 2000 and $11 million for the nine months ended September 30, 2001. (h) Excludes contributions to the PO-11 joint venture to fund capital projects of $3 million for 2000, $2 million for the nine months ended September 30, 2000 and $74 million for the nine months ended September 30, 2001. (i) The ratio of earnings to fixed charges is computed by dividing earnings available for fixed charges by fixed charges. Earnings available for fixed charges consist of earnings before income taxes plus fixed charges, less capitalized interest. Fixed charges consist of interest, whether expensed or capitalized, and the portion of operating lease rental expense that represents the interest factor. 9 RISK FACTORS There are many risks that may affect your investment in the new notes. Some of these risks, but not all of them, are listed below. You should carefully consider these risks as well as the other information included or incorporated by reference in this prospectus before exchanging your notes. Risk Factors Relating to the Exchange Offer If you fail to exchange your outstanding notes, the existing transfer restrictions will remain in effect and the market value of your outstanding notes may be adversely affected because they may be more difficult to sell. If you do not exchange your outstanding notes for new notes under the exchange offer, then you will continue to be subject to the existing transfer restrictions on the outstanding notes. In general, the outstanding notes may not be offered or sold unless they are registered or exempt from registration under the Securities Act of 1933 and applicable state securities laws. Except as required by the registration rights agreement, we do not intend to register resales of the outstanding notes. The tender of outstanding notes under the exchange offer will reduce the aggregate principal amount of the outstanding notes. This may have an adverse effect upon, and increase the volatility of, the market price of any outstanding notes that you continue to hold due to a reduction in liquidity. Risk Factors Relating to Our Debt and the New Notes The risks described in this section that apply to the new notes also apply to any outstanding notes not tendered for new notes in the exchange offer. Our balance sheet is highly leveraged. As of September 30, 2001, after giving effect to the sale of the outstanding notes and the application of the net proceeds as described under "Use of Proceeds" and the exchange offer, we would have had $3.9 billion of consolidated debt, including the current portion of long-term debt. This debt amounted to approximately 77% of our total capitalization. Our consolidated debt amounts do not include $3.1 billion in joint venture debt ($431 million of which is Equistar debt for which we remain contingently liable). Our ability to pay or to refinance our debt will depend on future operating performance, which will be affected by general economic, financial, competitive, legislative, regulatory, business and other factors, many of which are beyond our control. We anticipate that our operating cash flow, together with money we can borrow under our credit facility, will be sufficient to meet anticipated future cash requirements, including scheduled debt repayments, necessary capital expenditures, ongoing operations and dividends. However, if future operating cash flows are less than currently anticipated, we may be forced to reduce or delay capital expenditures, sell assets or reduce operating expenses. Our debt agreements may restrict our ability to take certain actions. Our Indentures The indenture governing the notes and our other indentures contain various covenants that limit our ability to engage in certain transactions. These covenants limit our ability to, among other things: . incur additional debt or issue subsidiary preferred stock; . increase dividends on our capital stock; 10 . redeem or repurchase capital stock or repurchase subordinated debt; . engage in transactions with affiliates, except on an arm's-length basis; . create liens or engage in sale and leaseback transactions; . make some types of investments and sell assets; and . consolidate or merge with, or sell substantially all our assets to, another person. Our credit facility Our credit facility also contains restrictive covenants and limits our ability to prepay other debt (including the notes) until our senior unsecured debt is rated investment grade. The credit facility also requires us to maintain specified financial ratios and to satisfy certain other financial condition tests. Our ability to meet those financial ratios and tests can be affected by events beyond our control, and we cannot assure you that we will be able to satisfy those covenants. Our ability to comply with the financial ratios required by our credit facility will be dependent on improvement in our results of operations during 2002, which we cannot assure you will occur. Equistar's ability to comply with its credit facility covenants will similarly be dependent on improvements in its operating performance. Our credit facility covenants also limit our ability to, among other things: . increase dividends with respect to our capital stock; . make some types of investments; and . allow our subsidiaries to incur some types and amounts of debt. A breach of any of these provisions could permit the lenders to declare all amounts outstanding under the credit facility to be immediately due and payable and to terminate all commitments to extend further credit. If we were unable to repay those amounts, the lenders could proceed against the collateral granted to them to secure that debt. Under the terms of the new notes, we will pledge the same assets pledged under the credit facility and our existing senior secured notes as security for obligations under the new notes. Some of these assets are also pledged to secure Lyondell's debentures. If the lenders under our credit facility were to accelerate the repayment of borrowings thereunder, we cannot assure you that we would have sufficient assets to repay the new notes. Our joint ventures are not subject to most of the covenants under the new notes. None of Equistar, LCR or LMC is a "subsidiary" or a "restricted subsidiary" of Lyondell, as those terms are defined in the indenture governing the notes. Therefore, these joint ventures are not subject to the covenants described above. As a result, holders of the new notes will have no recourse if Equistar, LCR or LMC substantially increases its debt leverage. The indenture obligates us to use our best efforts, consistent with our contractual obligations and fiduciary duties, to ensure that our joint ventures do not agree to restrictions on their ability to make distributions to us, but that obligation is subject to significant exceptions. You should read the section called "Description of New Notes--Certain Covenants--Dividend and Other Payment Restrictions Affecting Subsidiaries and Joint Ventures." Subject to the restriction summarized above, Equistar, LCR and LMC could enter into agreements that would restrict their ability to pay dividends or make other distributions to us. In addition, under applicable state law, our joint ventures may be limited in amounts that they are permitted to pay as distributions on their equity interests. Any such restriction on distributions by Equistar or LCR could have a material adverse effect on us. Moreover, a default by a joint venture under any of its debt instruments generally would not, so long as that joint venture is not a "restricted subsidiary" as defined in the indenture, give rise to a default under the indenture governing the notes, even though the creditors of the defaulting joint venture would have remedies against the joint venture. As a result, you will have no recourse if any of these joint ventures defaults on any of 11 its debt. A default by Equistar under any of its material debt instruments would, however, give rise to a default under our credit facility. A default by any joint venture on its debt could result in reduced distributions by such joint venture to us. Reduced distributions by a significant joint venture could have a material adverse effect on us. The new notes are subordinated to debt of our subsidiaries and joint ventures. None of our joint ventures have guaranteed the new notes. Our subsidiaries Lyondell Chemical Nederland, Ltd., ARCO Chemical Technology, Inc. and ARCO Chemical Technology, L.P. are guarantors under the credit facility and of our existing senior secured notes and senior subordinated notes and will be guarantors of the new notes. None of our other subsidiaries will initially guarantee the new notes. As a result, the new notes are not debt of our joint ventures or subsidiaries, other than Lyondell Chemical Nederland, Ltd., ARCO Chemical Technology, Inc. and ARCO Chemical Technology, L.P., and holders of the debt and other liabilities, including trade payables, of these joint ventures and other subsidiaries will effectively be senior to claims against those entities by you. At September 30, 2001, these other subsidiaries had less than $1.0 million of outstanding liabilities, including trade payables, and these joint ventures had approximately $3.6 billion of outstanding liabilities, including trade payables. We may not be able to repurchase your new notes upon a change of control. Upon the occurrence of certain change of control events as described in "Description of New Notes," you may require us to purchase your notes at 101% of their principal amount, plus accrued interest. We cannot assure you that we will have the financial resources to purchase your notes, particularly if a change of control event triggers a similar repurchase requirement for, or results in the acceleration of, other debt. Our credit facility provides that certain change of control events will constitute a default under the credit facility and could result in the acceleration of the maturity of all debt under the credit facility. Our outstanding senior secured notes and senior subordinated notes have similar repurchase requirements to those applicable to the new notes. Future debt might contain similar provisions. You may not be able to fully realize the value of your liens. The security for your benefit can be released without your consent The liens for the benefit of the new notes may be released without your vote or consent: . The security documents generally provide for an automatic release of all liens on any asset that is disposed of in compliance with the provisions of the security documents. . Any lien can be released if approved by the requisite number of lenders under our credit facility. . The collateral agent and Lyondell may amend the provisions of the security documents with the consent of the requisite number of lenders under our credit facility and without your consent. . The lenders under our credit facility will have the sole ability to control remedies (including upon sale or liquidation of the collateral after acceleration of the new notes or the debt under the credit facility) with respect to the collateral. . The new notes, as well as the existing senior secured notes and the Lyondell debentures, will automatically cease to be secured by those liens if and when those liens no longer secure amounts under our credit facility. As a result, we cannot assure you that the new notes will continue to be secured by a substantial portion of our assets. You will have no recourse if the lenders under our credit facility approve the release of any or all the collateral, even if that release adversely affects any rating of the new notes. 12 The collateral may not be valuable enough to satisfy all the obligations secured by the collateral We will secure our obligations under the new notes by the pledge of certain of our assets. This pledge is also for the benefit of the lenders under the credit facility and the holders of our other outstanding senior secured notes. The pledge of some of those assets also benefits the holders of the outstanding Lyondell debentures. The security documents and the indenture provide that we may apply the proceeds of any sale of assets, including collateral (other than sales by the collateral agent after acceleration of the debt under the credit facility), to repay debt under our credit facility prior to repaying amounts owed under the new notes. The value of the pledged assets in the event of a liquidation will depend upon market and economic conditions, the availability of buyers and similar factors. No independent appraisals of any of the pledged property have been prepared by or on behalf of us in connection with the offering of the outstanding notes. Accordingly, we cannot assure you that the proceeds of any sale of the pledged assets following an acceleration to maturity with respect to the new notes would be sufficient to satisfy, or would not be substantially less than, amounts due on the new notes and the other debt secured thereby. If the proceeds of any sale of the pledged assets were not sufficient to repay all amounts due on any new notes, you (to the extent your notes were not repaid from the proceeds of the sale of the pledged assets) would have only an unsecured claim against our remaining assets. By their nature, some or all the pledged assets may be illiquid and may have no readily ascertainable market value. Likewise, we cannot assure you that the pledged assets will be saleable or, if saleable, that there will not be substantial delays in their liquidation. To the extent that liens, rights and easements granted to third parties encumber assets located on property owned by us or constitute subordinate liens on the pledged assets, those third parties have or may exercise rights and remedies with respect to the property subject to such encumbrances (including rights to require marshalling of assets) that could adversely affect the value of the pledged assets located at that site and the ability of the collateral agent to realize or foreclose on the pledged assets at that site. In addition, the indenture permits us to issue additional secured debt, including debt secured equally and ratably by the same assets pledged to you. This would reduce amounts payable to you from the proceeds of any sale of the collateral. Bankruptcy laws may limit your ability to realize value from the collateral The right of the collateral agent to repossess and dispose of the pledged assets upon the occurrence of an event of default under the indenture is likely to be significantly impaired by applicable bankruptcy law if a bankruptcy case were to be commenced by or against us before the collateral agent repossessed and disposed of the pledged assets. Under Title 11 of the United States Code, the bankruptcy code, a secured creditor is prohibited from repossessing its security from a debtor in a bankruptcy case, or from disposing of security repossessed from such debtor, without bankruptcy court approval. Moreover, the bankruptcy code permits the debtor to continue to retain and to use collateral even though the debtor is in default under the applicable debt instruments, provided that the secured creditor is given "adequate protection." The meaning of the term "adequate protection" may vary according to circumstances, but it is intended in general to protect the value of the secured creditor's interest in the collateral and may include cash payments or the granting of additional security, if and at such times as the court in its discretion determines, for any diminution in the value of the collateral as a result of the stay of repossession or disposition or any use of the collateral by the debtor during the pendency of the bankruptcy case. Generally, adequate protection payments, in the form of interest or otherwise, are not required to be paid by a debtor to a secured creditor unless the bankruptcy court determines that the value of the secured creditor's interest in the collateral is declining during the pendency of the bankruptcy case. In view of the lack of a precise definition of the term "adequate protection" and the broad discretionary powers of a bankruptcy court, it is impossible to predict (1) how long payments under the new notes could be delayed following commencement of a bankruptcy case, (2) whether or when the collateral 13 agent could repossess or dispose of the pledged assets or (3) whether or to what extent holders of the new notes would be compensated for any delay in payment or loss of value of the pledged assets through the requirement of "adequate protection." The collateral is subject to casualty risks and no mortgage title insurance has been obtained We are obligated under the security documents to at all times cause all the pledged assets to be properly insured and kept insured against loss or damage by fire or other hazards to the extent that such properties are usually insured by corporations operating properties of a similar nature in the same or similar localities. There are, however, certain losses, including losses resulting from terrorist acts, that may be either uninsurable or not economically insurable, in whole or in part. As a result, we cannot assure you that the insurance proceeds will compensate us fully for our losses. If there is a total or partial loss of any of the pledged assets, we cannot assure you that the proceeds received by us in respect thereof will be sufficient to satisfy all the secured obligations, including the new notes. In the event of a total or partial loss of any of the mortgaged facilities, certain items of equipment may not be easily replaced because they are sufficiently large or customized that replacement units generally are not readily available. Accordingly, even though there may be insurance coverage, the large size of some of the equipment and the extended period needed to manufacture replacement units could cause significant delays in replacement. Additionally, we are not required under the security documents to purchase any title insurance insuring the collateral agent's lien on the respective mortgaged properties. If a loss occurs arising from a title defect with respect to any mortgaged property, we cannot assure you that we could replace such property with collateral of equal value. Fraudulent transfer statutes may limit your rights under the guarantees Our obligations under the new notes are initially guaranteed by Lyondell Chemical Nederland, Ltd., ARCO Chemical Technology, Inc. and ARCO Chemical Technology, L.P., three of our subsidiaries. The guarantees may be subject to review under various laws for the protection of creditors. It is possible that the creditors of a guarantor may challenge a guarantee as a fraudulent transfer under relevant federal and state laws, by claiming, for example, that, since the guarantee was incurred for the benefit of Lyondell (and only indirectly, if at all, for the benefit of the guarantor), the obligations of the guarantor were incurred for less than reasonably equivalent value or fair consideration. Under certain circumstances, including a finding that a guarantor was insolvent at the time its guarantee was issued, a court could hold that the obligations of the guarantor under the guarantee may be voided or are subordinate to other obligations of the guarantor or that the amount for which a guarantor is liable under a guarantee may be limited. Different jurisdictions define "insolvency" differently. However, a guarantor generally would be considered insolvent at the time it guaranteed the notes if (1) the fair market value (or fair saleable value) of its assets is less than the amount required to pay its total existing debts and liabilities (including the probable liability on contingent liabilities) as they become absolute or matured or (2) the guarantor were incurring debts beyond its ability to pay as such debts mature. We cannot assure you as to what standard a court would apply in order to determine whether a guarantor was "insolvent" when the notes were guaranteed, and we cannot assure you that, regardless of the method of valuation, a court would not determine that a guarantor were insolvent on that date. Nor can we assure you that a court would not determine, regardless of whether the guarantor were insolvent when the guarantees were issued, that the guarantees constituted fraudulent transfers on another ground. In an attempt to limit the applicability of fraudulent transfer laws, the indenture limits the amount of the guarantees of Lyondell Chemical Nederland, Ltd., ARCO Chemical Technology, Inc. and ARCO Chemical Technology, L.P. to the amount that will result in the guarantees' not constituting fraudulent transfers or improper corporate distributions, but we cannot be certain which standard a court would apply in making a determination regarding the maximum liability of a guarantor. 14 There is no trading market for the new notes and there may never be one, and any market that does come into existence may have limited liquidity and be highly volatile. Currently there is no trading market for the new notes. We do not currently intend to apply for listing of the new notes on any securities exchange or stock market. Although the initial purchasers of the outstanding notes have informed us that they currently intend to make a market in the new notes, they are not obligated to do so. Any such market making may be discontinued at any time without notice. The liquidity of any market for the new notes will depend on the number of holders of those new notes, the interest of securities dealers in making a market in those securities and other factors. Accordingly we cannot assure you as to the development or liquidity of any market for the new notes. Historically, the market for non-investment grade debt has been subject to disruptions that have caused substantial volatility in the prices of securities similar to the new notes. We cannot assure you that the market, if any, for the new notes will be free from similar disruptions. Any such disruptions may adversely affect holders of the new notes. Risk Factors Relating To Our Business The cyclicality of the chemical and refining industries may cause significant fluctuation in our income and cash flow. Our historical operating results reflect the cyclical and volatile nature of the supply-demand balance in both the chemical and refining industries. These industries have historically experienced alternating periods of tight supply, causing prices and profit margins to increase, followed by periods when substantial capacity is added, resulting in oversupply, declining capacity utilization rates and declining prices and profit margins. The cyclicality of these industries results in volatile profits and cash flow over the business cycle. Currently, there is overcapacity in the chemical industry. Moreover, a number of participants in the chemical industry either have added or are expecting to add capacity. There can be no assurance that future growth in product demand will be sufficient to utilize this additional, or even current, capacity. Excess industry capacity has depressed and may continue to depress our and/or our joint ventures' volumes and margins. As a result of excess industry capacity and weak demand for our products, as well as higher energy and raw material prices earlier this year, our EBITDA declined significantly during the first nine months of 2001 as compared to the first nine months of 2000 and may continue to do so. In light of industry conditions, seasonal factors and maintenance turnaround work on LCR's refinery, our EBITDA for the fourth quarter of 2001 is expected to be lower than in the third quarter of 2001. Weak industry conditions are expected to continue into 2002. In addition, our cash on hand has declined since September 30, 2001, primarily as a result of significant semiannual interest payments in the fourth quarter and reduced distributions from LCR due to the LCR turnaround. In addition, higher natural gas prices early in 2001 adversely affected the ability of many domestic chemicals producers to compete internationally since U.S. producers are disproportionately reliant on natural gas as a feedstock and energy source. In addition to the impact that this has had on Equistar's exports, reduced competitiveness of U.S. producers also has in the past increased the availability of chemicals in North America, as U.S. production that would otherwise have been sold overseas was instead offered for sale domestically. External factors beyond our and our joint ventures' control can cause fluctuations in demand for our products and in our prices and margins, which may negatively affect income and cash flow. External factors can also cause significant fluctuations in demand for our and our joint ventures' products and volatility in the price of raw materials and other operating costs. Examples of external factors include: . general economic conditions; . competitor actions; 15 . international events and circumstances; and . governmental regulation in the United States and abroad. Demand for our products and our joint ventures' products is influenced by general economic conditions. For example, during 2000 and in the first half of 2001, uncertainty regarding the global economy, as well as unusually high prices for natural gas, reduced market demand for some of our and our joint ventures' products, which adversely affected our results of operations. Although natural gas prices have declined since their highs in early 2001, this reduction in market demand has continued through the third quarter 2001. In addition, a number of our products and our joint ventures' products are highly dependent on durable goods markets, such as housing and automotive, which are themselves particularly cyclical. Many of our and our joint ventures' products are components of other chemical products that, in turn, are subject to the supply-demand balance of both the chemical and refining industries and general economic conditions. For example, MTBE is used as a blending component in gasoline, and therefore a substantial decline in gasoline prices could result in decreased profitability from MTBE sales. If the global economy does not improve, demand for our and our joint ventures' products and our income and cash flow would be adversely affected. We and our joint ventures may reduce production at or idle a facility for an extended period of time or exit a business because of high raw material prices, an oversupply of a particular product and/or a lack of demand for that particular product, which makes production uneconomical. These temporary outages sometimes last for several quarters and cause us or our joint ventures to incur costs, including the expenses of the outages and the restart of these facilities. It is possible that factors like increases in raw material costs or lower demand in the future will cause us to further reduce operating rates or idle facilities or exit uncompetitive businesses. We and our joint ventures sell commodity products in highly competitive markets and face significant price pressure. We and our joint ventures sell our products in highly competitive markets. Due to the commodity nature of certain of our and our joint ventures' products, competition in these markets is based primarily on price and to a lesser extent on product performance, product quality, product deliverability and customer service. As a result, we and our joint ventures are generally not able to protect our market position for these products by product differentiation and may not be able to pass on cost increases to our customers. Accordingly, increases in raw material and other costs may not necessarily correlate with changes in prices for these products, either in the direction of the price change or in magnitude. In addition, some of our and our joint ventures' competitors may be able to drive down product prices. Moreover, some of our and our joint ventures' competitors may have greater financial, technological and other resources than ours, and may be better able to withstand changes in market conditions. For certain products, our and our joint ventures' competitors may be able to respond more quickly to new or emerging technologies and changes in customer requirements than we can. The occurrence of any of these events could adversely affect our financial condition and results of operations. Rising costs of raw materials and energy may result in increased operating expenses and reduced results of operations. We and our joint ventures purchase large amounts of raw materials and energy for our business. The cost of these raw materials and energy, in the aggregate, represents a substantial portion of our operating expenses. The prices of raw materials and energy generally follow price trends of, and vary with market conditions for, crude oil and natural gas, which may be highly volatile and cyclical. Raw material costs began increasing during 1999 due to higher oil and gas prices. These increases continued through 1999 and prices remained at high levels during 2000. Surging natural gas costs late in 2000 and in the first half of 2001 increased both the costs of natural gas liquids-based raw materials, primarily ethane, as well as the cost of utilities. In the first quarter of 2001, our results of operations and Equistar's results of operations were significantly affected by the rising cost of natural gas. Spot natural gas prices spiked at nearly $10 per million BTUs in January 2001, compared to a spot price range of $1.50 to $2.50 per million BTUs in the period from 1991 to 1999. Since the January 2001 peak, natural gas prices have decreased. Benchmark third quarter 2001 natural gas prices 16 averaged $2.96 per million BTUs compared to $4.29 in the third quarter 2000, a 31% decrease. However, average benchmark natural gas costs in the first nine months of 2001 were still 44% higher compared to the first nine months of 2000. Our operating expenses and Equistar's operating expenses will likely increase if these costs increase above current levels. Shared control of joint ventures involving Lyondell may delay decisions or actions. A substantial portion of our operations is conducted through joint ventures. We share control of these joint ventures with unaffiliated third parties. Our forecasts and plans with respect to these joint ventures assume that our joint venture partners will observe their obligations with respect to the joint ventures. In the event that any of our joint venture partners do not observe their commitments, it is possible that the affected joint venture would not be able to operate in accordance with its business plans or that we would be required to increase our level of commitment in order to give effect to such plans. As with any such joint venture arrangements, differences in views among the joint venture participants may result in delayed decisions or in failures to agree on major matters, potentially adversely affecting the business and operations of the joint ventures and in turn our business and operations. Lyondell or any of the other owners of the joint ventures may transfer control of their joint venture interests or engage in mergers or other business combination transactions with a third party or one or more of the other owners that could result in a change of control of Lyondell or the joint venture or the other owners. In many instances, such a transfer would be subject to an obligation to first offer the other owners an opportunity to purchase the interest. Lyondell and the other joint venture owners have discussed, and from time to time may continue to discuss, in connection with their ordinary course dialog regarding the joint ventures or otherwise, transactions that could result in a transfer or modification, directly or indirectly, of their ownership in a joint venture. We cannot be certain that any of the joint venture owners will not sell, transfer or otherwise modify their ownership interest in a joint venture, whether in a transaction involving third parties and/or one or more of the other owners. Upon a transfer of an interest in Equistar, the partnership agreement and key agreements between Equistar and its owners would remain in place and may not be modified without the consent of all of the owners, but the transfer could affect the governance of Equistar, particularly because Equistar's partnership agreement requires unanimous approval for some decisions. Equistar's credit facility provides that an event of default occurs if Lyondell, Millennium and Occidental cease to collectively hold at least a 50% interest. LCR's credit facility provides that an event of default occurs if Lyondell and CITGO cease to individually or collectively hold at least a 35% interest. In addition, LCR's credit facility provides that an event of default occurs if (1) Lyondell transfers its interest as a member of LCR to a person other than an affiliate or (2) neither CITGO nor any of its affiliates is a member of LCR. Distributions of cash from our joint ventures may be restricted. We conduct a substantial amount of our operations through our joint ventures. Our ability to meet our debt service obligations is dependent, in part, upon the receipt of distributions from our joint ventures. LCR's credit facility prohibits the payment of distributions to us during an event of default thereunder. Subject to the provisions of the applicable debt agreements, future borrowings by our joint ventures may contain other restrictions or prohibitions on the payment of distributions by such joint ventures to us. Dependent upon applicable state law, our joint ventures may be limited in amounts that they are permitted to pay as distributions on their equity interests. Our joint ventures' ability to distribute cash to us is also dependent upon their economic performance, which is dependent on a variety of factors, including factors described elsewhere in "Risk Factors." For example, Equistar did not make any distributions to its owners in 2001, as its results of operations have been adversely affected by increasing industry capacity for the products it sells, higher raw material prices and reduced demand due to weak economic conditions. 17 LCR's crude oil supply agreement with PDVSA Petroleo, S.A. (PDVSA Oil) is important to LCR's operations because it reduces the volatility of earnings and cash flow. The agreement is subject to the risk of enforcing judgments against non-United States affiliates of a sovereign nation and force majeure risks. Most of the crude oil used by LCR as a feedstock for its refinery is purchased under the crude supply agreement with PDVSA Oil, an affiliate of Petroleos de Venezuela, S.A. (PDVSA), which was entered into in 1993. The crude supply agreement incorporates formula prices to be paid by LCR for the crude oil supplied based on the market value of a slate of refined products deemed to be produced from each particular crude oil or feedstock, less (1) certain deemed refining costs adjustable for inflation and energy costs, (2) certain actual costs and (3) a deemed margin, which varies according to the grade of crude oil or other feedstock delivered. The actual refining margin earned by LCR may vary from the formula amount depending on, among other things, the efficiency with which LCR conducts its operations from time to time. Although LCR believes that the crude supply agreement reduces the volatility of its earnings and cash flows, the crude supply agreement also limits LCR's ability to enjoy higher margins during periods when the market price of crude oil is low relative to the then-current market prices for refined products. In addition, if the actual yields, costs or volumes of the LCR refinery differ substantially from those contemplated by the crude supply agreement, the benefits of this agreement to LCR could be substantially diminished and could result in lower earnings and cash flow for LCR. Furthermore, there may be periods during which LCR's costs for crude oil under the crude supply agreement may be higher than might otherwise be available to LCR from other sources. A disparate increase in the price of heavy crude oil relative to the prices for its products, such as experienced in 1999, has the tendency to make continued performance of its obligations under the crude supply agreement less attractive to PDVSA Oil. There are risks associated with enforcing the provisions of contracts with companies such as PDVSA Oil that are non-United States affiliates of a sovereign nation. All of the crude oil supplied by PDVSA Oil under the crude supply agreement is produced in the Republic of Venezuela, which has experienced economic difficulties and attendant social and political changes in recent years. It is impossible to predict how governmental policies may change under the current or any subsequent Venezuelan government. In addition, there are risks associated with enforcing judgments of United States courts against entities whose assets are located outside of the United States and whose management does not reside in the United States. Although the parties have negotiated alternative arrangements in the event of certain force majeure conditions, including Venezuelan governmental or other actions restricting or otherwise limiting PDVSA Oil's ability to perform its obligations, any such alternative arrangements may not be as beneficial to LCR as the crude supply agreement. PDVSA has announced that it intends to renegotiate the crude supply agreements that it has with all third parties, including LCR. In light of PDVSA's announced intent, we cannot assure you that PDVSA Oil will continue to perform its obligations under the crude supply agreement. However, it has confirmed that it expects to honor its commitments if a mutually acceptable restructuring of the crude supply agreement is not achieved. In recent years, Lyondell and PDVSA have had discussions covering both a restructuring of the crude supply agreement and a broader restructuring of the LCR partnership. We are unable to predict whether changes in either arrangement will occur. If the crude supply agreement is modified or terminated or this source of crude oil is otherwise interrupted due to production difficulties, OPEC- mandated supply cuts, political or economic events in Venezuela or other factors, LCR could experience significantly lower earnings and cash flows. The parties each have a right to transfer their interests in LCR to unaffiliated third parties in certain circumstances, subject to reciprocal rights of first refusal. In the event that CITGO were to transfer its interest in LCR to an unaffiliated third party, PDVSA Oil would have an option to terminate the crude supply agreement. Depending on then-current market conditions, any breach or termination of the crude supply agreement could adversely affect LCR, since LCR would have to purchase all of its crude oil feedstocks in the merchant market, which could subject LCR to significant volatility and price fluctuations. We cannot assure you that alternative crude oil supplies with similar margins will be available for purchase by LCR. 18 By letter dated April 16, 1998, PDVSA Oil informed LCR that the Venezuelan government, through the Ministry of Energy and Mines, had instructed that production of certain grades of crude oil be reduced. The letter stated that PDVSA Oil declared itself in a force majeure situation and that PDVSA Oil would reduce deliveries of crude oil. Such reductions in deliveries were purportedly based on announced OPEC production cuts. LCR began receiving reduced deliveries of crude oil from PDVSA Oil in August 1998, amounting to 195,000 barrels per day in that month. LCR was advised by PDVSA Oil in May 1999 of a further reduction in the deliveries of crude oil supplied under the crude supply agreement to 184,000 barrels per day, effective May 1999. On several occasions since then, PDVSA Oil has further reduced crude oil deliveries, although it made payments under a different provision of the crude supply agreement in partial compensation for such reductions. Subsequently, PDVSA Oil unilaterally increased deliveries of crude oil to LCR to 195,000 barrels per day effective April 2000, to 200,000 barrels per day effective July 2000 and to 230,000 barrels per day effective October 2000. By letter dated February 9, 2001, PDVSA Oil informed LCR that the Venezuelan government, through the Ministry of Energy and Mines, had instructed that production of certain grades of crude oil be reduced effective February 1, 2001. The letter stated that PDVSA Oil declared itself in a force majeure situation, but did not announce any reduction in crude oil deliveries to LCR. Although some reduction in crude oil delivery may be forthcoming, it is unclear as to the level of reduction, if any, which may be anticipated. LCR has consistently contested the validity of PDVSA Oil's reductions in deliveries under the crude supply agreement and, specifically, Lyondell, on behalf of LCR, has disputed the existence and validity of the purported force majeure situation declared by the February 9, 2001 letter. Operating problems in our business may adversely affect our income and cash flow. The occurrence of material operating problems at our facilities or any of our joint ventures' facilities, including, but not limited to, the events described below, may have a material adverse effect on the productivity and profitability of a particular manufacturing facility, or on our operations as a whole, during and after the period of such operational difficulties. Our income and cash flow are dependent on the continued operation of our various production facilities, our joint ventures' production facilities and the ability to complete construction projects on a schedule. Our operations and our joint ventures' operations are subject to the usual hazards associated with chemical manufacturing and refining and the related storage and transportation of feedstocks, products and wastes, including: . pipeline leaks and ruptures; . fires; . mechanical failure; . labor difficulties; . remediation complications; . discharges or releases of toxic or hazardous substances or gases and other environmental risk; . explosions; . storage tank leaks; . unscheduled downtime; . transportation interruptions; . chemical spills; and . inclement weather and natural disasters. 19 Some of these hazards can cause personal injury and loss of life, severe damage to or destruction of property and equipment and environmental damage, and may result in suspension of operations and the imposition of civil or criminal penalties. Furthermore, we are also subject to present and future claims with respect to workplace exposure, workers' compensation and other matters. We are not fully insured against all potential hazards. Our operations and assets are subject to extensive environmental, health and safety laws and regulations. We cannot predict with certainty the extent of our, our subsidiaries' or our joint ventures' future liabilities and costs under environmental, health and safety laws and regulations and we cannot assure you that they will not be material. In addition, we, our subsidiaries or our joint ventures may face liability for alleged personal injury or property damage due to exposure to chemicals or other hazardous substances at our facilities or chemicals that we otherwise manufacture, handle or own. Although these claims have not historically had a material impact on our, our subsidiaries' or our joint ventures' operations, a significant increase in the number or success of these claims could materially adversely affect our, our subsidiaries' or our joint ventures' business, financial condition, operating results or cash flow. The production facilities of Lyondell, Equistar, LCR and LMC are generally required to have permits and licenses regulating air emissions, discharges to water and storage, treatment and disposal of hazardous wastes. Companies such as Lyondell and its joint ventures that are permitted to treat, store or dispose of hazardous waste and maintain underground storage tanks pursuant to the Resource Conservation and Recovery Act (RCRA) also are required to meet certain financial responsibility requirements. We believe that we and our joint ventures have all permits and licenses generally necessary to conduct business or, where necessary, are applying for additional, amended or modified permits and that we and our joint ventures meet applicable financial responsibility requirements. The policy of each of Lyondell, Equistar, LCR and LMC is to be in compliance with all applicable environmental laws. Lyondell and Equistar also are each committed to Responsible Care(R), an international chemical industry initiative to enhance the industry's responsible management of chemicals. Our subsidiaries and joint ventures (together with the industries in which they operate) are subject to extensive national, state and local environmental laws and regulations concerning emissions to the air, discharges onto land or waters and the generation, handling, storage, transportation, treatment and disposal of waste materials. Many of these laws and regulations provide for substantial fines and potential criminal sanctions for violations. Some of these laws and regulations are subject to varying and conflicting interpretations. In addition, we cannot accurately predict future developments, such as increasingly strict environmental laws, and inspection and enforcement policies, as well as compliance costs therefrom, which might affect the handling, manufacture, use, emission or disposal of products, other materials or hazardous and nonhazardous waste. Some risk of environmental costs and liabilities is inherent in particular operations and products of us, and our joint ventures, as it is with other companies engaged in similar businesses, and there is no assurance that material costs and liabilities will not be incurred. In general, however, with respect to the capital expenditures and risks described above, we do not expect that we or our joint ventures will be affected differently from the rest of the chemicals and refining industry where our facilities or our joint ventures' facilities are located. Environmental laws may have a significant effect on the nature and scope of cleanup of contamination at current and former operating facilities, the costs of transportation and storage of raw materials and finished products and the costs of the storage and disposal of water. Also, U.S. "Superfund" statutes may impose joint and several liability for the costs of remedial investigations and actions on the entities that generated waste, arranged for disposal of the wastes, transported to or selected the disposal sites and the past and present owners and operators of such sites. All such responsible parties (or any one of them, including us) may be required to bear all of such costs regardless of fault, legality of the original disposal or ownership of the disposed site. As of September 30, 2001, our, our subsidiaries' and our joint ventures' environmental liability for future assessment and remediation costs at the above-mentioned sites totaled $34 million. The liabilities per site range from less than $1 million to $12 million and are expected to be incurred over the next two to seven years. It is 20 possible that new information about the sites for which the accrual has been established, new technology or future developments, such as involvement in other Comprehensive Environmental Response Compensation and Liability Act, as amended (CERCLA), RCRA, Texas Natural Resource Conservation Commission (TNRCC) or other comparable state or foreign law investigations, could require us to reassess our potential exposure related to environmental matters. In some cases, compliance with environmental, health and safety laws and regulations can be achieved only by capital expenditures. In the years ended December 31, 2000 and 1999, we, our subsidiaries and our joint ventures spent, in the aggregate, approximately $20 million and $21 million, respectively, for environmentally related capital expenditures at existing facilities, and we, our subsidiaries and our joint ventures anticipate spending approximately $37 million for environmentally related capital expenditures in 2001. We anticipate that the level of such expenditures will increase in 2002 as a result of, among other things, implementation of a plan for the Houston/Galveston region to comply with the ozone standard, as discussed below. The LCR refinery contains on-site solid-waste landfills, which were used in the past to dispose of waste generated at this facility. It is anticipated that corrective measures will be necessary to comply with federal and state requirements with respect to this facility. We are also subject to certain assessment and remedial actions at the LCR refinery under RCRA. In addition, we negotiated an order with the TNRCC for assessment and remediation of groundwater and soil contamination at the refinery. We also have liabilities under RCRA and various state and foreign government regulations related to five current plant sites and three former plant sites. We are also responsible for a portion of the remediation of certain off-site waste disposal facilities. We are currently contributing funds to the cleanup of two waste sites located near Houston, Texas under CERCLA and the Superfund Amendments and Reauthorization Act of 1986. Lyondell has also been named, along with several other companies, as a potentially responsible party for a third CERCLA site near Houston, Texas. The $34 million accrual described above includes, where applicable, costs to address these RCRA, TNRCC and CERCLA matters. In addition, Lyondell is involved in administrative proceedings or lawsuits relating to a minimal number of other CERCLA sites. We estimate, based upon currently available information, that potential loss contingencies associated with the latter CERCLA sites, individually and in the aggregate, are not significant. The eight-county Houston/Galveston region has been designated a severe nonattainment area for ozone by the U.S. Environmental Protection Agency (EPA). As a result, the TNRCC has submitted a plan to the EPA to reach and demonstrate compliance with the ozone standard by November 2007. Ozone is a product of the reaction between volatile organic compounds (VOCs) and nitrogen oxides (NOx) in the presence of sunlight, and is a principal component of smog. The proposed plans for meeting the ozone standard focus on significant reductions in NOx emissions. NOx emission reduction controls must be installed at LCR's refinery and each of Lyondell's two facilities and Equistar's six facilities in the Houston/Galveston region during the next several years, well in advance of the 2007 deadline. Compliance with the provisions of the plan will result in increased capital investment during the next several years and higher annual operating costs for Equistar, Lyondell and LCR. As a result, Lyondell estimates that aggregate related capital expenditures could total between $400 million and $500 million for Lyondell, Equistar and LCR before the 2007 deadline. Lyondell's share of such expenditures could total between $65 million and $80 million, and Lyondell's proportionate share of Equistar's and LCR's expenditures could total between $160 million and $195 million. The timing and amount of these expenditures are subject to regulatory and other uncertainties, as well as obtaining the necessary permits and approvals. Lyondell has been actively involved with a number of organizations to help solve the ozone problem in the most cost-effective manner and, in January 2001, Lyondell and an organization composed of industry participants filed a lawsuit against the TNRCC to encourage adoption of their alternative plan to achieve the same air quality improvement with less negative economic impact on the region. In June 2001, the parties entered into a consent order with respect to the lawsuit. Pursuant to the consent order, the TNRCC agreed to review, by June 2002, the scientific data for ozone formation in the Houston/Galveston region. In October 2001, the EPA approved the TNRCC plan. However, if the TNRCC scientific review supports the industry 21 group proposal, the TNRCC has agreed to revise the NOx emission reduction requirements set forth in its original plan. Any revisions will have to be approved by the EPA. Such revisions of the NOx emission reduction requirements would reduce the estimated capital investments required by Lyondell, Equistar and LCR to comply with the plans for meeting the ozone standards. The Clean Air Act specified certain emissions standards for vehicles beginning in the 1994 model year and required the EPA to study whether further emissions reductions from vehicles were necessary, starting no earlier than the 2004 model year. In 1998, the EPA concluded that more stringent vehicle emission standards were needed and that additional controls on gasoline and diesel were necessary to meet these emission standards. New standards for gasoline were finalized in 1999 and will require refiners to produce a low sulfur gasoline by 2004, with final compliance by 2006. A new "on-road" diesel standard was adopted in January 2001 and will require refiners to produce ultra low sulfur diesel by June 2006, with some allowance for a conditional phase-in period that could extend final compliance until 2009. Lyondell estimates that these standards will result in increased capital investment for LCR, totaling between $175 million to $225 million for the new gasoline standards and $250 million to $300 million for the new diesel standards, between now and the implementation dates. Lyondell's share of LCR's capital expenditures would be between $250 million and $300 million. In addition, these standards could result in higher operating costs for LCR. Equistar's olefins fuel business may also be impacted if these standards increase the cost for processing fuel components. Pending or future legislative initiatives or litigation may adversely affect Equistar's MTBE sales. In the United States, the Clean Air Act Amendments of 1990 set minimum levels for oxygenates, such as MTBE, in gasoline sold in areas not meeting specified air quality standards. However, while studies by federal and state agencies and other organizations have shown that MTBE is safe for use in gasoline, is not carcinogenic and is effective in reducing automotive emissions, the presence of MTBE in some water supplies in California and other states due to gasoline leaking from underground storage tanks and in surface water from recreational watercraft has led to public concern that MTBE may, in certain limited circumstances, affect the taste and odor of drinking water supplies, and thereby lead to possible public concerns. Certain federal and state governmental initiatives have sought either to rescind the oxygenate requirement for reformulated gasoline or to restrict or ban the use of MTBE. Such actions, to be effective, would require (1) a waiver of the state's oxygenate mandate, (2) Congressional action in the form of an amendment to the Clean Air Act or (3) replacement of MTBE with another oxygenate such as ethanol, a more costly, untested and less widely available additive. California has twice sought a waiver of its oxygenate mandate. California's request was denied by both the Clinton Administration and the Bush Administration. California is challenging the denial in court. At the federal level, a blue ribbon panel appointed by the EPA issued its report on July 27, 1999. That report recommended, among other things, reducing the use of MTBE in gasoline. During 2000, the EPA announced its intent to seek legislative changes from Congress to give the EPA authority to ban MTBE over a three-year period. Such action would only be granted through amendments to the Clean Air Act. Additionally, the EPA is seeking a ban of MTBE utilizing rulemaking authority contained in the Toxic Substance Control Act. It would take at least three years for such a rule to issue. In January 2001, however, senior policy analysts at the U.S. Department of Energy presented a study stating that banning MTBE would create significant economic risk. The study did not identify any benefits from banning MTBE. Additionally, in early 2001, after a thorough evaluation of MTBE conducted in connection with proposed amendments to the 1998 European Council directive on gasoline and diesel fuel specifications, the European Union concluded that the use of MTBE in gasoline does not present a health risk to the community or a risk to the environment, and decided not to restrict the use of MTBE in the European Union. The EPA initiatives mentioned above or other governmental actions could result in a significant reduction in Lyondell's MTBE sales, which could have a negative impact on our results of operations. We have developed technologies to convert TBA into alternate gasoline blending components should it be necessary to reduce MTBE production in the future. 22 Our international operations are subject to exchange rate fluctuations, exchange controls, political risks and other risks relating to foreign operations. International operations and exports to foreign markets are subject to a number of risks, including currency exchange rate fluctuations, trade barriers, exchange controls, national and regional labor strikes, political risks and risks of increases in duties and taxes, as well as changes in laws and policies governing operations of foreign-based companies. In addition, earnings of foreign subsidiaries and intercompany payments may be subject to foreign income tax rules that may reduce cash flow available to meet required debt service and other obligations of Lyondell. Lyondell and Equistar pursue acquisitions, dispositions and joint ventures. Lyondell and Equistar both seek opportunities to maximize efficiency or value through various transactions. These transactions may include purchases or sales of assets or contractual arrangements or joint ventures that are intended to result in the realization of synergies, the creation of efficiencies or the generation of cash to reduce debt. To the extent permitted under Lyondell's and Equistar's credit facilities and other debt, some of these transactions may be financed by additional borrowings by Lyondell or Equistar or by the issuance of equity securities. Although these transactions are expected to yield longer- term benefits if the expected efficiencies and synergies of the transactions are realized, they could adversely affect the results of operations of Lyondell or Equistar in the short term because of the costs associated with such transactions. Our quarterly results will vary significantly. Our quarterly results will vary significantly depending on various factors, most of which are beyond our control, including: . changes in product prices, product demand, including seasonal demand for certain products, such as MTBE, raw material costs or supply arrangements; . the scheduling of plant turnarounds; . fluctuations in shipments to customers; . adverse developments in foreign or domestic markets; . regional business activities; . changes in interest rates; . foreign exchange fluctuations; and . unanticipated expenses. 23 FORWARD-LOOKING STATEMENTS This prospectus and the documents incorporated by reference in this prospectus include forward-looking statements. Although we believe the expectations reflected in such forward-looking statements are reasonable as of the date the statements are made, they do involve certain assumptions, risks and uncertainties, and we cannot assure you that such expectations will prove to have been correct. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those described in "Risk Factors" and the following risks: . the cyclical nature of the chemical and refining industries; . uncertainties associated with the United States and worldwide economies; . substantial chemical and refinery capacity additions resulting in oversupply and declining prices and margins; . the availability and cost of raw materials; . the availability of capital markets; . technological developments; . current and potential governmental regulatory actions in the United States and other countries; . potential terrorist attacks; . operating interruptions (including leaks, explosions, fires, mechanical failure, unscheduled downtime, labor difficulties, transportation interruptions, spills and releases, and other environmental risks); and . Lyondell's ability to implement its business strategies, including cost reductions. Many of such factors are beyond our or our joint ventures' ability to control or predict. Any of these factors, or a combination of these factors, could materially affect our or our joint ventures' future results of operations and the ultimate accuracy of the forward-looking statements. These forward- looking statements are not guarantees of our or our joint ventures' future performance, and our or our joint ventures' actual results and future developments may differ materially from those projected in the forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. You are cautioned against putting undue reliance on forward-looking statements or projecting any future results based on such statements or present or prior earnings levels. USE OF PROCEEDS The exchange offer is intended to satisfy our obligations under the registration rights agreement that we entered into in connection with the private offering of the outstanding notes. We will not receive any cash proceeds from the issuance of the new notes. In consideration for issuing the new notes, we will receive in exchange a like principal amount of outstanding notes. The outstanding notes surrendered in exchange for the new notes will be retired and canceled, and cannot be reissued. Accordingly, issuance of the new notes will not result in any change in our capitalization. We used the net proceeds from the sale of the outstanding notes to prepay the entire $192 million principal amount then outstanding under Term Loan B of our credit facility and $192 million of the $828 million principal amount then outstanding under Term Loan E of our credit facility. 24 CAPITALIZATION The following table sets forth our capitalization as of September 30, 2001 on an historical basis and as adjusted to reflect the offering of the outstanding notes and the application of the net proceeds and the exchange offer.
As of September 30, 2001 -------------------- As Actual adjusted --------- ---------- (in millions) (unaudited) Debt, including current maturities of long-term debt (a): Secured debt: Credit facility (b)................................... $ 1,020 $ 636 Senior Secured Notes due 2007......................... 1,900 1,900 Senior Secured Notes due 2008 offered hereby.......... -- 393 Debentures due 2005-2020.............................. 424 424 Senior Subordinated Notes due 2009...................... 500 500 Other debt.............................................. 2 2 --------- --------- Total debt, including current maturities of long-term debt................................................. 3,846 3,855 --------- --------- Minority interest......................................... 170 170 --------- --------- Total stockholders' equity................................ 955 955 --------- --------- Total capitalization...................................... $ 4,971 $ 4,980 ========= =========
- -------- (a) Does not include $3.1 billion in joint venture debt ($431 million of which is Equistar debt for which Lyondell remains contingently liable). (b) Total committed revolver capacity is $500 million, none of which was borrowed as of September 30, 2001. 25 THE EXCHANGE OFFER We are offering to issue new registered 9 1/2% senior secured notes due 2008 in exchange for a like principal amount of our outstanding unregistered 9 1/2% senior secured notes due 2008. We may extend, delay or terminate the exchange offer. Holders of outstanding notes will need to complete the exchange offer documentation related to the exchange. Purpose and Effect of the Exchange Offer We entered into a registration rights agreement with the initial purchasers of the outstanding notes in which we agreed to file this registration statement relating to our offer to exchange the outstanding notes for new notes within 90 days after issuing the outstanding notes and to use our best efforts to have it declared effective within 210 days after issuing the outstanding notes. We are offering the new notes under this prospectus to satisfy those obligations under the registration rights agreement. If the exchange offer is not permitted by applicable law or SEC policy or in general if any holder of the outstanding notes notifies us before the 20th business day following the consummation of the exchange offer that: . it is prohibited by law or SEC policy from participating in the exchange offer; . it cannot resell the new notes to the public without delivering a prospectus and this prospectus is not appropriate or available for those resales by it; or . it is a broker-dealer that holds notes acquired directly from us or any of our affiliates, we will file with the SEC a shelf registration statement to cover resales of outstanding notes. If we fail to comply with deadlines for completion of the exchange offer, we will be required to pay liquidated damages to holders of the outstanding notes. Please read the section captioned "Description of New Notes--Registration Rights; Liquidated Damages" for more details regarding the registration rights agreement. To receive transferable new notes in exchange for your outstanding notes in the exchange offer, you, as holder of that outstanding note, will be required to make the following representations: . you are not an "affiliate," as defined in Rule 405 of the Securities Act, of us or a broker-dealer tendering outstanding notes acquired directly from us for your own account; . if you are not a broker-dealer or are a broker-dealer but will not receive new notes for your own account in exchange for outstanding notes, you are not engaged in and do not intend to participate in a distribution of the new notes; . you have no arrangement or understanding with any person to participate in a distribution of the new notes or the outstanding notes within the meaning of the Securities Act; . you are acquiring the new notes in the ordinary course of your business; and . if you are a broker-dealer that will receive new notes for your own account in exchange for outstanding notes, you represent that the outstanding notes to be exchanged for new notes were acquired by you as a result of market-making activities or other trading activities and you acknowledge that you will deliver a prospectus meeting the requirements of the Securities Act in connection with the resale of any new notes. It is understood that you are not admitting that you are an "underwriter" within the meaning of the Securities Act by acknowledging that you will deliver, and by delivery of, a prospectus. Based on interpretations of the SEC staff in "no action letters" issued to third parties, we believe that each new note issued under the exchange offer may be offered for resale, resold and otherwise transferred by you, 26 the holder of that new note, without compliance with the registration and prospectus delivery provisions of the Securities Act if: . you are not our "affiliate" within the meaning of Rule 405 under the Securities Act; . the new note is acquired in the ordinary course of your business; and . you do not intend to participate in the distribution of new notes. However, the SEC has not considered the legality of our exchange offer in the context of a "no action letter," and there can be no assurance that the staff of the SEC would make a similar determination with respect to our exchange offer as in other circumstances. If you tender outstanding notes in the exchange offer with the intention of participating in any manner in a distribution of the new notes, you: . cannot rely on these interpretations by the SEC staff; and . must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. Unless an exemption from registration is otherwise available, any security holder intending to distribute new notes should be covered by an effective registration statement under the Securities Act containing the selling security holder's information required by Item 507 or Item 508, as applicable, of Regulation S-K under the Securities Act. This prospectus may be used for an offer to resell, resale or other retransfer of new notes only as specifically described in this prospectus. Failure to comply with the registration and prospectus delivery requirements by a holder subject to these requirements could result in that holder's incurring liability for which it is not indemnified by us. Only broker-dealers that acquired the outstanding notes as a result of market-making activities or other trading activities may participate in the exchange offer. Please read the section captioned "Plan of Distribution" for more details regarding the transfer of new notes. Terms of the Exchange Offer Upon the terms and subject to the conditions described in this prospectus and in the letter of transmittal, we will accept for exchange any outstanding notes properly tendered and not withdrawn before the expiration date. We will issue $1,000 principal amount of new notes in exchange for each $1,000 principal amount of outstanding notes surrendered under the exchange offer. Outstanding notes may be tendered only in integral multiples of $1,000. The exchange offer is not conditioned upon any minimum aggregate principal amount of outstanding notes being tendered for exchange. As of the date of this prospectus, $393 million aggregate principal amount of the unregistered 9% senior secured notes due 2008 are outstanding. This prospectus and the letter of transmittal included with this prospectus are being sent to all registered holders of outstanding notes. There will be no fixed record date for determining registered holders of outstanding notes entitled to participate in the exchange offer. We intend to conduct the exchange offer according to the provisions of the registration rights agreement, the applicable requirements of the Securities Act and the Securities Exchange Act of 1934 and the rules and regulations of the SEC. Outstanding notes that are not tendered for exchange in the exchange offer will remain outstanding and continue to accrue interest and will be entitled to the rights and benefits the holders have under the indenture. However, these outstanding notes will not be freely tradable. See "-- Consequences of Failure to Exchange" below. We will be deemed to have accepted for exchange properly tendered outstanding notes when we have given oral or written notice of the acceptance to the exchange agent and complied with the applicable provisions of the registration rights agreement. The exchange agent will act as agent for the tendering holders for the purposes of receiving the new notes. 27 Holders tendering outstanding notes in the exchange offer will not be required to pay brokerage commissions or fees or, subject to the instructions in the letter of transmittal, transfer taxes with respect to the exchange of outstanding notes. We will pay all charges and expenses, other than certain applicable taxes described below, in connection with the exchange offer. It is important for holders to read the section labeled "--Fees and Expenses" for more details regarding fees and expenses incurred in the exchange offer. We will return any outstanding notes that we do not accept for exchange for any reason without expense to the tendering holder as promptly as practicable after the expiration or termination of the exchange offer. Expiration Date The exchange offer will expire at 5:00 p.m., New York City time on , 2002 unless, we extend or terminate the exchange offer. Extensions, Delay in Acceptance, Termination or Amendment We expressly reserve the right, at any time or at various times, to extend the period of time during which the exchange offer is open. During any extension, all outstanding notes previously tendered will remain subject to the exchange offer, and we may accept them for exchange. To extend the exchange offer, we will notify the exchange agent orally or in writing of any extension. We will also make a public announcement of the extension no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date. If any of the conditions described below under "--Conditions to the Exchange Offer" have not been satisfied, we reserve the right, in our sole discretion: . to delay accepting for exchange any outstanding notes; . to extend the exchange offer; or . to terminate the exchange offer by giving oral or written notice of a delay, extension or termination to the exchange agent. Subject to the terms of the registration rights agreement, we also reserve the right to amend the terms of the exchange offer in any manner. Any delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by oral or written notice to the registered holders of the outstanding notes. If we amend the exchange offer in a manner we determine to constitute a material change, we will promptly disclose the amendment by means of a prospectus supplement. The supplement will be distributed to the registered holders of the outstanding notes. Depending upon the significance of the amendment and the manner of disclosure to the registered holders, we will extend the exchange offer if the exchange offer would otherwise expire during that period. Without limiting the manner in which we may choose to make public announcements of any delay in acceptance, extension, termination or amendment of the exchange offer, we will have no obligation to publish, advertise or otherwise communicate any public announcement, other than by making a timely release to the Dow Jones News Service. Conditions to the Exchange Offer Despite any other term of the exchange offer, if in our reasonable judgment the exchange offer, or the making of any exchange by a holder of outstanding notes, would violate applicable law or any applicable interpretation of the staff of the SEC: . we will not be required to accept for exchange, or exchange any new notes for, any outstanding notes; and 28 . we may terminate the exchange offer as provided in this prospectus before accepting any outstanding notes for exchange. In addition, we will not be obligated to accept for exchange the outstanding notes of any holder that has not made the following: . the representations described under "--Purpose and Effect of the Exchange Offer," "--Procedures for Tendering" and "Plan of Distribution"; and . other representations as may be reasonably necessary under applicable SEC rules, regulations or interpretations to make available to us an appropriate form for registration of the new notes under the Securities Act. We expressly reserve the right to amend or terminate the exchange offer, and to reject for exchange any outstanding notes not previously accepted for exchange, upon the occurrence of any of the conditions to the exchange offer specified above. We will give oral or written notice of any extension, amendment, nonacceptance or termination to the holders of the outstanding notes as promptly as practicable. These conditions are for our sole benefit, and we may assert them or waive them in whole or in part at any time or at various times in our sole discretion. If we fail at any time to exercise any of these rights, this failure will not mean that we have waived our rights. Each right will be deemed an ongoing right that we may assert at any time or at various times. In addition, we will not accept for exchange any outstanding notes tendered and will not issue new notes in exchange for any outstanding note, if at that time any stop order has been threatened or is in effect with respect to the registration statement of which this prospectus constitutes a part or the qualification of the indenture under the Trust Indenture Act of 1939. Procedures for Tendering How to Tender Generally Only a holder of outstanding notes may tender its outstanding notes in the exchange offer. To tender in the exchange offer, you must either comply with the procedures for manual tender or comply with the automated tender offer program procedures of DTC described below under "--Tendering Through DTC's Automated Tender Offer Program." To complete a manual tender, you must: . complete, sign and date the letter of transmittal, or a facsimile of the letter of transmittal; . have the signature on the letter of transmittal guaranteed if the letter of transmittal so requires; . mail or deliver the letter of transmittal or a facsimile of the letter of transmittal to the exchange agent before the expiration date; and . deliver, and the exchange agent must receive, before the expiration date: --the outstanding notes along with the letter of transmittal; or --a timely confirmation of book-entry transfer of the outstanding notes into the exchange agent's account at DTC according to the procedure for book-entry transfer described below under "--Book-Entry Transfer." If you wish to tender your outstanding notes and cannot comply with the requirement to deliver the letter of transmittal and your outstanding notes or use the automated tender offer program of DTC before the expiration date, you must tender your outstanding notes according to the guaranteed delivery procedures described below. For a tender to be effective, the exchange agent must receive any physical delivery of the letter of transmittal and other required documents at its address provided above under "Prospectus Summary--The 29 Exchange Agent" before the expiration date. The tender by a holder that is not withdrawn before the expiration date will constitute an agreement between the holder and us according to the terms and subject to the conditions described in this prospectus and in the letter of transmittal. The method of delivery of outstanding notes, the letter of transmittal and all other required documents to the exchange agent is at your election and risk. Rather than mail these items, we recommend that you use an overnight or hand-delivery service. In all cases, you should allow sufficient time to assure delivery to the exchange agent before the expiration date. You should not send the letter of transmittal or outstanding notes to us. You may request your brokers, dealers, commercial banks, trust companies or other nominees to effect the above transactions on your behalf. Book-Entry Transfer The exchange agent will make a request to establish an account with respect to the outstanding notes at DTC for purposes of the exchange offer promptly after the date of this prospectus. Any financial institution participating in DTC's system may make book-entry delivery of outstanding notes by causing DTC to transfer the outstanding notes into the exchange agent's account at DTC according to DTC's procedures for transfer. Holders of outstanding notes who are unable to deliver confirmation of the book-entry tender of their outstanding notes into the exchange agent's account at DTC or all other documents required by the letter of transmittal to the exchange agent on or before the expiration date must tender their outstanding notes according to the guaranteed delivery procedures described below. Tendering Through DTC's Automated Tender Offer Program The exchange agent and DTC have confirmed that any financial institution that is a participant in DTC's system may use DTC's automated tender offer program to tender its outstanding notes. Participants in the program may, instead of physically completing and signing the letter of transmittal and delivering it to the exchange agent, transmit their acceptance of the exchange offer electronically. They may do so by causing DTC to transfer the outstanding notes to the exchange agent according to its procedures for transfer. DTC will then send an agent's message to the exchange agent. The term "agent's message" means a message transmitted by DTC, received by the exchange agent and forming part of the book-entry confirmation, stating that: . DTC has received an express acknowledgment from a participant in its automated tender offer program that is tendering outstanding notes that are the subject of book-entry confirmation; . the participant has received and agrees to be bound by the terms of the letter of transmittal or, in the case of an agent's message relating to guaranteed delivery, that the participant has received and agrees to be bound by the applicable notice of guaranteed delivery; and . the agreement may be enforced against the participant. How to Tender if You Are a Beneficial Owner If you beneficially own outstanding notes that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender those notes, you should contact the registered holder promptly and instruct it to tender on your behalf. If you are a beneficial owner and wish to tender on your own behalf, you must, before completing and executing the letter of transmittal and delivering your outstanding notes, either: . make appropriate arrangements to register ownership of the outstanding notes in your name; or . obtain a properly completed bond power from the registered holder of outstanding notes. 30 The transfer of registered ownership may take considerable time and may not be completed before the expiration date. Signatures and Signature Guarantees You must have signatures on a letter of transmittal or a notice of withdrawal described below guaranteed by: . a member firm of a registered national securities exchange; . a member of the National Association of Securities Dealers, Inc.; . a commercial bank or trust company having an office or correspondent in the United States; or . an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange Act. The above must be a member of one of the recognized signature guarantee programs identified in the letter of transmittal, unless the outstanding notes are tendered: . by a registered holder who has not completed the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" on the letter of transmittal and the new notes are being issued directly to the registered holder of the outstanding notes tendered in the exchange for those new notes; or . for the account of a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States, or an eligible guarantor institution. When Endorsements or Bond Powers are Needed If the letter of transmittal is signed by a person other than the registered holder of any outstanding notes, the outstanding notes must be endorsed or accompanied by a properly completed bond power. The bond power must be signed by the registered holder as the registered holder's name appears on the outstanding notes and a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or an eligible guarantor institution must guarantee the signature on the bond power. If the letter of transmittal or any outstanding notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, those persons should so indicate when signing. They should also submit evidence of their authority to deliver the letter of transmittal satisfactory to us unless we waive this requirement. Determinations Under the Exchange Offer We will determine in our sole discretion all questions as to the validity, form, eligibility, time of receipt, acceptance of tendered outstanding notes and withdrawal of tendered outstanding notes. Our determination will be final and binding. We reserve the absolute right to reject any outstanding notes not property tendered or any outstanding notes our acceptance of which would, in the opinion of our counsel, be unlawful. We also reserve the right to waive any defects, irregularities or conditions of tender as to particular outstanding notes. Our interpretation of the terms and conditions of the exchange offer, including the instructions in the letter of transmittal, will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of outstanding notes must be cured within the time we shall determine. Neither we, the exchange agent nor any other person will be under any duty to give notification of defects or irregularities with respect to tenders of outstanding notes, and none of the aforementioned will incur liability for failure to give notification. Tenders of outstanding notes will not be deemed made until any defects or irregularities have been cured or waived. Any outstanding notes received by the exchange agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned to the tendering holder, unless otherwise provided in the letter of transmittal, as soon as practicable following the expiration date. 31 When We Will Issue New Notes In all cases, we will issue new notes for outstanding notes that we have accepted for exchange under the exchange offer only after the exchange agent timely receives: . outstanding notes or a timely book-entry confirmation of the outstanding notes into the exchange agent's account at DTC; and . a properly completed and duly executed letter of transmittal and all other required documents or a properly transmitted agent's message. Return of Outstanding Notes Not Accepted or Exchanged If we do not accept any tendered outstanding notes for exchange for any reason described in the terms and conditions of the exchange offer or if outstanding notes are submitted for a greater principal amount than the holder desires to exchange, the unaccepted or nonexchanged outstanding notes will be returned without expense to their tendering holder. In the case of outstanding notes tendered by book-entry transfer into the exchange agent's account at DTC according to the procedures described below, the nonexchanged outstanding notes will be credited to an account maintained with DTC. These actions will occur as promptly as practicable after the expiration or termination of the exchange offer. Your Representations to Us By signing or agreeing to be bound by the letter of transmittal, you will represent that, among other things: . you are not an "affiliate," as defined in Rule 405 of the Securities Act, of us or a broker-dealer tendering outstanding notes acquired directly from us for your own account; . if you are not a broker-dealer or are a broker-dealer but will not receive new notes for your own account in exchange for outstanding notes, you are not engaged in and do not intend to participate in a distribution of the new notes; . you have no arrangement or understanding with any person to participate in a distribution of the outstanding notes or the new notes within the meaning of the Securities Act; . you are acquiring the new notes in the ordinary course of your business; and . if you are a broker-dealer that will receive new notes for your own account in exchange for outstanding notes, you represent that the outstanding notes to be exchanged for new notes were acquired by you as a result of market-making activities or other trading activities and you acknowledge that you will deliver a prospectus meeting the requirements of the Securities Act in connection with the resale of any new notes. It is understood that you are not admitting that you are an "underwriter" within the meaning of the Securities Act by acknowledging that you will deliver, and by delivery of, a prospectus. Guaranteed Delivery Procedures If you wish to tender your outstanding notes but your outstanding notes are not immediately available or you cannot deliver your outstanding notes, the letter of transmittal or any other required documents to the exchange agent or comply with the applicable procedures under DTC's automated tender offer program before the expiration date, you may tender if: . the tender is made through a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or an eligible guarantor institution; 32 . before the expiration date, the exchange agent receives from the member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., commercial bank or trust company having an office or correspondent in the United States, or eligible guarantor institution either a properly completed and duly executed notice of guaranteed delivery by facsimile transmission, mail or hand delivery or a properly transmitted agent's message and notice of guaranteed delivery: --stating your name and address, the registered number(s) of your outstanding notes and the principal amount of outstanding notes tendered; --stating that the tender is being made; and --guaranteeing that, within five business days after the expiration date, the letter of transmittal or facsimile thereof, together with the outstanding notes or a book-entry confirmation and any other documents required by the letter of transmittal will be deposited by the eligible guarantor institution with the exchange agent; and . the exchange agent receives the properly completed and executed letter of transmittal or facsimile thereof, as well as all tendered outstanding notes in proper form for transfer or a book-entry confirmation and all other documents required by the letter of transmittal, within three business days after the expiration date. Upon request to the exchange agent, the exchange agent will send you a notice of guaranteed delivery if you wish to tender your outstanding notes using the guaranteed delivery procedures described above. Withdrawal of Tenders Except as otherwise provided in this prospectus, you may withdraw your tender at any time before 5:00 p.m., New York City time, on the expiration date unless previously accepted for exchange. For a withdrawal to be effective: . the exchange agent must receive a written notice of withdrawal at one of the addresses listed above under "Prospectus Summary--The Exchange Agent"; or . the withdrawing holder must comply with the appropriate procedures of DTC's automated tender offer program system. Any notice of withdrawal must: . specify the name of the person (whom we refer to as the depositor) who tendered the outstanding notes to be withdrawn; . identify the outstanding notes to be withdrawn, including the registration number or numbers and the principal amount of the outstanding notes; . be signed by the depositor in the same manner as the original signature on the letter of transmittal used to deposit those outstanding notes or be accompanied by documents of transfer sufficient to permit the trustee for the outstanding notes to register the transfer into the name of the depositor withdrawing the tender; and . specify the name in which the outstanding notes are to be registered, if different from that of the depositor. If outstanding notes have been tendered under the procedure for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn outstanding notes and otherwise comply with the procedures of DTC. We will determine all questions as to the validity, form, eligibility and time of receipt of notice of withdrawal, and our determination shall be final and binding on all parties. We will deem any outstanding notes so withdrawn not to have been validly tendered for exchange for purposes of the exchange offer. 33 Any outstanding notes that have been tendered for exchange but that are not exchanged for any reason will be returned to their holder without cost to the holder or, in the case of outstanding notes tendered by book-entry transfer into the exchange agent's account at DTC according to the procedures described above, the outstanding notes will be credited to an account maintained with DTC for the outstanding notes. This return or crediting will take place as soon as practicable after withdrawal, rejection of tender or termination of the exchange offer. Holders may retender properly withdrawn outstanding notes by following one of the procedures described under "--Procedures for Tendering" above at any time on or before the expiration date. Fees and Expenses We will bear the expenses of soliciting tenders. The principal solicitation is being made by mail, but we may make additional solicitation by telegraph, telephone or in person by our officers and regular employees and those of our affiliates and the exchange agent. We have not retained any dealer-manager in connection with the exchange offer and will not make any payments to broker-dealers or others soliciting acceptances of the exchange offer. We will, however, pay the exchange agent reasonable and customary fees for its services and reimburse it for its related reasonable out-of-pocket expenses. We may also pay brokerage houses and other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding copies of this prospectus, letters of transmittal and related documents to the beneficial owners of the outstanding notes and in handling or forwarding tenders for exchange. We will pay the cash expenses to be incurred in connection with the exchange offer, including: . SEC registration fees; . fees and expenses of the exchange agent and trustee; . accounting and legal fees and printing costs; and . related fees and expenses. Transfer Taxes We will pay all transfer taxes, if any, applicable to the exchange of outstanding notes under the exchange offer. The tendering holder, however, will be required to pay any transfer taxes, whether imposed on the registered holder or any other person, if: . certificates representing outstanding notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered holder of outstanding notes tendered; . tendered outstanding notes are registered in the name of any person other than the person signing the letter of transmittal; or . a transfer tax is imposed for any reason other than the exchange of outstanding notes under the exchange offer. If satisfactory evidence of payment of any transfer taxes payable by a note holder is not submitted with the letter of transmittal, the amount of the transfer taxes will be billed directly to that tendering holder. Consequences of Failure to Exchange If you do not exchange your outstanding notes for new notes in the exchange offer, your notes will remain subject to the existing restrictions on transfer. In general, you may not offer or sell the outstanding notes unless they are registered under the Securities Act or the offer or sale is exempt from registration under the Securities Act and applicable state securities laws. Except as required by the registration rights agreement, we do not 34 intend to register resales of the outstanding notes under the Securities Act. Based on interpretations of the SEC staff, you may offer for resale, resell or otherwise transfer new notes issued in the exchange offer without compliance with the registration and prospectus delivery provisions of the Securities Act, if: . you are not our "affiliate" within the meaning of Rule 405 under the Securities Act; . you acquired the new notes in the ordinary course of your business; and . you have no arrangement or understanding with respect to the distribution of the new notes to be acquired in the exchange offer. If you tender in the exchange offer for the purpose of participating in a distribution of the new notes: . you cannot rely on the applicable interpretations of the SEC; and . you must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. Accounting Treatment We will not recognize a gain or loss for accounting purposes upon the consummation of the exchange offer. We will amortize expenses of the exchange offer over the term of the new notes under accounting principles generally accepted in the United States of America. Other Participation in the exchange offer is voluntary, and you should carefully consider whether to accept. You are urged to consult your financial and tax advisors in making your own decision on what action to take. We may, in the future, seek to acquire untendered outstanding notes in open- market or privately negotiated transactions, through subsequent exchange offers or otherwise. We have no present plans to acquire any outstanding notes that are not tendered in the exchange offer or to file a registration statement to permit resales of any untendered outstanding notes. 35 DESCRIPTION OF OTHER INDEBTEDNESS Credit Facility Prior to the application of the net proceeds of the offering of the outstanding notes, Lyondell's credit facility consisted of two separate term loans and a $500 million revolving credit facility to be used for general corporate purposes. As of September 30, 2001, the principal amounts outstanding, then-current interest rates and maturity dates of the term loans and revolving credit facility were as follows:
Principal Amount Debt Outstanding Interest Rate Maturity ---- ------------ ----------------- ------------- Term Loan B..................... $192 million LIBOR plus 4.250% June 30, 2005 Term Loan E..................... $828 million LIBOR plus 4.375% June 30, 2006 Revolving loans(a).............. -- LIBOR plus 3.500% June 30, 2003
- -------- (a) We are required to pay a commitment fee of 0.500% on the unused portion of the revolving credit facility. The applicable interest rate margin payable by us will vary depending on our unsecured senior debt rating. The net proceeds from the sale of the outstanding notes were used to prepay all of Term Loan B and $192 million aggregate principal amount of Term Loan E. Security Our obligations under the credit facility are secured by equal and ratable liens on the collateral that will secure the new notes and certain other outstanding debt. Subsidiary Guarantees Our obligations under the credit facility are guaranteed by the subsidiaries that will initially guarantee the new notes. Covenants Our credit facility contains covenants that, subject to exceptions, restrict sale and leaseback transactions, lien incurrence, debt incurrence, dividends and investments, sales of assets and mergers and consolidations, and require us to use our best efforts to maintain certain ownership interests in certain of our existing joint ventures and to ensure that certain of our existing joint ventures limit capital expenditure and debt levels and maintain cash distribution policies. In addition, the credit facility requires us to maintain specified financial ratios and consolidated net worth. The breach of these covenants could permit the lenders under our credit facility to declare the loans immediately payable, which would result in an event of default under our indentures, and could permit the lenders under our credit facility to terminate future lending commitments. We were in compliance with all such covenants as of September 30, 2001. Mandatory Prepayment We are required to offer to make mandatory prepayments of Term Loan E with the net cash proceeds of: . asset sales; . casualty and condemnation events; . debt incurrences; and . equity issuances. The mandatory prepayment of our Term Loan E obligations will be subject to specified exceptions, and the lenders thereunder may elect not to receive any mandatory prepayment. Term Loan B under our credit facility 36 was subject to these same mandatory prepayment provisions. However, all amounts outstanding under Term Loan B were repaid with a portion of the net proceeds of the offering of the outstanding notes. Optional Prepayment Subject to specified exceptions, we may (1) prepay loans under the credit facility in a minimum amount of $20 million or any larger multiple of $1 million and (2) terminate any class of loans under the credit facility or reduce permanently the amount of the commitments of any class of loans under the credit facility in a minimum amount of $20 million or any larger multiple of $1 million. Before May 17, 2002, we may offer to prepay amounts under the Term Loan E portion of the credit facility without prepayment premium, but the Term Loan E lenders have the option to reject such prepayment. Beginning May 17, 2002, the Term Loan E lenders will no longer have such option, but we will be required to pay a 2% prepayment premium if we, at our option, prepay amounts under the Term Loan E portion of the credit facility on or after May 17, 2002 but prior to May 17, 2003, and a 1% premium if we, at our option, prepay amounts under the Term Loan E portion of the credit facility on or after May 17, 2003 but prior to May 18, 2004. Thereafter, no premiums will be required. Events of Default The credit facility includes customary events of default, including a change of control, as defined in the credit facility. Existing Senior Secured Notes As of September 30, 2001, we had outstanding the following senior secured notes: . $900 million of 9.625% Senior Secured Notes, Series A, due 2007; and . $1 billion of 9.875% Senior Secured Notes, Series B, due 2007. The existing senior secured notes are secured by equal and ratable liens on the same collateral that will secure the new notes and debt under the credit facility, and these existing notes are guaranteed by the same subsidiaries that guarantee the outstanding notes and will guarantee the new notes. The indentures for the existing senior secured notes contain covenant, asset sale, change of control and event of default provisions substantially similar to the covenant, asset sale, change of control and event of default provisions in the indenture governing the notes. Senior Subordinated Notes As of September 30, 2001, we had outstanding $500 million of 10.875% Senior Subordinated Notes due 2009. These senior subordinated notes are guaranteed by the same subsidiaries that will guarantee the new notes. The indenture for the senior subordinated notes contains covenant, asset sale, change of control and event of default provisions substantially similar to the covenant, asset sale, change of control and event of default provisions in the indenture governing the notes. Lyondell Debentures As of September 30, 2001, we had the following outstanding debentures that were originally issued by ARCO Chemical, which was acquired by Lyondell in 1998 and merged into Lyondell in 1999: . $100 million of 9.375% debentures due 2005; . $100 million of 10.250% debentures due 2010; and . $224 million of 9.800% debentures due 2020. 37 The debentures are secured by liens on Lyondell's manufacturing plants located in Texas and Louisiana that are equal and ratable with the liens on those assets that secure the outstanding notes, the new notes and the loans under the credit facility. The indentures for these debentures contain limitations on liens and sale and leaseback transactions. Joint Venture Debt Equistar Debt In August 2001, Equistar completed a $700 million placement of seven-year senior unsecured notes and amended and restated its credit facility. A portion of the net proceeds from the sale of the Equistar notes, together with $365 million of borrowings under the Equistar credit facility, were used to refinance $820 million of revolving credit borrowings that were scheduled to mature in November 2002 and $90 million of medium term notes that matured in August 2001. The remaining net proceeds of the financing will be used for general business purposes. As of September 30, 2001, the principal amounts outstanding, then-current interest rates and maturity dates of the debt obligations of Equistar were as follows:
Principal Amount Debt Outstanding Interest Rate Maturity ---- ------------ --------------------------- ------------------ Credit Facility Revolving loans(a).... -- LIBOR plus 1.000% to 2.000% August 2006 Term loans............ $300 million LIBOR plus 3.000% August 2007 Notes due 2002(b)....... $100 million 9.125% March 2002 Notes due 2004.......... $300 million 8.500% February 2004 Notes due 2006(b)....... $150 million 6.500% February 2006 Notes due 2008.......... $700 million 10.125% August 2008 Notes due 2009.......... $598 million 8.750% February 2009 Debentures due 2026(b).. $150 million 7.550% February 2026 Medium-term notes(b).... $ 31 million 9.500%-11.200% Various dates from September 2002 to March 2005
- -------- (a) Equistar currently also pays a facility fee of 0.750% per annum on the entire $500 million revolving credit facility. The applicable margin and facility fee for revolving credit facility borrowings will vary depending on Equistar's leverage ratio and usage of the revolving credit facility. (b) This debt was assumed by Equistar from Lyondell in connection with Equistar's formation in 1997. Lyondell remains a guarantor of this debt (or, in the case of the medium-term notes, a co-obligor, although Equistar is primarily liable as between the two entities). Equistar Covenants Equistar's credit facility and senior unsecured notes indenture contain covenants that, subject to exceptions, restrict sale and leaseback transactions, lien incurrence, debt incurrence, sales of assets and mergers and consolidations and contain customary events of default, including a change of control. In addition, the Equistar credit facility requires Equistar to maintain specified financial ratios, in all cases as provided in the credit facility. The breach of these covenants could permit the lenders under Equistar's credit facility to declare the loans immediately payable, which would result in an event of default under the indenture for the Equistar notes due 2008, and could permit the lenders under Equistar's credit facility to terminate future lending commitments. The Equistar credit facility is secured by a lien on Equistar's accounts receivable, inventory, other personal property and certain fixed assets. Equistar's debt instruments do not prohibit the payment by it of distributions to its owners, but its credit facility and senior notes due 2008 require the payment of additional interest if, at the time of, or as a result of, payment of any such dividend, Equistar's interest coverage ratio, as 38 defined therein, is less than 1.75 to 1. Equistar was in compliance with all covenants under its debt instruments as of September 30, 2001. LCR Debt As of September 30, 2001, the principal amounts outstanding, then-current interest rates and maturity dates of the debt obligations of LCR were as follows:
Principal Amount Debt Outstanding Interest Rate Maturity ---- ------------ ------------------------ ------------ Credit Facility $70 million revolving credit agreement......... -- LIBOR plus 2.000% January 2003 Term loans................ $450 million LIBOR plus 2.000% January 2003 Loans Payable to Lyondell... $229 million LIBOR plus basis July 2003 points consistent with a BBB+ issuer Loans Payable to CITGO...... $ 35 million LIBOR plus basis July 2003 points consistent with a BBB+ issuer
LCR Covenants Under the covenant provisions of its credit agreements, LCR has agreed to, among other things, maintain certain specified financial ratios (including a consolidated net worth, debt to total capitalization, interest coverage ratio and leverage ratio), not enter into certain transactions with affiliates, not make certain investments, not create certain liens, not incur certain debt, not make distributions (including distributions to its owners during an event of default or repurchases of its capital securities), not allow its subsidiaries to incur certain debt, not enter into certain asset sales and not take certain specified actions with respect to its crude supply agreement, products purchase agreement or certain of LCR's formation documents. LCR was in compliance with each of such covenants as of September 30, 2001. The breach by LCR of any of the covenants or financial requirements in its credit agreement could result in a default, which would permit the lenders to declare the loans immediately payable and to terminate future lending commitments. 39 DESCRIPTION OF NEW NOTES As used in this "Description of New Notes," the term "Company" refers to Lyondell Chemical Company and not to any of its subsidiaries. For definitions of certain terms used in the following summary, see "--Certain Definitions." General The form and the term of the new notes are the same as the form and term of the outstanding notes they will replace, except that: . we will register the new notes under the Securities Act; . the new notes, once registered, will not bear legends restricting transfer; and . holders of the new notes will not be entitled to some rights under the registration rights agreement, including our payment of liquidated damages for failure to meet specified deadlines that will terminate when the exchange offer is consummated. The new notes will be issued solely in exchange for an equal principal amount of outstanding notes. As of the date of this prospectus, $393 million aggregate of 9 1/2% senior secured notes are outstanding. See "The Exchange Offer." The new notes will mature on December 15, 2008 and will bear interest at the rate of 9 1/2% per annum. Interest on the new notes will accrue from December 4, 2001, the date the outstanding notes were issued, and will be payable semiannually in arrears on June 15 and December 15 of each year, commencing June 15, 2002. We will make each interest payment to the holders of record of the new notes at the close of business on the June 1 or December 1 preceding such interest payment date. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The new notes will be issued pursuant to the existing indenture relating to the outstanding notes among the Company, the Subsidiary Guarantors party thereto and The Bank of New York, as trustee (the Trustee). The terms of the new notes include those stated in the indenture and those made part of the indenture by reference to the Trust Indenture Act of 1939, as amended (the Trust Indenture Act). The new notes are subject to all such terms, and holders of new notes are referred to the indenture and the Trust Indenture Act for a statement of all the terms. Because this is a summary, it does not contain all the information that may be important to you. You should read the indenture in its entirety, including the definitions in the indenture of certain terms used below. Copies of the indenture and the Security Documents (as defined under "-- Security") are filed as exhibits to the registration statement of which this prospectus forms a part. The new notes will be general secured obligations of the Company and will rank pari passu in right of payment with all other existing and future unsubordinated Indebtedness of the Company, including Indebtedness under the Existing Credit Facility and the Existing Senior Secured Notes. While unsecured and unsubordinated indebtedness ranks pari passu with the new notes in right of payment, the holders of the new notes, together with the holders of other outstanding secured indebtedness, may, to the exclusion of unsecured creditors, seek recourse against the pledged assets as security for the new notes and such other secured indebtedness until amounts owed under the new notes and the other secured indebtedness are satisfied in full. The Company's obligations under the new notes will also be guaranteed on a senior basis by the Subsidiary Guarantors. See "--Subsidiary Guarantees." ARCO Chemical Technology, Inc., ARCO Chemical Technology, L.P. and Lyondell Chemical Nederland, Ltd. initially will be the only Subsidiary Guarantors of the new notes. The Subsidiary Guarantees will be general unsecured obligations of the Subsidiary Guarantors and will rank pari passu in right of payment to all existing and future unsubordinated Indebtedness of the Subsidiary Guarantors. At September 30, 2001, on a pro forma basis after giving effect to the offering of the outstanding notes and the exchange offer: 40 . approximately $3.4 billion in principal amount of outstanding unsubordinated Indebtedness of the Company and the Subsidiary Guarantors would have been secured, including the new notes, the Indebtedness under the Existing Credit Facility and the Existing Senior Secured Notes; . approximately $10 million of outstanding Indebtedness of the Company and the Subsidiary Guarantors would have been pari passu with the new notes and unsecured and ranking effectively junior to the new notes to the extent of the value of the assets securing the new notes, consisting primarily of hedging obligations and undrawn letters of credit; and . the $500 million in principal amount of Senior Subordinated Notes are, by their terms, subordinated to the new notes. Structural Subordination. Many of the operations of the Company are conducted through its Subsidiaries and Joint Ventures and, therefore, the Company is dependent upon the cash flow of its Subsidiaries and Joint Ventures to meet its obligations, including its obligations under the new notes. The new notes will be effectively subordinated to all outstanding Indebtedness and other liabilities and commitments (including trade payables and operating lease obligations) of the Company's Subsidiaries and Joint Ventures, except to the extent they are Subsidiary Guarantors. Any right of the Company to receive assets of any of its Subsidiaries or Joint Ventures that are not Subsidiary Guarantors upon the latter's liquidation or reorganization or insolvency (and the consequent right of the holders of new notes to participate in those assets) will be effectively subordinated to the claims of that Subsidiary's or Joint Venture's creditors and preferred stockholders, except to the extent that the Company is itself recognized as a creditor of such Subsidiary or Joint Venture. In that case, the claims of the Company would still be subordinate to any lien or security interest in the assets of such Subsidiary or Joint Venture and any Indebtedness of such Subsidiary or Joint Venture senior to that held by the Company. At September 30, 2001, on a pro forma basis after giving effect to the offering of the outstanding notes and the exchange offer, the new notes would have been effectively subordinated to approximately $3.6 billion of outstanding liabilities of the Company's Joint Ventures, including trade payables, and less than $1 million of outstanding liabilities, including trade payables, of the nonguarantor subsidiaries. See "Risk Factors--Risk Factors Relating to Our Debt and the New Notes--The new notes are subordinated to debt of our subsidiaries and joint ventures." Under certain circumstances, the Company will be able to designate current or future Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries and Joint Ventures, so long as they are not Subsidiaries of the Company (and, if they are Subsidiaries, at any time that they are designated as Unrestricted Subsidiaries), will not be subject to many of the restrictive covenants set forth in the indenture. Principal, Maturity and Interest The new notes will mature on December 15, 2008. Interest on the new notes will accrue at the rate per annum set forth on the cover page hereof and will be payable semiannually in arrears on June 15 and December 15 of each year, commencing on June 15, 2002, to holders of record on the immediately preceding June 1 and December 1, respectively. Interest on the new notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. Principal of and premium, if any, and interest and liquidated damages, if any, on the new notes will be payable at the office or agency of the Company maintained for such purpose within the City and the State of New York or, at the option of the Company, payment of interest and liquidated damages, if any, may be made by check mailed to the holders of the new notes at their respective addresses set forth in the register of holders of new notes; provided that all payments with respect to Global Notes, the holders of which have given wire transfer instructions, on or prior to the relevant record date, to the paying agent, will be required to be made by wire 41 transfer of immediately available funds to the accounts specified by such holders. Until otherwise designated by the Company, the Company's office or agency in New York will be the office of the Trustee maintained for such purpose. The new notes will initially be issued in global form and, in the event they are subsequently certificated, in denominations of $1,000 and integral multiples thereof. Subject to the covenants described below under "Certain Covenants," the Company may issue additional notes under the indenture having the same terms in all respects as the new notes (or in all respects except for the payment of interest on the new notes (i) scheduled and paid prior to the date of issuance of such notes or (ii) payable on the first interest payment date following such date of issuance); provided that the aggregate principal amount of notes outstanding after giving effect to any such issuance shall not exceed the amount that may be equally and ratably secured with obligations under the Existing Credit Facility without causing a default under the Existing Credit Facility; provided further that prior to any such issuance, the Company shall have delivered to the Trustee an opinion of counsel confirming that the holders of the outstanding new notes 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 additional notes were not issued. The new notes and any such additional notes would be treated as a single class for all purposes under the indenture. Security Under the Security Documents referred to below, the new notes will be secured by a lien equally and ratably with all Senior Indebtedness owing under the Existing Credit Facility and the Existing Senior Secured Notes (and, with respect to certain of the Company's manufacturing plants described below, with Existing ARCO Chemical Debt as well) pursuant to certain security agreements and pledge agreements, as amended from time to time (collectively, the "Security Documents") between the Company or certain of its Restricted Subsidiaries and JP Morgan Chase Bank, as collateral agent. The liens granted under the Security Documents constitute first-priority liens, subject to certain exceptions and permitted liens described therein, on: . personal property of the Company; . substantially all the stock directly owned by the Company of the Company's domestic subsidiaries and 65% of the stock directly owned by the Company of the Company's foreign subsidiaries (other than the stock of certain subsidiaries for which consent is required in order to permit a pledge to the extent such consent has not been obtained); . the rights of certain of the Company's Joint Venture Subsidiaries to receive distributions from Joint Ventures in which they hold Equity Interests; and . mortgages on the Company's facilities located in Bayport, Texas, Channelview, Texas and Lake Charles, Louisiana (collectively and together with any other assets that may be pledged from time to time, the Collateral). The indenture and the Security Documents also require that holders of the new notes be granted a lien equally and ratably with any lien granted on additional assets to secure the holders of Senior Indebtedness under the Existing Credit Facility subsequent to the Issue Date. The liens that will secure the new notes also secure the Existing Credit Facility, the Existing Senior Secured Notes and, in the case of the mortgages, the Existing Arco Chemical Debt. The new notes, as well as the Existing Senior Secured Notes and the Existing Arco Chemical Debt, will automatically cease to be secured by those liens if and when those liens no longer secure the Existing Credit Facility. The liens that secure the Existing Credit Facility would be released if such a release were approved by the requisite lenders under the Existing Credit Facility, and the consent of the holders of the new notes would not be required for such a release. The Security Documents generally provide that liens will be automatically released if the assets subject 42 to such lien are transferred or otherwise disposed of in compliance with the provisions of the Existing Credit Facility. The Existing Credit Facility specifically provides that liens will be automatically released from assets that are the subject of a Major Asset Sale and that are transferred to a Subject Asset Transferee in accordance with the terms of the Existing Credit Facility. In addition, the collateral agent and the Company may amend the provisions of the Security Documents with the consent of the requisite lenders under the Existing Credit Facility and without the consent of the holders of the new notes. The lenders under the Existing Credit Facility have the sole ability to control remedies (including upon sale or liquidation after acceleration of the new notes or the debt under the Existing Credit Facility) with respect to the collateral. The indenture provides that the Company and its Restricted Subsidiaries that are parties to any Security Documents will comply with all the covenants and agreements contained in such Security Documents the failure to comply with which would have a material and adverse effect on the Liens purported to be created thereby, unless such failure to comply is waived by the requisite lenders under the Existing Credit Facility and, after that waiver, the Company is in compliance with the covenant described under "Security." See "Risk Factors--Risk Factors Relating to Our Debt and the New Notes--You may not be able to fully realize the value of your liens--The security for your benefit can be released without your consent." From and after the date when all liens granted in favor of the holders of Senior Indebtedness under the Existing Credit Facility are released, the provisions regarding security described above will no longer apply. The provisions of the covenant described below under "Certain Covenants--Liens" will, however, continue to apply. Subsidiary Guarantees ARCO Chemical Technology, Inc., ARCO Chemical Technology, L.P. and Lyondell Chemical Nederland, Ltd. initially will be the only Subsidiary Guarantors of the new notes. In addition, the indenture provides that any Restricted Subsidiary that Guarantees or secures the payment of any other Indebtedness of the Company or any of its Restricted Subsidiaries must also Guarantee the payment of the new notes, subject to certain exceptions described below under "Certain Covenants--Limitations on Issuances of Guarantees of Indebtedness by Subsidiaries." The Subsidiary Guarantors will unconditionally guarantee the due and punctual payment of the principal of and premium, if any, and interest and liquidated damages, if any, on the new notes, when and as the same shall become due and payable, whether at maturity, upon redemption, by declaration or otherwise (the "Subsidiary Guarantees"). The terms of each Subsidiary Guarantee will provide that the obligations of the Subsidiary Guarantor thereunder will be limited so as not to constitute a fraudulent conveyance under applicable law. The Subsidiary Guarantees will be general senior obligations of the Subsidiary Guarantors. The indenture provides that no Subsidiary Guarantor may consolidate with or merge with or into (whether or not such Subsidiary Guarantor is the surviving person) another corporation, person or entity, whether or not affiliated with such Subsidiary Guarantor unless: (i) subject to the provisions of the following paragraph, the person formed by or surviving any such consolidation or merger (if other than the Company or such Subsidiary Guarantor) assumes all the obligations of such Subsidiary Guarantor, pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee, under its Subsidiary Guarantee; (ii) immediately after giving effect to such transaction, no Default or Event of Default exists; and (iii) the Company would, at the time of such transaction and after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period, (A) have a Consolidated Net Worth immediately after the transaction equal to or greater than the Consolidated Net Worth of the Company immediately preceding the transaction, and (B) except with respect to a consolidation or merger with a person that has no outstanding Indebtedness, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the covenant described under the caption "Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock." 43 The requirements of clauses (i) and (iii) of this paragraph will not apply in the case of a consolidation with or merger with or into the Company and the requirements of clause (iii) of this paragraph will not apply in the case of a consolidation with or merger with or into another Subsidiary Guarantor. The indenture provides that: (i) in the event of a sale or other disposition, by way of merger, consolidation or otherwise, of all the Capital Stock of any Subsidiary Guarantor to any person that is not an Affiliate of the Company, such Subsidiary Guarantor will be released and relieved of any obligations under its Subsidiary Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the indenture. See "Repurchase at the Option of Holders--Asset Sales"; (ii) upon the release or discharge of the Guarantee that resulted in the creation of the Subsidiary Guarantee of such Subsidiary Guarantor (or, in the case of the Subsidiary Guarantee of the new notes by ARCO Chemical Technology, Inc., ARCO Chemical Technology, L.P. or Lyondell Chemical Nederland, Ltd., the release or discharge of its Guarantee of Indebtedness under the Existing Credit Facility and the Existing Senior Secured Notes), except a discharge or release by or as a result of payment under such Guarantee, such Subsidiary Guarantor will be released and relieved of any obligations under its Subsidiary Guarantee; and (iii) upon the designation of any Subsidiary Guarantor as an Unrestricted Subsidiary in accordance with the terms of the indenture, such Subsidiary Guarantor will be released and relieved of any obligations under its Subsidiary Guarantee. See "Certain Covenants--Limitations on Issuances of Guarantees of Indebtedness by Subsidiaries." Mandatory Redemption Except as set forth below under "Repurchase at the Option of Holders," the Company will not be required to make any mandatory redemption or sinking fund payments with respect to the new notes. Optional Redemption The new notes will not be redeemable at the option of the Company prior to December 15, 2005. Thereafter, the new notes will be subject to redemption at the option of the Company, in whole or from time to time in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and liquidated damages, if any, thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on December 15 of the following years:
Year Percentage ---- ---------- 2005.............................. 104.750% 2006.............................. 102.375% 2007.............................. 100.000%
Selection and Notice If less than all the new notes are to be redeemed at any time, selection of new notes for redemption will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the new notes are listed or, if the new notes are not so listed, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate; provided that no new notes of $1,000 or less shall be redeemed in part. Notices of redemption shall be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each holder of new notes to be redeemed at its registered address. Notices of redemption may not be conditional. If any new note is to be redeemed in part only, the notice of redemption that relates to such new note shall state the portion of the principal amount thereof to be redeemed. A new note 44 in principal amount equal to the unredeemed portion thereof will be issued in the name of the holder thereof upon cancellation of the original note. New notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on new notes or portions of them called for redemption. Repurchase at the Option of Holders Change of Control Upon the occurrence of a Change of Control, each holder of new notes will have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such holder's new notes pursuant to the offer described below (the Change of Control Offer) at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and liquidated damages, if any, thereon to the date of purchase (the Change of Control Payment) on a date that is not more than 90 days after the occurrence of such Change of Control (the Change of Control Payment Date). Within 30 days following any Change of Control, the Company will mail, or at the Company's request the Trustee will mail, a notice to each holder offering to repurchase the new notes held by such holder pursuant to the procedures specified in such notice. The Company will comply with the requirements of Rule l4e-1 under the Securities Exchange Act of 1934 and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the new notes as a result of a Change of Control. On the Change of Control Payment Date, the Company will, to the extent lawful: (1) accept for payment all new notes or portions thereof properly tendered and not withdrawn pursuant to the Change of Control Offer; (2) deposit with the paying agent an amount equal to the Change of Control Payment in respect of all new notes or portions thereof so tendered; and (3) deliver or cause to be delivered to the Trustee the new notes so accepted, together with an officers' certificate stating the aggregate principal amount of new notes or portions thereof being purchased by the Company. The paying agent will promptly mail to each holder of new notes so tendered the Change of Control Payment for such new notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each holder a note equal in principal amount to any unpurchased portion of the new notes surrendered, if any; provided that each such note will be in a principal amount of $1,000 or an integral multiple thereof. A failure by the Company to comply with the provisions of the two preceding paragraphs will constitute an Event of Default under the indenture. Except as described above with respect to a Change of Control, the indenture does not contain provisions that permit the holders of the new notes to require that the Company purchase or redeem the new notes in the event of a takeover, recapitalization or similar transaction. See "Events of Default and Remedies." There can be no assurance that the Company will have the financial resources to purchase the new notes, particularly if a Change of Control triggers a similar repurchase requirement for, or results in the acceleration of, other Indebtedness. The Existing Senior Secured Notes and Senior Subordinated Notes contain a similar repurchase requirement. The Existing Credit Facility provides that certain events constituting a Change of Control will constitute a default under, and could result in the acceleration of the maturity of, the Existing Credit Facility. Future indebtedness might contain similar provisions. Accordingly, the Company might not be able to fulfill its obligation to repurchase any new notes if a Change of Control occurs. See "Risk Factors--Risk Factors Relating to Our Debt and the New Notes--We may not be able to repurchase your new notes upon a change of control." 45 The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer at the same or a higher purchase price, at the same times and otherwise in substantial compliance with the requirements applicable to a Change of Control Offer made by the Company and purchases all new notes validly tendered and not withdrawn under such Change of Control Offer. "Change of Control" means the occurrence of any of the following: (i) the sale, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all the assets of the Company and its Subsidiaries taken as a whole to any person or group (as such term is used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) other than to a person or group who, prior to such transaction, held a majority of the voting power of the voting stock of the Company; (ii) the acquisition by any person or group (as defined above) of a direct or indirect interest in more than 50% of the voting power of the voting stock of the Company, by way of merger or consolidation or otherwise; or (iii) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors. The phrase "all or substantially all" the assets of the Company will likely be interpreted under applicable state law and will be dependent upon particular facts and circumstances. As a result, there may be a degree of uncertainty in ascertaining whether a sale or transfer of "all or substantially all" the assets of the Company has occurred, in which case a holder's ability to obtain the benefit of a Change of Control Offer may be impaired. Asset Sales The indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless: (i) the Company and/or the Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the fair market value (as conclusively evidenced by a resolution of the Board of Directors of the Company set forth in an officers' certificate delivered to the Trustee) of the assets or Equity Interests issued or sold or otherwise disposed of; and (ii) at least 80% of the consideration therefor received by the Company and/or such Restricted Subsidiary is in the form of: (A) cash or Cash Equivalents; or (B) a controlling interest or a joint venture interest (to the extent otherwise permitted by the indenture) in a business engaged in a Permitted Business or long-term property or assets that are used or useful in a Permitted Business; provided that the amount of (x) any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet) of the Company or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the notes or any guarantee thereof) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases the Company or such Restricted Subsidiary from further liability and (y) any securities, new notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are promptly converted by the Company or such Restricted Subsidiary into cash (to the extent of the cash received) shall be deemed to be cash for purposes of this provision. Within 360 days after the receipt of any Net Proceeds from an Asset Sale, the Company may apply such Net Proceeds, at its option: (a) to permanently repay Senior Indebtedness (and to correspondingly reduce commitments with respect thereto in the case of revolving borrowings) of the Company or a Subsidiary Guarantor or Indebtedness (and to correspondingly reduce commitments with respect thereto in the case of revolving borrowings) of any Restricted Subsidiary that is not a Subsidiary Guarantor; provided that so long as the new notes are secured, only repayment of Senior Indebtedness incurred under the Existing Credit Facility 46 (but not any refinancing thereof other than a credit facility with commercial banks and other lenders) shall constitute a repayment of Indebtedness permitted pursuant to this clause (a); or (b) to acquire a controlling interest or a joint venture interest (to the extent otherwise permitted by the indenture) in another business or the making of a capital expenditure or the acquisition of other long-term assets, in each case, in a Permitted Business (or enter into a binding commitment for any such expenditure or acquisition); provided that such binding commitment shall be treated as a permitted application of Net Proceeds from the date of such commitment until and only until the earlier of (x) the date on which such expenditure or acquisition is consummated and (y) the 180th day following the expiration of the aforementioned 360-day period. If the expenditure or acquisition contemplated by such binding commitment is not consummated on or before such 180th day and the Company shall not have applied such Net Proceeds pursuant to clause (a) above on or before such 180th day, such commitment shall be deemed not to have been a permitted application of Net Proceeds at any time. However, so long as the new notes are secured, the Company may not apply Net Proceeds of a Significant Asset Sale pursuant to clause (b) to satisfy its obligations under the first sentence of this paragraph except to the extent that the provisions of the Existing Credit Facility (but not any refinancing thereof other than a credit facility with commercial banks and other lenders) require a mandatory prepayment from such proceeds but the requisite lenders thereunder have waived such mandatory prepayment. Pending the final application of any such Net Proceeds, the Company may temporarily reduce the revolving Indebtedness under the Existing Credit Facility or otherwise invest such Net Proceeds in any manner that is not prohibited by the indenture. Any Net Proceeds from Asset Sales that are not applied or invested as provided in the first sentence of this paragraph will be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds under the indenture exceeds $25 million, the Company will be required to make an offer to all holders of new notes (an Asset Sale Offer) to purchase the maximum principal amount of new notes and (i) if the Company is required to do so under the terms of any other Indebtedness ranking pari passu with such new notes, such other Indebtedness and (ii) if the Company elects to do so, any Existing ARCO Chemical Debt, on a pro rata basis with the new notes, that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest and liquidated damages, if any, thereon to the date of purchase, in accordance with the procedures set forth in the indenture. To the extent that the aggregate amount of new notes (and any other pari passu Indebtedness subject to such Asset Sale Offer) tendered pursuant to such Asset Sale Offers is less than the Excess Proceeds, the Company may, subject to the other terms of the indenture, use any remaining Excess Proceeds for general corporate purposes. If the aggregate principal amount of new notes surrendered by holders thereof in connection with any Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall select the new notes to be purchased on a pro rata basis with the outstanding notes not tendered for exchange. Upon completion of the offer to purchase made under the indenture, the amount of Excess Proceeds under the indenture shall be reset at zero. Certain Covenants Restricted Payments The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any distribution on account of the Company's or any of its Restricted Subsidiaries' Equity Interests (other than (x) dividends or distributions payable in Qualified Equity Interests of the Company and (y) dividends or distributions payable to the Company or any Restricted Subsidiary of the Company); (ii) purchase, redeem or otherwise acquire or retire for value any Equity Interests of the Company, any of its Restricted Subsidiaries or any Affiliate of the Company (other than any such Equity Interests owned by the Company or any of its Restricted Subsidiaries); (iii) make any principal payment on, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness (Subordinated Debt) of the Company or any Restricted Subsidiary that is 47 subordinated by its terms to the new notes or the Subsidiary Guarantees, as applicable (other than Indebtedness owed to the Company or any Restricted Subsidiary), except, in each case, payment of interest or principal at Stated Maturity; or (iv) make any Restricted Investment (all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as Restricted Payments); unless, at the time of and after giving effect to such Restricted Payment (the amount of any such Restricted Payment, if other than cash, shall be the fair market value (as conclusively evidenced by a resolution of the Board of Directors) of the asset(s) proposed to be transferred by the Company or such Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment): (a) no Default or Event of Default shall have occurred and be continuing after giving effect thereto; (b) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the most recently ended four full fiscal quarters for which financial statements have been filed with the Commission pursuant to the covenant described below under the caption "Reports" immediately preceding the date of such Restricted Payment, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant in the indenture described below under the caption "--Incurrence of Indebtedness and Issuance of Preferred Stock"; and (c) such Restricted Payment, together with the aggregate of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the Existing Notes Issue Date (excluding Restricted Payments permitted by clauses (b)(to the extent paid to the Company or any of its Restricted Subsidiaries or to the extent such distributions are deducted as a minority interest in calculating Consolidated Net Income), (c), (d), (e), (g), (j), (n) and (p) of the next succeeding paragraph and 50% of any Restricted Payments permitted by clause (h) of the next succeeding paragraph), is less than the sum, without duplication, of: (i) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing on April 1, 1999, to the end of the Company's most recently ended fiscal quarter for which financial statements have been filed with the Commission pursuant to the covenant described below under the caption "Reports" at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus (ii) 100% of the aggregate net cash proceeds received by the Company or any of its Restricted Subsidiaries from the issue or sale (other than to a Subsidiary or Joint Venture of the Company) after the Existing Notes Issue Date of Qualified Equity Interests of the Company or of debt securities of the Company or any of its Restricted Subsidiaries that have been converted into or exchanged for such Qualified Equity Interests of the Company, plus (iii) to the extent that any Restricted Investment (other than a Restricted Investment permitted to be made pursuant to clause (g) or (h) below) that was made after the Existing Notes Issue Date is sold for cash or otherwise liquidated, repaid or otherwise reduced, including by way of dividend (to the extent not included in calculating Consolidated Net Income), for cash, the lesser of (A) the cash return with respect to such Restricted Investment (less the cost of disposition, if any) and (B) the initial amount of such Restricted Investment, plus (iv) an amount equal to the sum of (A) the net reduction in Investments in Unrestricted Subsidiaries resulting from dividends, repayments of loans or other transfers of assets (to the extent not included in calculating Consolidated Net Income), in each case to the Company or any Restricted Subsidiary from Unrestricted Subsidiaries, and 48 (B) the portion (proportionate to the Company's equity interest in such Subsidiary) of the net market value of the net assets of an 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 Unrestricted Subsidiary, the amount of Restricted Investments (other than Restricted Investments permitted to be made pursuant to clause (g) or (h) below) previously made after the Existing Notes Issue Date by the Company or any Restricted Subsidiary in such Unrestricted Subsidiary. If, other than with respect to payments made under clauses (a) and (n) below, no Default or Event of Default shall have occurred and be continuing after giving effect to such Restricted Payment, the foregoing provisions will not prohibit the following Restricted Payments: (a) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of the indenture; (b) dividends or distributions by any Restricted Subsidiary of the Company payable (x) to all holders of a class of Capital Stock of such Restricted Subsidiary on a pro rata basis or on a basis that is more favorable to the Company; provided that at least 50% of such class of Capital Stock is held by the Company and/or one or more of its Restricted Subsidiaries, or (y) to all holders of a class of Preferred Stock of a Restricted Subsidiary that is not a Subsidiary Guarantor issued after the Issue Date in compliance with the covenant described below under the caption "--Incurrence of Indebtedness and Issuance of Preferred Stock"; (c) the payment of cash dividends on any series of Disqualified Stock issued after the Existing Notes Issue Date in an aggregate amount not to exceed the cash received by the Company since the Existing Notes Issue Date upon issuance of such Disqualified Stock; (d) the redemption, repurchase, retirement or other acquisition of any Equity Interests of the Company, any Restricted Subsidiary or any Joint Venture (or the acquisition of all the outstanding Equity Interests of any person that conducts no operations and has no assets or liabilities other than the ownership of Equity Interests in a Joint Venture) in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary or Joint Venture of the Company) of, Qualified Equity Interests of the Company; provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement or other acquisition shall be excluded from clause (c)(ii) of the preceding paragraph; (e) the defeasance, redemption or repurchase of Subordinated Debt with the net cash proceeds from an incurrence of Permitted Refinancing or in exchange for or out of the net cash proceeds from the substantially concurrent sale (other than to a Subsidiary or Joint Venture of the Company) of Qualified Equity Interests of the Company; provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement or other acquisition shall be excluded from clause (c)(ii) of the preceding paragraph; (f) the repurchase, redemption or other acquisition or retirement for value of (i) any Equity Interests of the Company or any Subsidiary of the Company held by any member of the Company's (or any of its Subsidiaries') management pursuant to any management equity subscription agreement or stock option agreement or (ii) any Equity Interests of the Company that are or are intended to be used to satisfy issuances of Equity Interests upon exercise of employee or director stock options or upon exercise or satisfaction of other similar instruments outstanding under employee or director benefit plans of the Company or any Subsidiary of the Company; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $5 million in any fiscal year of the Company; 49 (g) Restricted Investments in any of the Specified Joint Ventures (including, without limitation, the purchase of Equity Interests of a Specified Joint Venture directly from another person or the purchase of all the outstanding Equity Interests of any person that conducts no operations and has no assets or liabilities other than the ownership of Equity Interests of a Specified Joint Venture) to the extent that the proceeds thereof are used to purchase or redeem an interest of another person in such Specified Joint Venture (other than the Company, a Restricted Subsidiary or an Affiliate of the Company, except a person that is deemed to be an Affiliate solely by virtue of its ownership of Equity Interests of the Company acquired in exchange for Equity Interests in such Specified Joint Venture); provided that after giving pro forma effect thereto as if such Restricted Payment (and any related incurrence of Indebtedness) had been made at the beginning of the most recently ended four-full-fiscal- quarter period for which financial statements have been filed with the Commission pursuant to the covenant described below under the caption "Reports" immediately preceding the date of such Restricted Payment, the Company would have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described below under the caption "-- Incurrence of Indebtedness and Issuance of Preferred Stock"; (h) Restricted Investments in any Joint Venture made during any fiscal year of the Company or within 45 days after the end of such fiscal year in amounts that, together with all other Restricted Investments made in such Joint Venture in respect of such fiscal year in reliance on this clause (h) during such fiscal year or within 45 days after the end of such fiscal year, do not exceed the amount of dividends or distributions previously paid in respect of such fiscal year to the Company or any Restricted Subsidiary by such Joint Venture; (i) the payment of dividends on the Company's common stock in an aggregate amount per annum not to exceed the product of (i) $0.90 and (ii) the sum, without duplication, of (w) the number of shares outstanding on the day prior to the Existing Notes Issue Date plus (x) 40,250,000 (i.e., the number of shares issued in the stock offering made concurrently with placement of the Existing Senior Secured Notes), plus (y) if the Company issues shares of its common stock after the Existing Notes Issue Date, to the extent (1) such shares are issued in exchange for or (2) the net cash proceeds therefrom are used substantially concurrently to acquire Equity Interests (held by a person other than the Company, a Restricted Subsidiary or an Affiliate of the Company, except a person that is deemed to be an Affiliate solely by virtue of its ownership of Equity Interests of the Company acquired in exchange for Equity Interests in such Specified Joint Venture) of a Specified Joint Venture that immediately prior to such issuance was or as a result of such exchange or acquisition becomes a Restricted Subsidiary (and such Specified Joint Venture is not subsequently designated as an Unrestricted Subsidiary), such number of shares of common stock plus (z) the sum of (1) 1,000,000 and (2) such number of shares of common stock of the Company as have been or are issued after the Existing Notes Issue Date pursuant to the exercise of employee or director stock options granted prior to the Existing Notes Issue Date or issued after the Existing Notes Issue Date pursuant to other employee or director benefit plans of the Company or any of its Restricted Subsidiaries or issuable pursuant to the exercise of employee or director stock options granted after the Existing Notes Issue Date; provided that the aggregate number of shares includable pursuant to this clause (z)(2) with respect to shares issued or issuable during any fiscal year of the Company shall not exceed 1,000,000; provided further that the number of shares referred to in clauses (y) and (z) shall be adjusted to reflect any stock split (or reverse stock split) or stock dividend made after the Issue Date and prior to the date such shares were issued; (j) distributions or payments of Receivables Fees; (k) (i) Investments in any Joint Venture or Unrestricted Subsidiary organized to construct, own and/or operate a propylene oxide plant in the European Union in an aggregate amount that, together with all other Investments made pursuant to this clause (k), does not exceed $100.0 million and (ii) the pledge of the Capital Stock of such Joint Venture or Unrestricted Subsidiary or of a Joint Venture Subsidiary that has no assets and conducts no operations other than the holding directly or indirectly of Equity Interests of such Joint Venture to secure Non-Recourse Debt of such Joint Venture or Unrestricted Subsidiary; 50 (l) (i) (x) the transfer of the TDI Assets to a newly formed Joint Venture or Unrestricted Subsidiary or (y) the designation of any Restricted Subsidiary that has no assets or liabilities other than all or a portion of the TDI Assets as an Unrestricted Subsidiary, in each case, in connection with the incurrence of Indebtedness by such Joint Venture or Unrestricted Subsidiary or Rhodia or a wholly owned subsidiary of Rhodia to improve the Rhodia TDI Plant and (ii) the pledge of the Capital Stock of such Joint Venture or Unrestricted Subsidiary or of a Joint Venture Subsidiary that has no assets and conducts no operations other than the holding directly or indirectly of Equity Interests of such Joint Venture to secure Non-Recourse Debt of such Joint Venture or Unrestricted Subsidiary or Rhodia or a wholly owned subsidiary of Rhodia; (m) the repurchase of any Subordinated Debt at a purchase price not greater than 101% of the principal amount thereof in the event of (x) a Change of Control pursuant to a provision no more favorable to the holders thereof than the provision of the indenture described under "Repurchase at the Option of Holders--Change of Control" or (y) an Asset Sale pursuant to a provision no more favorable to the holders thereof than the provision of the indenture described under "Repurchase at the Option of Holders--Asset Sales"; provided that, in each case, prior to such repurchase, the Company has made a Change of Control Offer or Asset Sale Offer, as applicable, and repurchased all notes issued under the indenture that were validly tendered for payment in connection with such Change of Control Offer or Asset Sale Offer; (n) distributions by any Restricted Subsidiary or Joint Venture of chemicals to a holder of Capital Stock of such Restricted Subsidiary or Joint Venture if such distributions are made pursuant to a provision in a joint venture agreement or other arrangement entered into in connection with the establishment of such Joint Venture or Restricted Subsidiary that requires such holder to pay a price for such chemicals equal to that which would be paid in a comparable transaction negotiated on an arm's-length basis (or pursuant to a provision that imposes a substantially equivalent requirement); (o) any other Restricted Payment that, together with all other Restricted Payments made pursuant to this clause (o) on or after the Existing Notes Issue Date, does not exceed $25 million (after giving effect to any subsequent reduction in the amount of any Investments made pursuant to this clause (o) as a result of the repayment or other disposition thereof for cash as set forth in clause (iii) of the first paragraph above, the amount of such reduction not to exceed the amount of such Investments previously made pursuant to this clause (o)); and (p) dividends or distributions by any Joint Venture (other than a Specified Joint Venture) to all holders of a class of Capital Stock of such Joint Venture permitted by clause (b)(x) above; provided that after giving effect to such dividends or distributions and any related transactions, the Joint Venture making such dividends or distributions to such holders is contractually entitled to receive, and receives within 180 days before or after the date of such dividends or distributions, directly or indirectly, an equivalent or larger cash payment from each such holder (other than from a holder that is the Company or any Restricted Subsidiary) or from an Affiliate of such holder, which cash payment has not been previously applied pursuant to this clause (p) to offset any other dividend or distribution by such Joint Venture to such holder and (y) such dividends or distributions do not exceed such holders' pro rata share of the Joint Venture's cash flows from operating activities, minus any noncash charge to the extent that it represents an accrual of or reserve for cash expenditures in any future period or amortization of a prepaid cash expense in any future period. The Board of Directors of the Company may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if such designation would not cause a Default. For purposes of making such determination, all outstanding Investments by the Company and its Restricted Subsidiaries in the Subsidiary so designated will be deemed to be Restricted Payments at the time of such designation and will reduce the amount available for Restricted Payments under the first paragraph of this covenant (except to the extent such Investments were repaid in cash, and, in the case of a Joint Venture (and any Subsidiary of a Joint Venture) designated as an Unrestricted Subsidiary on the first day that it is a Subsidiary of the Company, except to the extent that (1) such 51 Investments were made after the Existing Notes Issue Date or (2) in the case of a Specified Joint Venture, such Investments were made prior to the Existing Notes Issue Date). All such outstanding Investments (except as provided in the parenthetical included in the preceding sentence) will be deemed to constitute Investments in an amount equal to the fair market value of such Investments at the time of such designation (as conclusively determined by the Board of Directors). Such designation will only be permitted if any such Restricted Payment would be permitted at such time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. In the case of any designation by the Company of a person as an Unrestricted Subsidiary on the first day that such person is a Subsidiary of the Company in accordance with the provisions of the indenture, such designation shall be deemed to have occurred for all purposes of the indenture simultaneously with, and automatically upon, such person becoming a Subsidiary. Not later than the date of making any Restricted Payment, other than those permitted by clauses (b)(x), (f), (j) and (n) above, and not later than the 120th day after making any Restricted Payment permitted by clause (f) above, the Company shall deliver to the Trustee an officers' certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by the covenant described under the caption "--Restricted Payments" were computed. For purposes of this covenant, any payment made on or after May 17, 1999 but prior to the Issue Date shall be deemed to be a "Restricted Payment" to the extent such payment would have been a Restricted Payment had the indenture been in effect at the time of such payment (and, to the extent that any such Restricted Payment was permitted by clauses (a) through (p) above, such Restricted Payment may be deemed by the Company to have been made pursuant to such clause). Incurrence of Indebtedness and Issuance of Preferred Stock The indenture provides that, on or after the Issue Date: . the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, Guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt); . the Company will not, and will not permit any of its Restricted Subsidiaries to, issue any Disqualified Stock (including Acquired Disqualified Stock); and . the Company will not permit any of its Restricted Subsidiaries that are not Subsidiary Guarantors to issue any shares of Preferred Stock (including Acquired Preferred Stock); provided, however, that the Company and the Subsidiary Guarantors may incur Indebtedness (including Acquired Debt) and the Company and the Subsidiary Guarantors may issue shares of Disqualified Stock (including Acquired Disqualified Stock) if the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for which financial statements have been filed with the Commission pursuant to the covenant described below under the caption "Reports" immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock is issued would have been at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock had been issued, as the case may be, at the beginning of such four-quarter period. Letters of credit and bankers' acceptances shall be deemed to have an aggregate principal amount of Indebtedness equal to the maximum amount available thereunder. The foregoing provisions will not apply to: (i) the incurrence by the Company of Indebtedness pursuant to the Existing Credit Facility (and by its Subsidiaries of Guarantees thereof) in an aggregate principal amount at any time outstanding not to exceed an amount equal to $3.477 billion less the aggregate amount of all mandatory repayments (other than mandatory prepayments triggered solely by the issuance of Indebtedness or Preferred Stock of a Finance Subsidiary to refinance the Existing Credit Facility) applied after the Existing Notes Issue Date to (i) repay 52 loans (other than revolving credit loans) outstanding thereunder or (ii) permanently reduce the revolving credit commitments thereunder; (ii) the incurrence by the Company and the Subsidiary Guarantors of Indebtedness represented by the new notes (other than additional notes) and the Subsidiary Guarantees thereof; (iii) the incurrence by the Company and its Restricted Subsidiaries of Existing Indebtedness (other than Indebtedness of the type described in clause (i), (ii) or (v) through (xii) of this covenant); (iv) the incurrence by the Company or any of its Restricted Subsidiaries of any Permitted Refinancing in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund, Indebtedness that was permitted to be incurred under the Fixed Charge Coverage Ratio test set forth above or clause (ii) or (iii) above or (xiii) or (xiv) below or this clause (iv); (v) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that (i) if the Company or any 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 new notes or the Subsidiary Guarantee, as the case may be, and (ii)(A) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a person other than the Company or a Restricted Subsidiary and (B) any sale or other transfer of any such Indebtedness to a person that is not either the Company or a Restricted Subsidiary shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be; (vi) the incurrence by the Company or any Restricted Subsidiary of Hedging Obligations that are incurred for the purpose of (A) fixing or hedging interest rate or currency risk with respect to any fixed or floating rate Indebtedness that is permitted by the indenture to be outstanding or any receivable or liability the payment of which is determined by reference to a foreign currency; provided that the notional principal amount of any such Hedging Obligation does not exceed the principal amount of the Indebtedness to which such Hedging Obligation relates or (B) fixing or hedging risk with respect to fluctuations in the cost of raw materials; provided that such obligation is entered into for valid business purposes other than speculative purposes (as determined by the Company's or such Restricted Subsidiary's principal financial officer in the exercise of his or her good faith business judgment); (vii) the issuance by any of the Company's Restricted Subsidiaries of shares of Preferred Stock to the Company or a Wholly Owned Restricted Subsidiary; provided that (A) any subsequent issuance or transfer of Equity Interests that results in such Preferred Stock being held by a person other than the Company or a Wholly Owned Restricted Subsidiary or (B) the transfer or other disposition by the Company or a Wholly Owned Restricted Subsidiary of any such shares to a person other than the Company or a Wholly Owned Restricted Subsidiary shall be deemed, in each case, to constitute an issuance of such Preferred Stock by such Subsidiary on such date that is not permitted by this clause (vii); (viii) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by tender, bid, performance, government contract, surety or appeal bonds, standby letters of credit and warranty and contractual service obligations of like nature, trade letters of credit or documentary letters of credit, in each case to the extent incurred in the ordinary course of business of the Company or such Restricted Subsidiary and the incurrence by the Company of Indebtedness represented by letters of credit incurred in connection with the PBGC Settlement; (ix) the incurrence by any Restricted Subsidiary of the Company of Indebtedness or the issuance by any Restricted Subsidiary of Preferred Stock, the aggregate principal amount or liquidation preference of which, together with all other Indebtedness and Preferred Stock of the Company's Restricted Subsidiaries at the time outstanding and incurred or issued in reliance upon this clause (ix), does not exceed $50.0 million; 53 (x) the issuance by any Finance Subsidiary of Preferred Stock with an aggregate liquidation preference not exceeding the amount of Indebtedness of the Company held by such Finance Subsidiary; provided that the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for which financial statements have been filed with the Commission pursuant to the covenant described below under the caption "Reports" immediately preceding the date on which such Preferred Stock is issued would have been at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom) as if such Preferred Stock had been issued at the beginning of such four-quarter period; (xi) the incurrence of Indebtedness by Foreign Subsidiaries in an aggregate principal amount (or accreted value, as applicable) at any time outstanding and incurred in reliance upon this clause (xi) not to exceed $100.0 million; (xii) the Guarantee by any Restricted Subsidiary of Indebtedness of the Company or a Restricted Subsidiary that was permitted to be incurred by another provision of this covenant; (xiii) Acquired Debt or Acquired Disqualified Stock; provided that such Indebtedness or Disqualified Stock was not incurred in connection with or in contemplation of such person's becoming a Restricted Subsidiary; and provided further that immediately after giving effect to such incurrence, the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for which financial statements have been filed with the Commission pursuant to the covenant described below under the caption "Reports" immediately preceding the date of such incurrence would have been at least 2.0 to 1, determined on a pro forma basis; (xiv) Indebtedness or Disqualified Stock of a Specified Joint Venture or a Subsidiary thereof existing at the time such Specified Joint Venture first becomes a Restricted Subsidiary; provided that such Indebtedness or Disqualified Stock was not incurred in connection with or in contemplation of such Specified Joint Venture's becoming a Restricted Subsidiary; and provided further that immediately after giving effect to such Specified Joint Venture's becoming a Restricted Subsidiary, the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for which financial statements have been filed with the Commission pursuant to the covenant described below under the caption "Reports" immediately preceding the date on which such Specified Joint Venture became a Restricted Subsidiary would have been, determined on a pro forma basis, (i) at least 2.0 to 1 or (ii) equal to or greater than it was immediately prior to such Specified Joint Venture's becoming a Restricted Subsidiary; (xv) with respect to any Specified Joint Venture that becomes a Restricted Subsidiary, the incurrence by such Specified Joint Venture of Indebtedness under any revolving credit facility in an aggregate principal amount at any time outstanding not to exceed the aggregate principal amount of committed financing under all revolving credit facilities of such Specified Joint Venture as in effect on the Issue Date; and (xvi) the incurrence by the Company or any Subsidiary Guarantor of Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding and incurred in reliance on this clause (xvi) not to exceed $25.0 million. For purposes of determining compliance with this covenant, in the event that an item of Indebtedness or Preferred Stock meets the criteria of more than one of the categories of permitted Indebtedness described in clauses (i) through (xvi) above or is entitled to be incurred pursuant to the first paragraph of this covenant, the Company shall, in its sole discretion, classify such item of Indebtedness or Preferred Stock in any manner that complies with this covenant, and such Indebtedness or Preferred Stock will be treated as having been incurred pursuant to the clauses or the first paragraph hereof, as the case may be, designated by the Company. The amount of Indebtedness issued at a price which is less than the principal amount thereof shall be equal to the amount of the liability in respect thereof determined in accordance with GAAP. 54 Liens The indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien (except Permitted Liens) on any asset now owned or hereafter acquired, or any income or profits therefrom, unless all payments due under the indenture and the new notes or the Subsidiary Guarantees are secured on an equal and ratable basis with the obligations so secured (or, if such obligations are subordinated by their terms to the new notes or the Subsidiary Guarantees, prior to the obligations so secured) until such time as such obligations are no longer so secured. Dividend and Other Payment Restrictions Affecting Subsidiaries and Joint Ventures The indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any restriction on the ability of any Restricted Subsidiary to: (i)(a) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries: (1) on its Capital Stock, or (2) with respect to any other interest or participation in, or measured by, its profits, or (b) pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries; (ii) make loans or advances to the Company or any of its Restricted Subsidiaries; or (iii) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries; except for such restrictions existing under or by reason of: (a) existing agreements as in effect on the Issue Date; (b) Indebtedness permitted by the indenture to be incurred containing restrictions on the ability of Restricted Subsidiaries to consummate transactions of the types described in clause (i), (ii) or (iii) above not materially more restrictive than those contained in the indenture; (c) the indenture; (d) applicable law; (e) existing restrictions with respect to a person acquired by the Company or any of its Restricted Subsidiaries (except to the extent such restrictions were put in place in connection with or in contemplation of such acquisition), which restrictions are not applicable to any person, or the properties or assets of any person, other than the person, or the property or assets of the person, so acquired; (f) customary non-assignment provisions in leases and other agreements entered into in the ordinary course of business; (g) construction loans and purchase money obligations (including Capital Lease Obligations) for property acquired in the ordinary course of business that impose restrictions of the nature described in clause (iii) above on the property so constructed or acquired; (h) in the case of clause (iii) above, restrictions contained in security agreements or mortgages securing Indebtedness of a Restricted Subsidiary to the extent such restrictions restrict the transfer of the property subject to such security agreements or mortgages; (i) a Permitted Refinancing, provided that the restrictions contained in the agreements governing such Permitted Refinancing are not materially more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced (as conclusively evidenced by a resolution of the Board of Directors); 55 (j) customary restrictions on a Finance Subsidiary imposed in such Finance Subsidiary's organizational documents or by the terms of its Preferred Stock; (k) any restriction with respect to shares of Capital Stock of a Restricted Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of such shares of Capital Stock or any restriction with respect to the assets of a Restricted Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of such assets or all or substantially all the Capital Stock of such Restricted Subsidiary pending the closing of such sale or disposition; (l) in the case of any Restricted Subsidiary that is a Joint Venture, customary restrictions on such Restricted Subsidiary contained in its joint venture agreement, which restrictions are consistent with the past practice of the Company and its Restricted Subsidiaries (as conclusively evidenced by a resolution of the Board of Directors); (m) existing restrictions with respect to a Specified Joint Venture or the property or assets thereof or a Subsidiary of a Specified Joint Venture or the property or assets thereof, in each case, at the time such Specified Joint Venture first becomes a Restricted Subsidiary (except to the extent such restrictions were put in place in connection with or in contemplation of such Specified Joint Venture becoming a Restricted Subsidiary), which restrictions are not applicable to any person, or the properties or assets of any person, other than such Specified Joint Venture or the property or assets thereof or a Subsidiary of such Specified Joint Venture or the property or assets thereof; and (n) the Existing Credit Facility and related documentation as the same is in effect on the Issue Date and as amended, modified, extended, renewed, refunded, refinanced, restated or replaced from time to time; provided that the Existing Credit Facility and related documentation as so amended, modified, extended, reviewed, refunded, refinanced, restated or replaced is not materially more restrictive, taken as a whole, as to the matters enumerated above than the Existing Credit Facility and related documentation as in effect on the Issue Date (as conclusively evidenced by a resolution of the Board of Directors). For purposes of determining compliance with this covenant, in the event that a restriction meets the criteria of more than one of the categories of permitted restrictions described in clauses (a) through (n) above, the Company shall, in its sole discretion, classify such restriction in any manner that complies with this covenant, and such restriction will be treated as existing pursuant to the clauses designated by the Company. In addition, the indenture provides that the Company will use best efforts (consistent with its contractual obligations and fiduciary duties to any Joint Venture, in each case, as in effect on the Issue Date) not to permit any of its Joint Ventures that are not Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any restriction on the ability of such Joint Venture to: (i)(a) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries: (1) on its Capital Stock, or (2) with respect to any other interest or participation in, or measured by, its profits, or (b) pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries; (ii) make loans or advances to the Company or any of its Restricted Subsidiaries; or (iii) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries; except for such restrictions existing under or by reason of: (a) such Joint Venture's joint venture agreement or its credit facility (provided that in each case such restrictions are consistent with the past practice of the Company); (b) in the case of any Joint Venture existing on the Issue Date, its existing agreements as in effect on the date of the indenture and as amended, modified, extended, restated or replaced from time to time; 56 provided that no such amendment, modification, extension, restatement or replacement results in agreements that are materially more restrictive, taken as a whole, as to the matters enumerated above than the existing agreements as in effect on the date of the indenture (as conclusively evidenced by a resolution of the Board of Directors); (c) in the case of LCR, any instrument governing its Indebtedness; and (d) the restrictions described in clauses (d), (e), (f), (g), (h), (j), (k) and (n) of the first sentence of this covenant (assuming that references in clauses (h) and (k) to Restricted Subsidiary were references to a Joint Venture). Sale and Leaseback Transactions The indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, enter into any Sale and Leaseback Transaction; provided that the Company or any Restricted Subsidiary may enter into a Sale and Leaseback Transaction if: (a) the Company or such Restricted Subsidiary, as the case may be, could have: (i) incurred Indebtedness in an amount equal to the Attributable Debt relating to such Sale and Leaseback Transaction pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described under the caption "--Incurrence of Indebtedness and Issuance of Preferred Stock" (whether or not such covenant has ceased to be otherwise in effect as described below under "Limitation on Applicability of Certain Covenants if Notes Rated Investment Grade"); and (ii) incurred a Lien to secure such Indebtedness pursuant to the covenant described under the caption "--Liens" without securing the new notes; and (b) the gross cash proceeds of such Sale and Leaseback Transaction are at least equal to the fair market value (as conclusively determined by the Board of Directors) of the property that is the subject of such Sale and Leaseback Transaction. Line of Business The indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, engage in any business other than Permitted Businesses, except to such extent as would not be material to the Company and its Subsidiaries taken as a whole. Merger, Consolidation or Sale of Assets The indenture provides that the Company may not consolidate or merge with or into (whether or not the Company is the surviving corporation), or sell, assign, transfer, convey or otherwise dispose of all or substantially all its assets in one or more related transactions, to another corporation, person or entity unless: (i) the Company is the surviving corporation or the entity or the person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia; (ii) the corporation formed by or surviving any such consolidation or merger (if other than the Company) or the corporation to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all the Obligations of the Company under the new notes, the indenture and the Security Documents pursuant to a supplemental indenture in form reasonably satisfactory to the Trustee; (iii) immediately after such transaction no Default or Event of Default exists; and (iv) the Company or the entity or person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made (A) will have a Consolidated Net Worth immediately after the transaction equal to or 57 greater than the Consolidated Net Worth of the Company immediately preceding the transaction and (B) except with respect to a consolidation or merger of the Company with or into a person that has no outstanding Indebtedness, will, at the time of such transaction and after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant in the indenture described above under the caption "--Incurrence of Indebtedness and Issuance of Preferred Stock." The foregoing shall not prohibit the merger or consolidation of a Wholly Owned Restricted Subsidiary with the Company; provided that, in connection with any such merger or consolidation, no consideration (other than common stock in the surviving person or the Company) shall be issued or distributed to the stockholders of the Company. The sale, assignment, transfer, lease, conveyance or other disposition by the Company of all or substantially all its property or assets taken as a whole to one or more of the Company's Subsidiaries shall not relieve the Company from its obligations under the indenture and the new notes. In addition, the indenture provides that the Company will not lease all or substantially all its assets to another person. Transactions With Affiliates The indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make any contract, agreement, understanding, loan, advance or Guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an Affiliate Transaction), unless (i) such Affiliate Transaction is on an arm's- length basis and (ii) the Company delivers to the Trustee (a) with respect to any Affiliate Transaction involving aggregate consideration in excess of $10 million, a resolution of the Board of Directors set forth in an officers' certificate certifying that such Affiliate Transaction complies with clause (i) above and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors and (b) with respect to any Affiliate Transaction involving aggregate consideration in excess of $25 million, an opinion as to the fairness to the Company or such Restricted Subsidiary of such Affiliate Transaction from a financial point of view issued by an investment banking firm of national standing; provided that: (i) transactions or payments pursuant to any employment arrangements or employee, officer or director benefit plans or arrangements entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business; (ii) transactions between or among the Company and/or its Restricted Subsidiaries; (iii) any Restricted Payment permitted by the provisions of the indenture described under the caption "--Restricted Payments," of the type described in clause (i) or (ii) of the first paragraph thereof; (iv) customary loans, advances, fees and compensation paid to, and indemnity provided on behalf of, officers, directors, employees or consultants of the Company or any of its Restricted Subsidiaries; (v) transactions entered into on an arm's-length basis in the ordinary course of business between the Company or any of its Restricted Subsidiaries and any Joint Venture; (vi) sales (including a sale in exchange for a promissory note of or Equity Interest in such Accounts Receivable Subsidiary) of accounts receivable and the provision of billing, collection and other services in connection therewith, in each case, to an Accounts Receivable Subsidiary in connection with any Receivables Facility; and (vii) transactions pursuant to any contract or agreement in effect on the date of the indenture as the same may be amended, modified or replaced from time to time so long as any such contract or agreement as so amended, modified or replaced is, taken as a whole, no less favorable to the Company and its Restricted Subsidiaries than the contract or agreement as in effect on the date of the indenture (as conclusively evidenced by a resolution of the Board of Directors); 58 in each case, shall not be deemed to be Affiliate Transactions and therefore not subject to the requirements of clauses (i) and (ii) of the initial paragraph above. Limitations on Issuances of Guarantees of Indebtedness by Subsidiaries The indenture provides that the Company will not permit any Restricted Subsidiary that is not a Subsidiary Guarantor, directly or indirectly, to Guarantee or secure the payment of any other Indebtedness of the Company or any of its Restricted Subsidiaries (except Indebtedness of such Restricted Subsidiary or a Restricted Subsidiary of such Restricted Subsidiary) unless (i) such Restricted Subsidiary simultaneously executes and delivers a supplemental indenture to the indenture providing for the Guarantee of the payment of the new notes by such Restricted Subsidiary and (ii) such Restricted Subsidiary waives and agrees not to in any manner whatsoever claim or take the benefit or advantage of, either (i) any right to receive payment by way of subrogation against the Company or against any direct or indirect security for such obligation, or any other right to be reimbursed, indemnified or exonerated by or for the account of the Company in respect thereof or (ii) any right to receive payment, in the nature of contribution or for any other reason, from any other Subsidiary Guarantor with respect to such payment, in each case so long as any amount payable by the Company under the indenture or under the new notes remains unpaid; provided that this paragraph shall not be applicable to (x) any Guarantee of any Restricted Subsidiary that existed at the time such person became a Restricted Subsidiary and was not incurred in connection with, or in contemplation of, such person's becoming a Restricted Subsidiary, (y) Guarantees of Indebtedness of a Restricted Subsidiary that is a Foreign Subsidiary by a Restricted Subsidiary that is a Foreign Subsidiary or (z) the granting of Liens by a Joint Venture Subsidiary to secure Indebtedness under the Existing Credit Facility, the Existing Senior Secured Notes and the new notes. If the new notes are (A) pari passu with the Guaranteed Indebtedness, then the Subsidiary Guarantee shall be pari passu with, or senior to, the guarantee of such Guaranteed Indebtedness or (B) senior to the Guaranteed Indebtedness, then the Subsidiary Guarantee shall be senior to the guarantee of such Guaranteed Indebtedness at least to the extent that the new notes are senior to such Guaranteed Indebtedness. Notwithstanding the foregoing, each Subsidiary Guarantee by a Restricted Subsidiary will provide by its terms that it shall be automatically and unconditionally released and discharged upon (i) any sale, exchange or transfer, to any person not an Affiliate of the Company, of all the Company's and each Restricted Subsidiary's Capital Stock in such Restricted Subsidiary (which sale, exchange or transfer is not prohibited by the indenture), (ii) the release or discharge of the Guarantee which resulted in the creation of such Subsidiary Guarantee (or, in the case of the Subsidiary Guarantee of ARCO Chemical Technology, Inc., ARCO Chemical Technology, L.P. or Lyondell Chemical Nederland, Ltd. issued on the Issue Date, the release or discharge of its respective Guarantee of Indebtedness under the Existing Credit Facility and the Existing Senior Secured Notes), except a discharge or release by or as a result of payment under such Guarantee and (iii) the designation of such Restricted Subsidiary as an Unrestricted Subsidiary in accordance with the terms of the indenture. Accounts Receivable Facilities The indenture provides that the Company may, and any of its Restricted Subsidiaries may, sell (including a sale in exchange for a promissory note of or an Equity Interest in such Accounts Receivable Subsidiary) at any time and from time to time, accounts receivable to any Accounts Receivable Subsidiary; provided that the aggregate consideration received in each such sale is at least equal to the aggregate fair market value of the receivables sold. No Amendment to Subordination Provisions The indenture provides that the Company will not amend, modify or alter the Senior Subordinated Note Indenture in any way that would (i) increase the principal of, advance the final maturity date of or shorten the Weighted Average Life to Maturity of any Senior Subordinated Notes such that the final maturity date of the Senior Subordinated Notes is earlier than the 91st day following the final maturity date of the new notes or (ii) amend the subordination provisions of the Senior Subordinated Note Indenture or any of the defined terms used therein in a manner that would be adverse to the holders of the new notes. 59 Limitation of Applicability of Certain Covenants if New Notes Rated Investment Grade Notwithstanding the foregoing, the Company's and its Restricted Subsidiaries' obligations to comply with the provisions of the indenture described above under the captions "Certain Covenants--Restricted Payments," "Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock," "Certain Covenants--Dividend and other Payment Restrictions Affecting Subsidiaries," "Certain Covenants--Line of Business," "Certain Covenants-- Limitations on Issuances of Guarantees of Indebtedness by Subsidiaries," "Certain Covenants--Transactions with Affiliates," "Certain Covenants--Accounts Receivable Facilities" and "Repurchase at the Option of Holders--Asset Sales" will terminate and cease to have any further effect from and after the first date when the new notes are rated Investment Grade. Reports The indenture provides that, whether or not required by the rules and regulations of the Commission, so long as any new notes issued thereunder are outstanding, the Company will furnish to the Trustee and the holders of new notes (i) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Company were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, with respect to the annual information only, a report thereon by the Company's certified independent accountants and (ii) all current reports that would be required to be filed with the Commission on Form 8-K if the Company were required to file such reports. In addition, whether or not required by the rules and regulations of the Commission, the Company will file a copy of all such information and reports with the Commission for public availability and make such information available to securities analysts and prospective investors upon request. In addition, the Company has agreed that, for so long as any new notes remain outstanding, it will furnish to the holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. Events of Default and Remedies The indenture provides that each of the following constitutes an Event of Default with respect to the new notes: (a) default for 30 days in the payment when due of interest or liquidated damages on the new notes issued thereunder; (b) default in payment when due of the principal of or premium, if any, on the new notes issued thereunder, at maturity or otherwise; (c) failure by the Company to comply with the provisions described under the captions "Repurchase at the Option of Holders--Change of Control," "Repurchase at the Option of Holders--Asset Sales" or "Certain Covenants-- Merger, Consolidation or Sale of Assets"; (d) failure by the Company for 60 days after notice by the Trustee or holders of at least 25% in principal amount of the then outstanding new notes issued thereunder to comply with any of its other agreements in the indenture or the new notes issued thereunder; (e) any 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 Significant Subsidiaries (or any Indebtedness for money borrowed Guaranteed by the Company or any of its Significant Subsidiaries if the Company or a Significant Subsidiary does not perform its payment obligations under such Guarantee within any grace period provided for in the documentation governing such Guarantee) and, whether such Indebtedness or Guarantee exists on the date of the indenture or is thereafter created, which default (a) constitutes a Payment Default or (b) results in the acceleration of such 60 Indebtedness prior to its Stated Maturity, and in each case, 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 that has been so accelerated, aggregates $50 million or more; (f) failure by the Company or any of its Significant Subsidiaries to pay a final judgment or final judgments aggregating in excess of $50 million, which judgment or judgments are not paid, discharged or stayed for a period of 60 days; (g) certain events of bankruptcy or insolvency with respect to the Company or any of its Significant Subsidiaries; (h) except as permitted by the indenture, any Subsidiary Guarantee issued thereunder shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Subsidiary Guarantor, or any person acting on behalf of any Subsidiary Guarantor, shall deny or disaffirm its obligations under the Subsidiary Guarantees issued thereunder; and (i) any of the Security Documents ceases to be in full force and effect, or any of the Security Documents ceases to give the holders of the new notes any of the Liens purported to be created thereby, or any of the Security Documents is declared null and void or the Company or any Restricted Subsidiary denies in writing that it has any further liability under any Security Document or gives written notice to such effect (in each case other than in accordance with the terms of the indenture or the terms of the Existing Credit Facility or the Security Documents (including the cessation of effectiveness of any Security Document in connection with the release of all collateral covered thereby in accordance with the terms of the indenture, the Existing Credit Facility, the Existing Senior Secured Note Indentures and such Security Document) or unless waived by the requisite lenders under the Existing Credit Facility if, after that waiver, the Company is in compliance with the covenant described under "Security"); provided that if a failure of the sort described in this clause (ix) is susceptible of cure, no Event of Default shall arise under this clause (ix) with respect thereto until 30 days after notice of such failure shall have been given to the Company by the Trustee or the holders of at least 25% in principal amount of the then outstanding new notes issued under the indenture. If an Event of Default (other than an Event of Default specified in clause (vii) above that occurs with respect to the Company or any Subsidiary Guarantor) occurs and is continuing under the indenture, the Trustee or the holders of at least 25% in aggregate principal amount of the new notes then outstanding, by written notice to the Company (and to the Trustee if such notice is given by the holders (the Acceleration Notice)), may, and the Trustee at the request of such holders shall, declare the principal of and premium, if any, and accrued interest and liquidated damages, if any, on such new notes to be immediately due and payable. Upon a declaration of acceleration, such principal, premium, if any, and accrued interest and liquidated damages, if any, shall be immediately due and payable. If an Event of Default specified in clause (vii) above occurs with respect to the Company or any Subsidiary Guarantor, the principal of and premium, if any, and accrued interest and liquidated damages, if any, on the new notes then outstanding shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any holder. The holders of at least a majority in principal amount of the outstanding new notes, by written notice to the Company and to the Trustee, may waive all past defaults and rescind and annul a declaration of acceleration and its consequences under the new notes if (i) all existing Events of Default, other than the nonpayment of the principal of and premium, if any, and interest and liquidated damages, if any, on such new notes that have become due solely by such declaration of acceleration, have been cured or waived and (ii) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction. For information as to the waiver of defaults, see "Modification and Waiver." The holders of at least a majority in aggregate principal amount of the outstanding new notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or the indenture, that may involve the Trustee in personal liability, or that the Trustee 61 determines in good faith may be unduly prejudicial to the rights of holders of the new notes not joining in the giving of such direction and may take any other action it deems proper that is not inconsistent with any such direction received from holders of the new notes. A holder may not pursue any remedy with respect to the indenture or the new notes unless: (i) the holder gives the Trustee written notice of a continuing Event of Default; (ii) the holders of at least 25% in aggregate principal amount of outstanding new notes make a written request to the Trustee to pursue the remedy; (iii) such holder or holders offer the Trustee indemnity satisfactory to the Trustee against any costs, liability or expense; (iv) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity; and (v) during such 60-day period, the holders of at least a majority in aggregate principal amount of the outstanding new notes do not give the Trustee a direction that is inconsistent with the request. However, such limitations do not apply to the right of any holder of a note to receive payment of the principal of or premium, if any, interest or liquidated damages, if any, on such note or to bring suit for the enforcement of any such payment, on or after the due date expressed in such new notes, which right shall not be impaired or affected without the consent of the holder. The indenture requires certain officers of the Company to certify, on or before a date not more than 120 days after the end of each fiscal year, that they have conducted or supervised a review of the activities of the Company and its Restricted Subsidiaries and the Company's and its Restricted Subsidiaries' performance under the indenture and that, to the best of such officers' knowledge, based upon such review, the Company has fulfilled all obligations thereunder or, if there has been a default in the fulfillment of any such obligation, specifying each such default and the nature and status thereof. The Company will also be obligated to notify the Trustee promptly of any default or defaults in the performance of any covenants or agreements under the indenture. Modification and Waiver Modifications and amendments of the indenture may be made by the Company, the Subsidiary Guarantors and the Trustee with the consent of the holders of not less than a majority in aggregate principal amount of the outstanding new notes; provided that no such modification or amendment may, without the consent of each holder affected thereby, (i) change the Stated Maturity of the principal of, or any installment of interest on, any new note, (ii) reduce the principal amount of or premium, if any, or interest or liquidated damages, if any, on any new note, (iii) reduce any amount payable on redemption of the new notes or upon the occurrence of an Event of Default or reduce the Change of Control Payment or the amount to be paid in connection with an Asset Sale Offer, (iv) change the place or currency of payment of principal of or premium, if any, or interest or liquidated damages, if any, on any new note, (v) impair the right to institute suit for the enforcement of any payment on or after the Stated Maturity (or, in the case of a redemption, on or after the Redemption Date) of any new note, (vi) reduce the above-stated percentage of outstanding new notes the consent of whose holders is necessary to modify or amend the indenture, (vii) waive a default in the payment of principal of or premium, if any, or interest or liquidated damages, if any, on the new notes (except as set forth in the penultimate sentence of the second paragraph under the caption "Events of Default and Remedies"), (viii) reduce the percentage or aggregate principal amount of outstanding new notes the consent of whose holders is necessary for waiver of compliance with certain provisions of the indenture or for waiver of certain defaults, (ix) modify or change any provision of the indenture affecting the ranking of the new notes or the Subsidiary Guarantees in a manner adverse to the holders of the new notes, (x) release any Subsidiary Guarantor from any of its obligations under its Subsidiary Guarantee or the indenture other than in accordance with the provisions of the indenture, or amend or modify any provision relating to such release or (xi) directly or indirectly release the Liens created by the Security Documents on all or substantially all the Collateral (other than in accordance with the terms of the Existing Credit Facility or the Security Documents or with the consent of the requisite lenders under the Existing Credit Facility if, after such consent, the Company is in compliance with the covenant described under "Security"). Neither the Company nor any of its Subsidiaries or Affiliates will, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any holder of any new notes for or as 62 an inducement to any consent, waiver or amendment of any of the terms or provisions of the indenture or the new notes unless such consideration is offered to be paid or agreed to be paid to all holders of such new notes that consent, waive or agree to amend such term or provision in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. Defeasance Defeasance and Discharge The indenture provides that the Company will be deemed to have paid and will be discharged from any and all obligations in respect of the new notes (and any Subsidiary Guarantor will be discharged from any and all obligations in respect of its Subsidiary Guarantee) on the 123rd day after the deposit referred to below, and the provisions of the indenture will no longer be in effect with respect to such new notes and such Subsidiary Guarantees (except for, among other matters, certain obligations to register the transfer or exchange of such new notes, to replace stolen, lost or mutilated new notes, to maintain paying agencies and to hold monies for payment in trust) if, among other things, (A) the Company has deposited with the Trustee, in trust, money and/or U.S. Government obligations that through the payment of interest and principal in respect thereof in accordance with their terms will provide money in an amount sufficient to pay the principal of and premium, if any, and accrued interest and liquidated damages, if any, on such new notes on the Stated Maturity of such payments in accordance with the terms of the indenture and such new notes to redemption or maturity, as the case may be, (B) the Company has delivered to the Trustee (i) either (x) an opinion of counsel to the effect that holders will not recognize income, gain or loss for federal income tax purposes as a result of the Company's exercise of its option under this "Defeasance" provision and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit, defeasance and discharge had not occurred, which opinion of counsel must be based upon (and accompanied by a copy of) a ruling of the Internal Revenue Service to the same effect unless there has been a change in applicable federal income tax law after the Issue Date such that a ruling is no longer required or (y) a ruling directed to the Trustee or the Company received from the Internal Revenue Service to the same effect as the aforementioned opinion of counsel and (ii) an opinion of counsel to the effect that the creation of the defeasance trust does not violate the Investment Company Act of 1940 and after the passage of 123 days following the deposit, the trust fund will not be subject to the effect of Section 547 of the United States Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law, or any comparable provision or applicable law, (C) immediately after giving effect to such deposit on a pro forma basis, no Event of Default, or event that after the giving of notice or lapse of time or both would become an Event of Default, shall have occurred and be continuing on the date of such deposit or during the period ending on the 123rd day after the date of such deposit, and such deposit shall not result in a breach or violation of, or constitute a default under, any other agreement or instrument to which the Company is a party or by which the Company is bound and (D) if at such time such new notes are listed on a national securities exchange, the Company has delivered to the Trustee an opinion of counsel to the effect that such new notes will not be delisted as a result of such deposit, defeasance and discharge. Defeasance of Certain Covenants and Certain Events of Default The indenture further provides that the provisions of the indenture will no longer be in effect with respect to the provision described under "Security," clause (iv) under "Certain Covenants--Merger, Consolidation and Sale of Assets" and all the covenants described under "Certain Covenants," and clauses (iii) and (iv) under "Events of Default" with respect to such covenants and clause (iv) under "Certain Covenants--Merger, Consolidation and Sale of Assets," and clauses (v), (vi) and (ix) under "Events of Default" shall be deemed not to be Events of Default, upon, among other things, the deposit with the Trustee, in trust, of money and/or U.S. Government obligations that through the payment of interest and principal in respect thereof in accordance with their terms will provide money in an amount sufficient to pay the principal of and premium, if any, and accrued interest and liquidated damages, if any, on such new notes on the Stated Maturity of such payments in accordance with the terms of the indenture and such new notes, the satisfaction of the provisions described in clauses (B)(ii), (C) and (D) of the preceding paragraph and the delivery by the Company to the Trustee of an 63 opinion of counsel to the effect that, among other things, the holders will not recognize income, gain or loss for federal income tax purposes as a result of such deposit and defeasance of certain covenants and Events of Default and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred. Defeasance and Certain Other Events of Default In the event the Company exercises its option to omit compliance with certain covenants and provisions of the indenture with respect to the new notes issued thereunder as described in the immediately preceding paragraph and such new notes are declared due and payable because of the occurrence of an Event of Default that remains applicable, the amount of money and/or U.S. Government obligations on deposit with the Trustee will be sufficient to pay amounts due on such new notes at the time of their Stated Maturity but may not be sufficient to pay amounts due on such new notes at the time of the acceleration resulting from such Event of Default. However, the Company will remain liable for such payments. No Personal Liability of Directors, Officers, Employees and Stockholders No director, officer, employee, incorporator, stockholder or other holder of Equity Interests of the Company or the Subsidiary Guarantors, as such, shall have any liability for any obligations of the Company or the Subsidiary Guarantors under the new notes, the Subsidiary Guarantees, the indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder of new notes by accepting a note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the new notes. Such waiver may not be effective to waive liabilities under the federal securities laws, and it is the view of the Commission that such a waiver is against public policy. Transfer and Exchange A holder may transfer or exchange new notes in accordance with the indenture. The Registrar and the Trustee may require a holder, among other things, to furnish appropriate endorsements and transfer documents, and the Company may require a holder to pay any taxes and fees required by law or permitted by the indenture. The registered holder of a new note will be treated as the owner of it for all purposes. Concerning the Trustee The indenture contains certain limitations on the rights of the Trustee, should it become a creditor of Lyondell, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the Commission for permission to continue or resign. The holders of a majority in principal amount of the then outstanding new notes issued under the indenture will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. The indenture provides that in case an Event of Default shall occur (which shall not be cured), the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the Trustee will not be under any obligation to exercise any rights or powers under the indenture at the request of any holder of new notes, unless such holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. The Bank of New York will act as Trustee for the new notes and is also the trustee for the Existing Senior Secured Notes and the Senior Subordinated Notes, the transfer agent for the Company's stock and a lender under its credit facility. 64 Book-Entry, Delivery and Form The new notes will initially be represented by one or more permanent global notes in definitive, fully registered book-entry form (the "Global Notes") and registered in the name of Cede & Co., as nominee of DTC. The Global Notes will be deposited on behalf of the acquirors of the new notes with a custodian for DTC for credit to the respective accounts of acquirors or such other accounts as they direct DTC. See "The Exchange Offer--Procedures for Tendering--Book- Entry Transfer." The Global Notes We expect that under procedures established by DTC: . upon deposit of the Global Notes with DTC or its custodian, DTC will credit on its internal system a portion of the Global Notes that shall be composed of the corresponding respective amounts of the Global Notes to the respective accounts of persons who have accounts with the depository, and . ownership of the notes will be shown on, and the transfer or ownership will be effected only through records maintained by DTC or its nominee, with respect to interests and records of participants and with respect to interests of persons other than participants. So long as DTC or its nominee is the registered owner of the Global Notes, DTC or its nominee, as the case may be, will be considered the sole owner or holder of the new notes represented by the Global Notes for all purposes under the indenture and under the new notes represented thereby. Except as provided below, owners of beneficial interest in Global Notes will not: . be entitled to have new notes represented by Global Notes registered in their names, . receive or be entitled to receive physical delivery of certificated new notes or . be considered the owners or holders of the Global Notes under the indenture for any purpose, including with respect to the giving of any direction, instruction or approval to the trustee. Payments of the principal of, and interest on, a Global Note will be made to DTC or its nominee, as the case may be, as the registered owner thereof. None of the Company, any Subsidiary Guarantor, the Trustee or any paying agent under the indenture will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in a Global Note or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. We expect that DTC or its nominee, upon receipt of any payment of principal or interest in respect of a Global Note, will credit participants' accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of such Global Note as shown on the records of DTC or its nominee. We also expect that payments by participants to owners of beneficial interests in a Global Note held through such participants will be governed by standing instructions and customary practices, as is now the case with securities held for accounts of customers registered in the names of nominees for such customers. Such payments will be the responsibility of such participants. Transfers between participants in DTC will be effected in the ordinary way in accordance with DTC rules and will be settled in same-day funds. Transfers between participants in Euroclear and Clearstream will be effected in the ordinary way in accordance with their respective rules and operating procedures. We expect that DTC will take any action permitted to be taken by a holder of new notes, including the presentation of new notes for exchange as described below, only at the direction of one or more participants to whose account the DTC interests in a Global Note is credited and only in respect of such portion of the aggregate principal amount of notes as to which such participant or participants has or have given such direction. However, if there is an event of default under the indenture or the new notes, DTC will exchange the applicable Global Notes for Certificated Notes, which it will distribute to its participants. 65 Although DTC, Euroclear and Clearstream are expected to follow the foregoing procedures in order to facilitate transfers of interests in a Global Note among participants of DTC, Euroclear and Clearstream, they are under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. Neither Lyondell nor the trustee will have any responsibility for the performance by DTC, Euroclear or Clearstream or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations. Description of DTC The description of the operations and procedures of DTC set forth below is provided solely as a matter of convenience. These operations and procedures are solely within the control of DTC and are subject to change from time to time. We do not take any responsibility for these operations or procedures, and investors are urged to contact DTC or its participants directly to discuss these matters. DTC has advised us that it is: . a limited purpose trust company organized under the laws of the State of New York; . a "banking organization" within the meaning of New York Banking Law; . a member of the Federal Reserve System; . a "clearing corporation" within the meaning of the Uniform Commercial Code; and . a "Clearing Agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for its participants and facilitate the clearance and settlement of securities transactions between participants through electronic book-entry changes in accounts of its participants, thereby eliminating the need for physical movement of certificates. DTC is owned by a number of its participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the National Association of Securities Dealers, Inc. DTC's direct participants include: . securities brokers and dealers; . banks and trust companies; and . clearing corporations and other organizations. Indirect access to the DTC system is available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly. Investors who are not participants may beneficially own securities held by or on behalf of DTC only through participants or indirect participants. The rules applicable to DTC and its participants are on file with the SEC. Certificated Notes Interest in the Global Notes may be exchanged for certificated securities if: . we notify the Trustee in writing that DTC is no longer willing or able to at as a depositary or DTC ceases to be registered as a clearing agency under the Securities Exchange Act and a successor depositary is not appointed within 90 days of notice or cessation; . we, at our option, notify the Trustee in writing that we elect to cause the issuance of new notes in certificated form under the indenture; or . other events occur as provided in the indenture. 66 Upon the occurrence of any of the events described in the preceding sentence, we will cause the appropriate certificated securities to be delivered. None of the Company, any Subsidiary Guarantor or the Trustee shall be liable for any delay by DTC or any participant or indirect participant in identifying the beneficial owners of the related new notes, and each person may conclusively rely on, and shall be protected in relying on, instructions from DTC for all purposes, including with respect to the registration and delivery, and the respective principal amounts, of the new notes to be issued. Same Day Settlement and Payment The indenture requires that payments in respect of the new notes represented by the Global Notes be made by wire transfer of immediately available funds to the accounts specified by holders of the Global Notes. With respect to new notes in certificated form, we will make all payments at the agency or office maintained by the for that purpose or, at our option, by mailing a check to each holder's registered address. Because of time zone differences, the securities account of a Euroclear or Clearstream participant purchasing an interest in a Global Note from a participant in DTC will be credited, and any such crediting will be reported to the relevant Euroclear or Clearstream participant, during the securities settlement processing day (which must be a business day for Euroclear and Clearstream) immediately following the settlement date of DTC. DTC has advised us that cash received in Euroclear or Clearstream as a result of sales of interests in a global note by or through a Euroclear or Clearstream participant to a participant in DTC will be received with value on the settlement date of DTC but will be available in the relevant Euroclear or Clearstream cash account only as of the business day for Euroclear or Clearstream following DTC's settlement date. Registration Rights; Liquidated Damages The Company, the Subsidiary Guarantors and the initial purchasers entered into a registration rights agreement on the Issue Date. In the registration rights agreement, the Company and the Subsidiary Guarantors agreed to file an exchange offer registration statement with the SEC within 90 days of the closing of the offering of the outstanding notes and use their respective best efforts to have it declared effective at the earliest possible time, but in no event later than 210 days following the Issue Date. The Company and the Subsidiary Guarantors also agreed to use their best efforts to cause the exchange offer registration statement to be effective continuously, to keep the exchange offer for the outstanding notes open for a period of not less than 20 business days and to cause the exchange offer to be consummated no later than the 30th business day after the exchange offer registration statement is declared effective by the SEC. See "The Exchange Offer" for further information about the exchange offer. The registration rights agreement also provides that: . if the Company and the Subsidiary Guarantors fail to file any registration statement on or prior to the applicable deadline; . if such registration statement is not declared effective by the SEC on or before the applicable deadline; . if the exchange offer is not consummated on or before the 30th business day after the exchange offer registration statement is declared effective; and . if any registration statement is declared effective but thereafter ceases to be effective or useable in connection with resales of the Transfer Restricted Securities during the periods specified in the registration rights agreement, for such time of non-effectiveness or non-usability (each of the foregoing four bullet points, a "Registration Default"), the Company and the Subsidiary Guarantors agree to pay each holder of Transfer Restricted Securities affected thereby liquidated damages in an amount equal to $.05 per week per $1,000 in principal amount of Transfer 67 Restricted Securities held by such holder for each week or portion thereof that the Registration Default continues for the first 90-day period immediately following the occurrence of such Registration Default. The amount of the liquidated damages shall increase by an additional $.05 per week per $1,000 in principal amount of Transfer Restricted Securities with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of liquidated damages of $.25 per week per $1,000 in principal amount of Transfer Restricted Securities. Following the cure of all Registration Defaults, the accrual of liquidated damages will cease. The Company shall not be required to pay liquidated damages for more than one Registration Default at any given time. All accrued liquidated damages shall be paid by the Company to holders entitled thereto in the same manner and at the same time as interest on the notes is paid. The outstanding notes and any registered new notes issued in exchange for the outstanding notes will constitute a single series of debt securities under the indenture. If an exchange offer is consummated, holders of outstanding notes who do not exchange their notes will vote together with the holders of the registered new notes for all relevant purposes under the indenture. Certain Definitions Set forth below are certain defined terms used in the indenture. Reference is made to the indenture for a full disclosure of all such terms, as well as any other capitalized terms used herein for which no definition is provided. "Accounts Receivable Subsidiary" means any Wholly Owned Subsidiary of the Company (i) which is formed solely for the purpose of, and which engages in no activities other than activities in connection with, financing accounts receivable of the Company and/or its Restricted Subsidiaries, (ii) which is designated by the Company as an Accounts Receivables Subsidiary pursuant to an officers' certificate delivered to the Trustee, (iii) no portion of Indebtedness or any other obligation (contingent or otherwise) of which is at any time recourse to or obligates the Company or any Restricted Subsidiary in any way, or subjects any property or asset of the Company or any Restricted Subsidiary, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to (I) representations, warranties and covenants (or any indemnity with respect to such representations, warranties and covenants) entered into in the ordinary course of business in connection with the sale (including a sale in exchange for a promissory note of or Equity Interest in such Accounts Receivable Subsidiary) of accounts receivable to such Accounts Receivable Subsidiary or (II) any guarantee of any such accounts receivable financing by the Company or any Restricted Subsidiary that is permitted to be incurred pursuant to the covenant described under the caption entitled "Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock," (iv) with which neither the Company nor any Restricted Subsidiary of the Company has any contract, agreement, arrangement or understanding other than contracts, agreements, arrangements and understandings entered into in the ordinary course of business in connection with the sale (including a sale in exchange for a promissory note of or Equity Interest in such Accounts Receivable Subsidiary) of accounts receivable in accordance with the covenant described under the caption "Certain Covenants--Accounts Receivable Facilities" and fees payable in the ordinary course of business in connection with servicing accounts receivable and (v) with respect to which neither the Company nor any Restricted Subsidiary of the Company has any obligation (a) to subscribe for additional shares of Capital Stock or other Equity Interests therein or make any additional capital contribution or similar payment or transfer thereto other than in connection with the sale (including a sale in exchange for a promissory note of or Equity Interest in such Accounts Receivable Subsidiary) of accounts receivable to such Accounts Receivable Subsidiary in accordance with the covenant described under "Certain Covenants-- Accounts Receivable Facilities" or (b) to maintain or preserve the solvency, any balance sheet term, financial condition, level of income or results of operations thereof. "Acquired Debt" means, with respect to any specified person, (i) Indebtedness of any other person existing at the time such other person is merged with or into or became a Subsidiary of such specified person, including, without limitation, Indebtedness incurred in connection with, or in contemplation of, such other 68 person merging with or into or becoming a Subsidiary of such specified person and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified person. "Acquired Disqualified Stock" means, with respect to any specified person, Disqualified Stock of any other person existing at the time such other person is merged with or into or became a Subsidiary of such specified person, including, without limitation, Disqualified Stock incurred in connection with, or in contemplation of, such other person merging with or into or becoming a Subsidiary of such specified person. "Acquired Preferred Stock" means, with respect to any specified person, Preferred Stock of any other person existing at the time such other person is merged with or into or became a Subsidiary of such specified person, including, without limitation, Preferred Stock incurred in connection with, or in contemplation of, such other person merging with or into or becoming a Subsidiary of such specified person. "Acquiring Person" means a person other than a Subject Assets Transferee which acquires (i) all or a portion of the Subject Assets or (ii) an interest in a Subject Assets Transferee in connection with a Major Asset Sale. "Adjusted Consolidated Cash Flow" means, for any period, the sum of Consolidated Cash Flow of the Company for such period plus the aggregate Distributable Joint Venture Cash Flow of the Company and its Restricted Subsidiaries, determined on a consolidated basis, for such period. "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 purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such person, whether through the ownership of voting securities, by agreement or otherwise; provided that beneficial ownership of 10% or more of the voting securities of a person shall be deemed to be control; provided further that the foregoing proviso shall not apply for purposes of clauses (g) and (i) of the covenant described under "Certain Covenants--Restricted Payments" or clause (d) of the definition of "Unrestricted Subsidiaries." "Asset Sale" means (i) the sale, lease, conveyance or other disposition (other than the creation of a Lien) of any assets other than the disposition of inventory, equipment or Cash Equivalents in the ordinary course of business consistent with past practices (provided that the sale, conveyance or other disposition of all or substantially all the assets of the Company and its Restricted Subsidiaries taken as a whole will be governed by the provisions of the indenture described above under the caption "Repurchase at the Option of Holders--Change of Control" and/or the provisions described above under the caption "Certain Covenants--Merger, Consolidation or Sale of Assets" and not by the provisions of the Asset Sale covenant), (ii) the sale by the Company or any of its Restricted Subsidiaries of Equity Interests of any of the Company's Restricted Subsidiaries, Unrestricted Subsidiaries or Joint Ventures and (iii) the issuance by any of the Company's Restricted Subsidiaries of Equity Interests of such Restricted Subsidiary, in the case of clause (i), (ii) or (iii), whether in a single transaction or a series of related transactions (a) that have a fair market value in excess of $25 million or (b) for Net Proceeds in excess of $25 million. Notwithstanding the foregoing: (a) a transfer of assets by the Company to a Restricted Subsidiary or by a Restricted Subsidiary to the Company or to another Restricted Subsidiary; (b) an issuance of Equity Interests by a Restricted Subsidiary to the Company or to another Restricted Subsidiary; (c) a Restricted Payment that is permitted by the covenant described under the caption "Certain Covenants--Restricted Payments"; (d) an issuance of Preferred Stock by a Finance Subsidiary that is permitted by the covenant described under the caption "Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock"; (e) sales (including a sale in exchange for a promissory note of or Equity Interest in such Accounts Receivable Subsidiary) of accounts receivable to an Accounts Receivable Subsidiary, in connection with any Receivables Facility; and (f) Sale and Leaseback Transactions will not be deemed to be an Asset Sale. 69 "Asset Sale Lien" means a Lien on the Subject Assets (including as a Lien for this purpose contractual rights with respect to the operation of the Subject Assets) arising in connection with a Major Asset Sale in favor of the Acquiring person (or an Affiliate thereof) which Lien does not secure any Indebtedness. "Attributable Debt" in respect of a Sale and Leaseback Transaction that is treated as a capital lease in accordance with GAAP 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). "Board of Directors" means the board of directors of the Company or any committee thereof duly authorized to act on behalf of such board of directors. "Capital Lease Obligation" means, 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 (i) in the case of a corporation, corporate stock, (ii) in the case of an association or a business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership, partnership interests (whether general or limited) and (iv) 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 (a) United States dollars, (b) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than one year from the date of acquisition, (c) demand deposits, time deposits and certificates of deposit with maturities of one year or less from the date of acquisition, bankers' acceptances with maturities not exceeding one year from the date of acquisition and overnight bank deposits, in each case with any bank or trust company organized or licensed under the laws of the United States or any State thereof having capital, surplus and undivided profits in excess of $500 million, (d) repurchase obligations with a term of not more than seven days for underlying securities of the type described in clauses (b) and (c) above entered into with any financial institution meeting the qualifications specified in clause (c) above, (e) commercial paper rated at least P-1 or A-1 by Moody's or S&P, respectively, and in each case maturing within six months after the date of acquisition, (f) any fund investing exclusively in investments of the type described in clauses (a) through (e) above and (g) in the case of a Foreign Subsidiary, substantially similar investments denominated in foreign currencies (including similarly capitalized foreign banks). "Consolidated Cash Flow" means, with respect to any person for any period, the Consolidated Net Income of such person for such period (less the Net Income of any Joint Venture to the extent included therein pursuant to clause (i) of the definition of "Consolidated Net Income"), plus, in each case, without duplication: (i) provision for taxes based on income or profits of such person and its Restricted Subsidiaries for such period (including any provision for taxes on the Net Income of any Joint Venture that is a pass-through entity for federal income tax purposes, to the extent such taxes are paid or payable by such person or any of its Restricted Subsidiaries), to the extent that such provision for taxes was included in computing such Consolidated Net Income, (ii) the Fixed Charges of such person and its Restricted Subsidiaries for such period, to the extent that such Fixed Charges were deducted in computing such Consolidated Net Income, (iii) depreciation and amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) of such person and its Restricted Subsidiaries for such period to the extent that such depreciation and amortization were deducted in computing such Consolidated Net Income and 70 (iv) any non-cash charges reducing Consolidated Net Income for such period (excluding any such non-cash charge to the extent that it represents an accrual of or a reserve for cash expenses in any future period or an amortization of a prepaid cash expense that was paid in a prior period); minus (v) any noncash items increasing Consolidated Net Income for such period, in each case, on a consolidated basis and determined in accordance with GAAP. Notwithstanding the foregoing, the provision for taxes on the income or profits of, and the depreciation and amortization of, a Restricted Subsidiary of the referent person shall be added to Consolidated Net Income to compute Consolidated Cash Flow only to the extent (and in the same proportion) that the Net Income of such Restricted Subsidiary was included in calculating the Consolidated Net Income of such person. "Consolidated Net Income" means, with respect to any person for any period, the aggregate of the Net Income of such person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that: (i) the Net Income of any person that is not a Restricted Subsidiary shall be included only to the extent of the lesser of (x) the amount of dividends or distributions paid in cash (but not by means of a loan) to the referent person or a Restricted Subsidiary thereof or (y) the referent person's (or a Restricted Subsidiary of the referent person's) proportionate share of the Net Income of such other person, (ii) the Net Income (but not loss) 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 Subsidiary or its stockholders, (iii) the Net Income of any person acquired in a pooling of interests transaction for any period prior to the date of such acquisition shall be excluded and (iv) the cumulative effect of a change in accounting principles shall be excluded. "Consolidated Net Worth" means, with respect to any person as of any date, the sum of (i) the consolidated equity of the common stockholders of such person and its Restricted Subsidiaries as of such date plus (ii) the respective amounts reported on such person's balance sheet as of such date with respect to any series of Preferred Stock (other than Disqualified Stock), less all write- ups (other than write-ups resulting from foreign currency translations and write-ups of tangible assets of a going concern business made in accordance with GAAP as a result of the acquisition of such business) subsequent to the date of the indenture in the book value of any asset owned by such person or a Restricted Subsidiary of such person, and excluding the cumulative effect of a change in accounting principles, all as determined in accordance with GAAP. "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company who (i) was a member of such Board of Directors on the date of the indenture or (ii) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election or any successor Continuing Directors appointed by such Continuing Directors (or their successors). "Default" means any event that is or with the passage of time or the giving of notice 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 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 on which the notes mature; provided that any Capital 71 Stock that would not constitute Disqualified Stock but for provisions thereof giving holders thereof the right to require such person to repurchase or redeem such Capital Stock upon the occurrence of an "asset sale" or a "change of control" occurring prior to the date on which the notes mature shall not constitute Disqualified Stock if the "asset sale" or "change of control" provisions applicable to such Capital Stock are no more favorable to the holders of such Capital Stock than the "asset sale" provision of the Senior Subordinated Indenture or the provision contained in the "Repurchase at the Option of Holders--Change of Control" covenant described above and such Capital Stock specifically provides that such person will not repurchase or redeem any such stock pursuant to such provision prior to the Company's repurchase of such notes as are required pursuant to such covenants. "Distributable Joint Venture Cash Flow" means, with respect to any person for any period, in the case of each Joint Venture that is not a Restricted Subsidiary of the referent person, the sum of: (I) the lesser of: (x) the amount of dividends or distributions paid in cash (but not by means of a loan) by such Joint Venture to the referent person or a Restricted Subsidiary thereof; or (y) the referent person's (or a Restricted Subsidiary of the referent person's) proportionate share of: (i) the Net Income of such Joint Venture for such period, plus (ii) to the extent deducted therefrom, depreciation and amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) of such Joint Venture for such period, plus (iii) any non-cash charges reducing Net Income of such Joint Venture for such period (excluding any such non-cash charge to the extent that it represents an accrual of or a reserve for cash expenses in any future period or an amortization of a prepaid cash expense that was paid in a prior period), less (iv) any non-cash items increasing Net Income of such Joint Venture for such period, minus (II) the aggregate amount of all Investments made by the Company or any of its Restricted Subsidiaries in such Joint Venture during such period pursuant to clause (h) of the covenant described under "Certain Covenants-- Restricted Payments," in each case determined on a consolidated basis and in accordance with GAAP. "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). "Equistar Assumed Debt" means (i) the 9.125% Notes Due 2002 issued by the Company pursuant to an Indenture dated as of March 10, 1992 between the Company and First Trust National Association, as Trustee, as supplemented by the First Supplemental Indenture dated as of March 10, 1992 and the Second Supplemental Indenture dated as of December 1, 1997; (ii) the 6.5% Notes Due 2006 and the 7.55% Notes Due 2026, each issued by the Company pursuant to an Indenture dated as of January 29, 1996 between the Company and Texas Commerce Bank National Association, as Trustee, as supplemented by the First Supplemental Indenture dated as of February 15, 1996 and the Second Supplemental Indenture dated as of December 1, 1997; and (iii) Indebtedness under the medium term notes issued by the Company, maturing at various dates from 2002 to 2005; in each case outstanding as of the Issue Date and with respect to which either (x) the Company is a guarantor or (y) as between the Company and Equistar, Equistar is the primary obligor and the Company is an obligor; in each case, as may be amended from time to time, provided that any such amendment does not increase the principal amount thereof or interest rate applicable thereto or shorten the Weighted Average Life to Maturity or Stated Maturity thereof or add any Restricted Subsidiary as an obligor with respect thereto. 72 "Existing ARCO Chemical Debt" means the 9.375% Debentures Due 2005, the 10.25% Debentures Due 2010 and the 9.8% Debentures Due 2020, all issued pursuant to the Indenture dated June 15, 1988 between the Company (as successor to ARCO Chemical Company) and The Bank of New York, as Trustee. "Existing Credit Facility" means that certain Credit Agreement dated as of July 23, 1998 and as amended through the date hereof by and among the Company and JP Morgan Chase Bank, as administrative agent, DLJ Capital Funding, Inc., as syndication agent, and the other lenders that are parties thereto, including any related notes, instruments and agreements executed in connection therewith, as amended, restated, modified, extended, renewed, refunded, replaced or refinanced, in whole or in part, from time to time, after the Issue Date, whether or not with the same lenders or agents. "Existing Indebtedness" means Indebtedness of the Company and its Restricted Subsidiaries in existence, and considered Indebtedness of the Company or any of its Restricted Subsidiaries, on the Issue Date, until such amounts are repaid, including all reimbursement obligations with respect to letters of credit outstanding as of the date of the indenture. "Existing Notes Issue Date" means May 17, 1999. "Existing Senior Secured Note Indentures" means the indentures among the Company, the Subsidiary Guarantors party thereto and The Bank of New York, as trustee, pursuant to which the Company issued the Existing Senior Secured Notes. "Existing Senior Secured Notes" means the Company's 9.625% Senior Secured Notes, Series A, Due 2007 and the 9.875% Senior Secured Notes, Series B, Due 2007. "Finance Subsidiary" means a Restricted Subsidiary of the Company, all the Capital Stock of which (other than Preferred Stock) is owned by the Company that does not engage in any activity other than: (i) holding of Indebtedness of the Company; (ii) the issuance of Capital Stock; and (iii) any activity necessary, incidental or related to the foregoing. "Fixed Charge Coverage Ratio" means with respect to any person for any period, the ratio of the Adjusted Consolidated Cash Flow of such person for such period to the Fixed Charges of such person for such period. In the event that the Company or any of its Restricted Subsidiaries incurs, assumes or redeems any Indebtedness (other than revolving credit borrowings) or issues or redeems Preferred Stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption or redemption of Indebtedness, or such issuance or redemption of Preferred Stock, as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of making the computation referred to above, (i) acquisitions that have been made by the Company or any of its Restricted Subsidiaries, including through mergers or consolidations 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 shall be deemed to have occurred on the first day of the four-quarter reference period, (ii) the Adjusted Consolidated Cash Flow and Fixed Charges attributable to operations or businesses disposed of prior to the Calculation Date shall be excluded, but, in the case of such Fixed Charges, only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the referent person or any of its Restricted Subsidiaries following the Calculation Date and 73 (iii) if since the beginning of the four-quarter reference period any person was designated as an Unrestricted Subsidiary or redesignated as or otherwise became a Restricted Subsidiary, such event shall be deemed to have occurred on the first day of the four-quarter reference period. "Fixed Charges" means, with respect to any person for any period, the sum, without duplication, of: (i) the consolidated interest expense of such person and its Restricted Subsidiaries for such period, whether paid or accrued (including, without limitation, 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 letters of credit or bankers' acceptance financings and net payments or receipts (if any) pursuant to Hedging Obligations) and (ii) the consolidated interest expense of such person and its Restricted Subsidiaries that was capitalized during such period and (iii) any interest expense on Indebtedness of another person (other than Non-Recourse Debt of a Joint Venture or an Unrestricted Subsidiary secured by a pledge by the Company or any Restricted Subsidiary of Capital Stock which pledge is permitted by clause (k) or (1) of the covenant described under the caption "Certain Covenants--Restricted Payments") that is Guaranteed by such person or one of its Restricted Subsidiaries or secured by a Lien on assets of such person or one of its Restricted Subsidiaries (whether or not such Guarantee or Lien is called upon) and (iv) the product of (a) all dividend payments (other than any payments to the referent person or any of its Restricted Subsidiaries) on any series of Preferred Stock of such person and its Restricted Subsidiaries, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP; provided that (i) interest payments by Equistar on the Equistar Assumed Debt and (ii) interest payments on Indebtedness of a Joint Venture shall, in each case, not be deemed Fixed Charges of the Company as of any date of determination when such Indebtedness is not considered Indebtedness of the Company or any Restricted Subsidiary of the Company. "Foreign Subsidiary" means any Restricted Subsidiary that has 50% or more of its assets located outside the United States or any territory thereof. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, as in effect on the Issue Date. "General Partner" means a Restricted Subsidiary of the Company or any of its Restricted Subsidiaries that has no assets and conducts no operations other than its ownership of a general partnership interest in a Joint Venture. "Guarantee" means any obligation, contingent or otherwise, of any person directly or indirectly guaranteeing any Indebtedness or Disqualified Stock of any other person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or Disqualified Stock of such other person (including those arising by virtue of partnership arrangements (other than, in the case of the Company or a Restricted Subsidiary of the Company, with respect to the obligations of a Joint Venture, solely by virtue of a Restricted Subsidiary of the Company being the General Partner of such Joint Venture if, as of the date of determination, no payment on such Indebtedness or obligation has been made by such General Partner of such Joint Venture and such arrangement would not be classified and accounted for, in accordance 74 with GAAP, as a liability on a consolidated balance sheet of the Company)) or (ii) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness or Disqualified Stock of the payment thereof or to protect such obligee against loss in respect thereof in whole or in part (including by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, to maintain financial statement conditions or otherwise); provided that the term "Guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning. "Hedging Obligations" means, with respect to any person, the obligations of such person under (i) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements, (ii) forward foreign exchange contracts or currency swap agreements, (iii) other agreements or arrangements designed to protect such person against fluctuations in interest rates or currency values and (iv) agreements designed to protect such person against fluctuations in raw material prices. "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 deferred and unpaid of the purchase price of any property or representing net Hedging Obligations, except any such balance that constitutes an accrued expense or a trade payable, if and to the extent any of the foregoing indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability on a balance sheet of such person prepared in accordance with GAAP, as well as all indebtedness of others secured by a Lien on any asset of such person whether or not such indebtedness is assumed by such person (provided that, for purposes of determining the amount of any Indebtedness of the type described in this clause, if recourse with respect to such Indebtedness is limited to such asset, the amount of such Indebtedness shall be limited to the lesser of the fair market value of such asset or the amount of such Indebtedness) and, to the extent not otherwise included, the Guarantee by such person of any indebtedness of the types described above of any other person; provided that Indebtedness shall not include the pledge by the Company or any of its Restricted Subsidiaries of the Capital Stock of a Joint Venture Subsidiary, an Unrestricted Subsidiary or a Joint Venture permitted by clause (k) or (1) of the covenant described above under the caption "Certain Covenants--Restricted Payments" to secure Non-Recourse Debt of such Unrestricted Subsidiary or Joint Venture. The Equistar Assumed Debt shall not constitute Indebtedness of the Company as of any date of determination if the Company has not made any principal or interest payments on such Indebtedness after the Issue Date; provided that, the payment by the Company of any principal or interest thereon shall be deemed to be an incurrence of such Indebtedness on the day of such payment. The amount of any Indebtedness outstanding as of any date shall be (i) the accreted value thereof, in the case of any Indebtedness that does not require current payments of interest and (ii) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. "Investment Grade" means a rating of BBB- or higher by S&P or Baa3 or higher by Moody's or the equivalent of such ratings by S&P or Moody's. In the event that the Company shall select any other Rating Agency pursuant to the provisions of the definition thereof, the equivalent of such ratings by such Rating Agency shall be used. "Investments" means, with respect to any person, all investments by such person in another person (including an Affiliate of such person) in the form of direct or indirect loans, advances or extensions of credit to such other person (including any Guarantee by such person of the Indebtedness or Disqualified Stock of such other person) or capital contributions or purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities of such other person, together with all items that are or would be classified as investments of such investing person on a balance sheet prepared in accordance with GAAP; provided that (x) trade credit and accounts receivable in the ordinary course of business, (y) commissions, loans, advances, 75 fees and compensation paid in the ordinary course of business to officers, directors and employees and (z) reimbursement obligations in respect of letters of credit and tender, bid, performance, government contract, surety and appeal bonds, in each case solely with respect to obligations of the Company or any of its Restricted Subsidiaries shall not be considered Investments. 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 the first paragraph of the covenant described above under the caption "Certain Covenants--Restricted Payments." "Issue Date" means December 4, 2001, the date on which the outstanding notes were originally issued. "Joint Venture" means any joint venture between the Company or any Restricted Subsidiary and any other person, whether or not such joint venture is a Subsidiary of the Company or any Restricted Subsidiary. "Joint Venture Subsidiary" means a Subsidiary of the Company or any of its Subsidiaries that has no assets and conducts no operations other than its ownership of Equity Interests of a Joint Venture. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest (other than, in the case of Receivables Facilities, security interests under the Uniform Commercial Code arising solely by virtue of the application of Article 9 thereof to sales of accounts) 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, and any lease in the nature thereof) or the assignment or conveyance of any right to receive income therefrom. "Lyondell TDI" means Lyondell Chimie France TDI, a French limited partnership and a wholly owned subsidiary of the Company. "Major Asset Sale" means an Asset Sale designated by the Company by prior notice to the Trustee as a Major Asset Sale, so long as in connection therewith (i) the Company receives Net Proceeds in an aggregate amount not less than $1,000,000,000 (which shall be deemed Net Proceeds of such Major Asset Sale for purposes of the covenant described under the caption "Repurchase at the Option of Holders--Asset Sales"), (ii) at the time of such Major Asset Sale and after giving effect thereto, no Default shall exist, (iii) the sum of the gross cash proceeds received by the Company in respect of such Major Asset Sale plus the value of the interest of the Company in the Subject Assets Transferee (if any) after giving effect to such Major Asset Sale is not less than the value (as conclusively determined by the Board of Directors of the Company) of the portion of the Subject Assets transferred by the Company in connection with such Major Asset Sale, and (iv) the Company directly or indirectly is the operator of the Subject Assets in which it or a Subject Assets Transferee retains an interest. For purposes of clause (i) of this definition (1) a transaction that produces substantially the same economic result as a sale of a partial interest in an asset, as might be achieved, for instance, through contractual arrangements allocating future revenues and costs attributable to the asset, shall be deemed an Asset Sale even though there may be no change in title to the asset or in the ownership of the person that has title to the asset and (2) a subsequent related transaction with the same Acquiring person (or an Affiliate thereof) contemplated by the terms of the initial Major Asset Sale with such person shall, for purposes of determining the applicability of and compliance with this definition, be deemed a single cumulative transaction. "Moody's" means Moody's Investors Service, Inc. and its successors. "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, (i) any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with (a) any Asset Sale or any disposition pursuant to a Sale and Leaseback Transaction or 76 (b) the disposition of any securities by such person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such person or any of its Restricted Subsidiaries and (ii) any extraordinary gain or loss, together with any related provision for taxes on such extraordinary gain or loss. "Net Proceeds" means the aggregate cash proceeds (excluding any proceeds deemed to be "cash" pursuant to the covenant described above under "Repurchase at the Option of Holders--Asset Sales") received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non- cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees and sales commissions) and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), amounts required to be paid to holders of minority interests in Restricted Subsidiaries as a result of such Asset Sale, amounts required to be applied to the repayment of Indebtedness (other than Indebtedness under the Existing Credit Facility, the Existing Senior Secured Notes or the Existing ARCO Chemical Debt) secured by a Lien on any asset sold in such Asset Sale and any reserves for adjustment in respect of the sales price of such asset or assets established in accordance with GAAP and any reserve for future liabilities established in accordance with GAAP; provided that the reversal of any such reserve that reduced Net Proceeds when issued shall be deemed a receipt of Net Proceeds in the amount of such proceeds on such day. "Non-Recourse Debt" means Indebtedness as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets (in each case, other than the stock of a Joint Venture or an Unrestricted Subsidiary or of a Joint Venture Subsidiary that has no assets and conducts no operations other than the holding, directly or indirectly, of Equity Interests of such Joint Venture pledged by the Company or any of its Restricted Subsidiaries to secure debt of such Joint Venture or Unrestricted Subsidiary) of the Company or any of its Restricted Subsidiaries. "Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness and in all cases whether direct or indirect, absolute or contingent, now outstanding or hereafter created, assumed or incurred and including, without limitation, interest accruing subsequent to the filing of a petition in bankruptcy or the commencement of any insolvency, reorganization or similar proceedings at the rate provided in the relevant documentation, whether or not an allowed claim, and any obligation to redeem or defease any of the foregoing. "Payment Default" means any failure to pay any scheduled installment of interest or principal on any Indebtedness within the grace period provided for such payment in the documentation governing such Indebtedness. "PBGC Settlement" means the settlement agreement between the Company and the Pension Benefit Guaranty Corporation (or any successor entity) as amended, modified, restated or replaced from time to time. "Permitted Business" means the petrochemical, chemical and petroleum refining businesses and any business reasonably related, incidental, complementary or ancillary thereto. "Permitted Investments" means: (a) any Investment in the Company or in a Restricted Subsidiary of the Company that is engaged in a Permitted Business; (b) any Investment in Cash Equivalents; (c) any Investment by the Company or any Subsidiary of the Company in a person, if as a result of such Investment: (i) such person becomes a Restricted Subsidiary of the Company engaged in a Permitted Business; or 77 (ii) such person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company engaged in a Permitted Business; (d) any non-cash consideration (other than a joint venture interest received in full or partial satisfaction of the 80% requirement in clause (ii) of the first paragraph of the covenant described above under the caption "Repurchase at the Option of Holders--Asset Sales") received as consideration in an Asset Sale that was made pursuant to and in compliance with the covenant described above under the caption "Repurchase at the Option of Holders--Asset Sales"; (e) any acquisition of assets or Equity Interests solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company; (f) Hedging Obligations entered into in the ordinary course of business and otherwise permitted under the indenture; (g) Investments in an Accounts Receivable Subsidiary that, as conclusively determined by the Board of Directors, are necessary or advisable to effect a Receivables Facility; (h) Investments in Unrestricted Subsidiaries and Joint Ventures in an aggregate amount, taken together with all other Investments made in reliance on this clause (h), not to exceed at any time outstanding $25 million (after giving effect to any reductions in the amount of any such Investments as a result of the repayment or other disposition thereof for cash, the amount of such reduction not to exceed the amount of such Investments previously made pursuant to this clause (h)); and (i) any Investment received by the Company or any Restricted Subsidiary as consideration for the settlement of any litigation, arbitration or claim in bankruptcy or in partial or full satisfaction of accounts receivable owned by a financially troubled person to the extent reasonably necessary in order to prevent or limit any loss by the Company or any of its Restricted Subsidiaries in connection with such accounts receivable. "Permitted Liens" means: (i) Liens in favor of the Company or any Subsidiary Guarantor; (ii) Liens securing the notes and the Subsidiary Guarantees; (iii) 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 or becomes a Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such merger, consolidation or acquisition and do not extend to any assets of the Company or its Restricted Subsidiaries other than those of the person merged into or consolidated with the Company or that becomes a Restricted Subsidiary of the Company; (iv) 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 the contemplation of such acquisition; (v) Liens (including the interest of a lessor under a capital lease) on any asset existing at the time of acquisition thereof or incurred within 180 days of the time of acquisition or completion of construction thereof, whichever is later, to secure or provide for the payment of all or any part of the purchase price (or construction price) thereof; (vi) Liens incurred or assumed in connection with the issuance of revenue bonds the interest on which is exempt from federal income taxation pursuant to Section 103(b) of the Internal Revenue Code; (vii) Liens imposed by law, such as laborers' or other employees', carriers', warehousemen's, mechanics', materialmen's and vendors' Liens and Liens imposed by law on pipelines or pipeline facilities; 78 (viii) Liens arising by reason of deposits necessary to qualify the Company or any Restricted Subsidiary to conduct business, maintain self insurance or comply with any law and Liens securing the PBGC Settlement; (ix) Liens to secure the performance of statutory obligations, tender, bid, performance, government contract, surety or appeal bonds or other obligations of a like nature incurred in the ordinary course of business; (x) Liens existing on the Issue Date other than Liens securing Indebtedness under the Existing Credit Facility, the Existing Senior Secured Notes or the Existing ARCO Chemical Debt; (xi) 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, prejudgment Liens that are being contested in good faith by appropriate proceedings and Liens arising out of judgments or awards against the Company or any Restricted Subsidiary with respect to which the Company or such Restricted Subsidiary at the time shall be prosecuting an appeal or proceedings for review and with respect to which it shall have secured a stay of execution pending such appeal or proceedings for review; provided that in each case any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor; (xii) easements, rights-of-way, restrictions, irregularities of title and other similar charges or encumbrances, not interfering in any material respect with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries; (xiii) Liens securing reimbursement obligations with respect to commercial letters of credit obtained in the ordinary course of business which encumber documents and other property or assets relating to such letters of credit and products and proceeds thereof; (xiv) Liens securing assets under construction arising from progress or partial payments by a customer of the Company or its Restricted Subsidiaries relating to such property or assets; (xv) licenses or leases by the Company or any of its Restricted Subsidiaries as licensor or lessor in the ordinary course of business and otherwise permitted by the indenture for patents, copyrights, trademarks, trade names and other intellectual property; (xvi) leases or subleases by the Company or any of its Restricted Subsidiaries as lessor or sublessor in the ordinary course of business and otherwise permitted by the indenture; (xvii) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; (xviii) Liens resulting from the deposit of funds or evidences of Indebtedness in trust for the purpose of (A) defeasing Indebtedness of the Company or any of its Restricted Subsidiaries (which defeasance is otherwise permitted under the indenture) having an aggregate principal amount at any one time outstanding not to exceed $25 million or (B) defeasing Indebtedness ranking pari passu with the notes issued under the indenture; provided that the notes issued under the indenture are defeased concurrently with such Indebtedness; (xix) from and after the first date when the notes are rated Investment Grade, Liens on any asset of the Company other than any of the Company's or any of its Restricted Subsidiary's manufacturing plants or Liens on any Equity Interests of any Restricted Subsidiary that owns a manufacturing plant; (xx) the pledge of Equity Interests of an Unrestricted Subsidiary or a Joint Venture (or of a Joint Venture Subsidiary that has no assets and conducts no operations other than the holding, directly or indirectly, of Equity Interests of such Joint Venture) organized (or designated as an Unrestricted Subsidiary and holding no other assets and conducting no other operations) to construct, own and/or operate a propylene oxide plant in the European Union to secure Non-Recourse Debt of such Joint Venture or Unrestricted Subsidiary; 79 (xxi) the pledge of Equity Interests of an Unrestricted Subsidiary or a Joint Venture (or of a Joint Venture Subsidiary that has no assets and conducts no operations other than the holding, directly or indirectly, of Equity Interests of such Joint Venture) organized (or designated as an Unrestricted Subsidiary and holding no other assets and conducting no other operations) to participate in the improvement of the Rhodia TDI Plant to secure Non-Recourse Debt of such Joint Venture or Unrestricted Subsidiary or Rhodia or a wholly owned subsidiary of Rhodia; (xxii) Liens on equipment of the Company or any Restricted Subsidiary arising as a result of a sale and leaseback with respect to such equipment; provided that the proceeds from such sale and leaseback are applied pursuant to the covenant described above under the caption "Repurchase at the Option of Holders--Asset Sales"; (xxiii) Asset Sale Liens; (xxiv) customary Liens for the fees, costs and expenses of trustees and escrow agents pursuant to any indenture, escrow agreement or similar agreement establishing a trust or an escrow arrangement, and Liens pursuant to merger agreements, stock purchase agreements, asset sale agreements, option agreements and similar agreements in respect of the disposition of property or assets of the Company or any Restricted Subsidiary, to the extent such dispositions are permitted hereunder; (xxv) netting provisions and setoff rights in favor of counterparties to agreements creating Hedging Obligations; (xxvi) other Liens on assets of the Company or any Restricted Subsidiary of the Company securing Indebtedness that is permitted by the terms of the indenture to be outstanding having an aggregate principal amount at any one time outstanding not to exceed $100 million; and (xxvii) Liens to secure a Permitted Refinancing incurred to refinance Indebtedness that was secured by a Lien permitted under the indenture and that was incurred in accordance with the provisions of the indenture; provided that such Liens do not extend to or cover any property or assets of the Company or any Restricted Subsidiary other than assets or property securing the Indebtedness so refinanced. "Permitted Refinancing" means any Indebtedness of the Company or any of its Subsidiaries or Preferred Stock of a Finance Subsidiary issued in exchange for, or the net proceeds of which are used solely to extend, refinance, renew, replace, defease or refund, other Indebtedness of the Company or any of its Restricted Subsidiaries; provided that: (i) the principal amount (or liquidation preference in the case of Preferred Stock) of such Permitted Refinancing (or if such Permitted Refinancing is issued at a discount, the initial issuance price of such Permitted Refinancing) does not exceed the principal amount of the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of any premiums paid and reasonable expenses incurred in connection therewith); (ii) such Permitted Refinancing or, in the case of Preferred Stock of a Finance Subsidiary, the Indebtedness issued to such Finance Subsidiary, has a Stated Maturity date later than the Stated Maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated by its terms in right of payment to the notes or the Subsidiary Guarantees, such Permitted Refinancing, or, in the case of Preferred Stock, the Indebtedness issued to such Finance Subsidiary, has a Stated Maturity date later than the Stated Maturity date of, and is subordinated in right of payment to, the notes on subordination terms at least as favorable to the holders of notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; 80 (iv) such Indebtedness is incurred by the Company or a Subsidiary Guarantor (or such Preferred Stock is issued by a Finance Subsidiary) if the Company or a Subsidiary Guarantor is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (v) such Indebtedness is incurred by the Company or a Restricted Subsidiary (or such Preferred Stock is issued by a Finance Subsidiary) if a Restricted Subsidiary that is not a Subsidiary Guarantor is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "Preferred Stock" means, with respect to any person, any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of preferred or preference stock of such person which is outstanding or issued on or after the date of the indenture. "Qualified Equity Interests" shall mean all Equity Interests of a person other than Disqualified Stock of such person. "Rating Agency" means (i) S&P or (ii) Moody's or (iii) if neither S&P nor Moody's shall exist, a nationally recognized securities rating agency or agencies, as the case may be, selected by the Company, which shall be substituted for S&P or Moody's or both, as the case may be. "Receivables Facility" means one or more receivables financing facilities or arrangements, as amended from time to time, pursuant to which the Company or any of its Restricted Subsidiaries sells (including a sale in exchange for a promissory note of or an Equity Interest in an Accounts Receivable Subsidiary) its accounts receivable to an Accounts Receivable Subsidiary. "Receivables Fees" means distributions or payments made directly or by means of discounts with respect to any participation interests issued or sold in connection with, and other fees paid to a person that is not the Company or a Restricted Subsidiary in connection with, any Receivables Facility. "Restricted Investment" means an Investment other than a Permitted Investment. "Restricted Subsidiary" of a person means any Subsidiary of the referent person that is not an Unrestricted Subsidiary. "Rhodia" means Rhodia S.A., a French company and the successor in interest to Rhone-Poulenc Chemie S.A. under the TDI Agreements. "Rhodia TDI Plant" means the manufacturing facilities for the production of toluene diisocyanate, currently owned by Rhodia and located at Pont-de-Claix, France. "Sale and Leaseback Transaction" means, with respect to any person, any arrangement with a lender or an investor providing for the leasing by such person of any property or asset of such person which has been or is being sold or transferred by such person to such lender or investor if such arrangement is accounted for as a capitalized lease by such person under GAAP. "Senior Indebtedness" has the meaning assigned to such term in the Senior Subordinated Note Indenture. "Senior Subordinated Note Indenture" means the indenture among the Company, the Subsidiary Guarantors party thereto and The Bank of New York, as trustee, pursuant to which the Company issued the Senior Subordinated Notes. "Senior Subordinated Notes" means the 10.875% Senior Subordinated Notes Due 2009 issued by the Company pursuant to the Senior Subordinated Note Indenture. "Significant Asset Sale" means an Asset Sale of (x) any of the Company's or its Restricted Subsidiaries' plants that (a) has a fair market value in excess of $50 million or (b) for Net Proceeds in excess of $50 million 81 (a "Significant Asset") or (y) a controlling interest in any Restricted Subsidiary that owns a Significant Asset (other than, in each case, an involuntary disposition, to the extent that the Existing Credit Facility (but not any refinancing thereof other than a credit facility with commercial banks and other lenders) permits the proceeds thereof to be reinvested prior to any mandatory prepayment of amounts outstanding thereunder). "Significant Subsidiary" means any Restricted Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Act, as such Regulation is in effect on the Issue Date. "Specified Joint Ventures" means (i) Equistar Chemicals, LP, (ii) LYONDELL- CITGO Refining LP and (iii) Lyondell Methanol Company, L.P. "S&P" means Standard & Poor's Corporation and its successors. "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 (or any later date established by any amendment to such original documentation) 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. "Subject Assets" means, with respect to any Major Asset Sale, the assets that are the subject of such Major Asset Sale. "Subject Assets Transferee" means any Restricted Subsidiary or Joint Venture that becomes the owner of Subject Assets in connection with a Major Asset Sale. "Subsidiary" means, with respect to any person, (i) 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) or (ii) 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 one or more Subsidiaries of such person (or any combination thereof) or (c) that is a Specified Joint Venture and as to which (i) a general partner of which is such person or a Subsidiary of such person, (ii) such person owns, directly or indirectly, 50% or more of the partnership interests of such Specified Joint Venture and (iii) the Board of Directors of such person has designated such Specified Joint Venture to be a "Subsidiary" (which designation shall be irrevocable for so long as such Specified Joint Venture satisfies the foregoing requirements). As of the Issue Date, none of the Existing Joint Ventures are Subsidiaries of the Company. "Subsidiary Guarantor" means (i) ARCO Chemical Technology, Inc., ARCO Chemical Technology, L.P. and Lyondell Chemical Nederland, Ltd. and (ii) any other Subsidiary that executes a Subsidiary Guarantee in accordance with the provisions of the indenture, in each case, until the Subsidiary Guarantee of such person is released in accordance with the provisions of the indenture. "TDI Agreements" means (i) the Share Purchase Agreement dated as of January 23, 1995 between ARCO Chemical Europe Inc. and Rhone-Poulenc Chemie S.A., as such agreement may be amended, supplemented or otherwise modified from time to time, (ii) the Processing Agreement dated as of January 23, 1995 between ARCO Chemical Chemie TDI and Rhone-Poulenc Chemie S.A., as such agreement may be amended, supplemented or otherwise modified from time to time, and (iii) the TDI License. "TDI Assets" means (i) all rights of ARCO Chemical Europe Inc., ARCO Chemical Chemie TDI, ARCO Chemical Technology, L.P. and their respective successors under the TDI Agreements and (ii) all of Lyondell TDI's customer lists relating to the Rhodia TDI Plant. 82 "TDI License" means the TDI Technology Agreement dated as of January 23, 1995 between ARCO Chemical Technology, L.P. and Rhone-Poulenc Chemie S.A., as such agreement may be amended, supplemented or otherwise modified from time to time. "Unrestricted Subsidiary" means (i) any Subsidiary of the Company that is designated by the Board of Directors of the Company as an Unrestricted Subsidiary pursuant to a board resolution, (ii) any Subsidiary of an Unrestricted Subsidiary and (iii) any Accounts Receivable Subsidiary. The Board of Directors 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 Equity Interest 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; provided that: (a) any Guarantee (other than as a co-obligor of the Equistar Assumed Debt so long as the Equistar Assumed Debt is not considered Indebtedness of the Company pursuant to the definition thereof) by the Company or any Restricted Subsidiary of any Indebtedness of the Subsidiary being so designated shall be deemed an "Incurrence" of such Indebtedness and an "Investment" by the Company or such Restricted Subsidiary (or both, if applicable) at the time of such designation, (b) either (i) the Subsidiary to be so designated has total assets of $1,000 or less or (ii) if such Subsidiary has assets greater than $1,000, such designation would be permitted under the covenant described above under the caption "Certain Covenants--Restricted Payments," (c) if applicable, the Investment and the incurrence of Indebtedness referred to in clause (a) of this proviso would be permitted under the covenants described above under the captions "Certain Covenants--Restricted Payments" and "Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock" and (d) in the case of any Subsidiary that is a Joint Venture as of the date of its designation as an Unrestricted Subsidiary, such Subsidiary has an aggregate of 15% or more of its outstanding Capital Stock or other voting interests (other than directors' qualifying shares) held by another person other than the Company or any Restricted Subsidiary or any Affiliate of the Company. Any such designation by the Board of Directors of the Company pursuant to clause (i) above shall be evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution giving effect to such designation and an officers' certificate certifying that such designation complied with the foregoing conditions and was permitted by the covenants described above under the captions "Certain Covenants--Restricted Payments" and "Certain Covenants-- Incurrence of Indebtedness and Issuance of Preferred Stock." If (i) at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements of clause (d) (because the Company has acquired more than 85% of the outstanding Capital Stock or other voting interests of any Subsidiary that was a Joint Venture on the date of its designation as an Unrestricted Subsidiary), or (ii) at any time the Company or any Restricted Subsidiary Guarantees any Indebtedness of such Unrestricted Subsidiary or makes any other Investment in such Unrestricted Subsidiary and such incurrence of Indebtedness or Investment would not be permitted under the covenants described above under the caption "Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock" or "Certain Covenants--Restricted Payments," it shall thereafter cease to be an Unrestricted Subsidiary for purposes of the 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 described above under the caption "Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock," the Company shall be in default of such covenant). The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall be permitted only if (i) such Indebtedness is permitted under the covenant described above under the caption "Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock" and (ii) no Default or Event of Default would be in existence following such designation. 83 "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (i) 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, including payment at final maturity, in respect thereof, 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 (ii) the then outstanding principal amount of such Indebtedness. "Wholly Owned Restricted Subsidiary" of any person means a Restricted Subsidiary of such person all the outstanding Equity Interests of which (other than directors' qualifying shares) shall at the time be owned by such person or by one or more Wholly Owned Restricted Subsidiaries of such person or by such person and one or more Wholly Owned Restricted Subsidiaries of such person. "Wholly Owned Subsidiary" of any person means a Subsidiary of such person all the outstanding Equity Interests of which (other than directors' qualifying shares) shall at the time be owned by such person or by one or more Wholly Owned Subsidiaries of such person or by such person and one or more Wholly Owned Subsidiaries of such person. UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO NON-U.S. HOLDERS The following is a summary of the material United States federal income tax consequences of the exchange of the outstanding notes for the new notes and the ownership and disposition of the new notes by a purchaser that is a non-U.S. holder. For this purpose, a non-U.S. holder is a holder that is, for United States federal income tax purposes: . a nonresident alien individual; . a foreign corporation; or . a foreign estate or trust that is not subject to United States federal income taxation on its worldwide income. If a partnership (including for this purpose an entity treated as a partnership for United States federal income tax purposes) is a beneficial owner of notes, the treatment of a partner in the partnership will generally depend upon the status of the partner and upon the activities of the partnership. Holders of notes that are a partnership or partners in such partnership should consult their tax advisors about the United States federal income tax consequences of purchasing, owning and disposing of the notes. This summary is based upon the Internal Revenue Code of 1986, as amended to the date hereof (the Code), administrative pronouncements, judicial decisions and final temporary and proposed Treasury Regulations, each of which is subject to change, possibly retroactively. This summary does not discuss all aspects of United States federal income taxation that may be important to particular non- U.S. holders in light of their individual investment circumstances, such as notes held by investors subject to special tax rules (e.g., U.S. expatriates, financial institutions, insurance companies, broker-dealers and tax-exempt organizations) or to persons that will hold the new notes as a part of a straddle, hedge or synthetic security transaction for United States federal income tax purposes or that have a functional currency other than the United States dollar, all of whom may be subject to tax rules that differ significantly from those summarized below. In addition, this summary does not discuss any foreign, state or local tax considerations. This summary assumes that investors will hold the new notes as "capital assets" (generally, property held for investment) under the Code. Prospective investors are urged to consult their tax advisors regarding the United States federal, state, local and foreign income and other tax consequences of the exchange of the outstanding notes for new notes and ownership and disposition of the new notes. 84 The Exchange Offer The exchange of a new note for an outstanding note will not constitute a taxable exchange for United States federal income tax purposes because the new notes will not differ materially either in kind or extent from the outstanding notes for which they will be exchanged. Accordingly, holders who receive a new note in exchange for an outstanding note will not recognize gain or loss, because for United States federal income tax purposes, the new notes will be treated as continuations of the outstanding notes. Payment of Interest Interest paid by Lyondell to non-U.S. holders will not be subject to United States federal income or withholding tax provided: . the beneficial owner of the new note does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of Lyondell entitled to vote; . the beneficial owner of the new note is not a controlled foreign corporation that is related to Lyondell through stock ownership; . the beneficial owner of the new note is not a bank that acquired the outstanding note as an extension of credit made pursuant to a loan agreement made in the ordinary course of business; and . the requirements of section 871(h) or 881(c) of the Code are satisfied as described below under the heading "Owner Statement Requirement." Notwithstanding the above, unless the holder qualifies for an exemption from such tax or a lower tax rate under an applicable treaty, a non-U.S. holder that is engaged in the conduct of a United States trade or business will be subject to: . United States federal income tax on interest that is effectively connected with the conduct of such trade or business; and . if the non-U.S. holder is a corporation, a United States branch profits tax equal to 30% of its "effectively connected earnings and profits" as adjusted for the taxable year. Gain on Disposition A non-U.S. holder will generally not be subject to United States federal income tax on gain recognized on a sale, redemption or other disposition of a new note unless: . the gain is effectively connected with the conduct of a trade or business within the United States by the non-U.S. holder; or . in the case of a non-U.S. holder who is a nonresident alien individual, such holder is present in the United States for 183 or more days during the taxable year and certain other requirements are met. However, to the extent that disposition proceeds represent interest accruing between interest payment dates, a non-U.S. Holder may be required to establish an exemption from United States federal income tax. (See "--Payment of Interest" above). Any gain recognized on a sale, redemption or other disposition of a new note that is effectively connected with the conduct of a United States trade or business by a non-U.S. holder will be subject to United States federal income tax on a net income basis in the same manner as if such holder were a United States person and, if such non-U.S. holder is a corporation, such gain may also be subject to the 30% United States branch profits tax (or lower treaty rate, if applicable) described above. Federal Estate Taxes A new note held by an individual who at the time of death is not a citizen or resident of the United States will not be subject to United States federal estate tax as a result of such individual's death, provided: . the individual does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of Lyondell entitled to vote; and 85 . the interest accrued on the note was not effectively connected with a United States trade or business of the individual at the individual's death. Owner Statement Requirement In order to claim an exemption from United States federal withholding tax with respect to payments of interest on a new note, sections 871(h) and 881(c) of the Code require that either the beneficial owner of the new note or a securities clearing organization, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business and that holds a new note on behalf of such owner file a statement with Lyondell or its agent representing that the beneficial owner is not a United States person. Under current regulations, this requirement will be satisfied if Lyondell or its agent receives: . a statement from the beneficial owner certifying under penalty of perjury that such owner is not a United States person and that provides certain information required under the regulations; or . a statement from the financial institution holding the new note on behalf of the beneficial owner certifying, under penalties of perjury, that it has received the owner's statement, together with a copy of the owner's statement. The beneficial owner must inform Lyondell or its agent, as applicable, or the financial institution, as applicable, within 30 days of any change in information on the owner's statement. Backup Withholding Payments made on, and proceeds from the sale of, a new note may be subject to a "backup" withholding tax unless the holder furnishes to the paying agent or broker an owner's statement or otherwise establishes an exemption. Any withheld amounts would generally be allowed as a credit against a holder's federal income tax, provided the required information is timely filed with the Internal Revenue Service. The United States federal income tax discussion set forth above is included for general information only and may not be applicable to a holder's particular situation. Holders of the new notes should consult tax advisors with respect to the tax consequences to them of the exchange of the outstanding notes for the new notes and of the ownership and disposition of the new notes, including the tax consequences under state, local, foreign and other tax laws and the possible effects of changes in United States federal or other tax laws. 86 PLAN OF DISTRIBUTION Based on interpretations by the staff of the SEC in no action letters issued to third parties, we believe that you may transfer new notes issued under the exchange offer in exchange for the outstanding notes if: . you acquire the new notes in the ordinary course of your business; and . you are not engaged in, and do not intend to engage in, and have no arrangement or understanding with any person to participate in, a distribution of new notes. Broker-dealers receiving new notes in the exchange offer will be subject to a prospectus delivery requirement with respect to resales of the new notes. We believe that you may not transfer new notes issued under the exchange offer if you are: . our "affiliate" within the meaning of Rule 405 under the Securities Act; . a broker-dealer that acquired outstanding notes directly from us; or . a broker-dealer that acquired outstanding notes as a result of market- making or other trading activities without compliance with the registration and prospectus delivery provisions of the Securities Act. To date, the staff of the SEC has taken the position that participating broker-dealers may fulfill their prospectus delivery requirements with respect to transactions involving an exchange of securities such as this exchange offer, other than a resale of an unsold allotment from the original sale of the outstanding notes, with the prospectus contained in the exchange offer registration statement. In the registration rights agreement, we have agreed to permit participating broker-dealers to use this prospectus in connection with the resale of new notes. We have agreed that, for a period of up to 180 days after the expiration of the exchange offer, we will make this prospectus, and any amendment or supplement to this prospectus, available to any broker-dealer that requests these documents in the letter of transmittal. In addition, until , 2002 all dealers effecting transactions in the new notes may be required to deliver a prospectus. If you wish to exchange your outstanding notes for new notes in the exchange offer, you will be required to make representations to us as described in the "The Exchange Offer--Purpose and Effect of the Exchange Offer" and "The Exchange Offer--Your Representations to Us" sections of this prospectus and in the letter of transmittal. In addition, if you are a broker-dealer who receives new notes for your own account in exchange for outstanding notes that were acquired by you as a result of market-making activities or other trading activities, you will be required to acknowledge that you will deliver a prospectus in connection with any resale by you of new notes. We will not receive any proceeds from sale of new notes by broker-dealers. Broker-dealers who receive new notes for their own account in the exchange offer may sell them from time to time in one or more transactions either: . in the over-the-counter market; . in negotiated transactions; . through the writing of options on the new notes or a combination of methods of resale; or . at prices related to prevailing market prices or negotiated prices. Any resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions form any broker-dealer or the purchasers of any new notes. Any broker-dealer that resells new notes it received for its own account in the exchange offer and any broker or dealer that participates in a distribution of new notes may be deemed to be an "underwriter" within 87 the meaning of the Securities Act. Any profit on any resale of new notes and any commissions or concessions received by any persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that, by acknowledging that it will deliver and by delivery a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning the Securities Act. We have agreed to pay all expenses incidental to the exchange offer other than commissions and concessions of any broker or dealers. We will indemnify holders of the outstanding notes, including any broker-dealers, against some liabilities, including liabilities under the Securities Act, as provided in the registration rights agreement. LEGAL MATTERS Baker Botts L.L.P., Houston, Texas, counsel for Lyondell Chemical Company, has issued an opinion about the legality of the new notes. EXPERTS The consolidated financial statements of Lyondell Chemical Company as of December 31, 2000 and 1999 and for each of the three years in the period ended December 31, 2000, incorporated in this prospectus by reference to the Lyondell Chemical Company Annual Report on Form 10-K for the year ended December 31, 2000, have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. The consolidated financial statements of Equistar Chemicals, LP as of December 31, 2000 and 1999 and for each of the three years in the period ended December 31, 2000, incorporated in this prospectus by reference to the Lyondell Chemical Company Annual Report on Form 10-K for the year ended December 31, 2000, have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. The financial statements of LYONDELL-CITGO Refining LP as of December 31, 2000 and 1999 and for each of the two years in the period ended December 31, 2000, incorporated in this prospectus by reference to the Lyondell Chemical Company Annual Report on Form 10-K for the year ended December 31, 2000, have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. The financial statements of LYONDELL-CITGO Refining LP for the year ended December 31, 1998, incorporated in this prospectus by reference from the Lyondell Chemical Company Annual Report on Form 10-K for the year ended December 31, 2000 have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report, which is incorporated by reference herein, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. 88 WHERE YOU CAN FIND MORE INFORMATION Lyondell files annual, quarterly and special reports, proxy statements and other information with the SEC. Lyondell's SEC filings are available to the public over the Internet at the SEC's web site at http://www.sec.gov. You may also read and copy any document Lyondell files at the SEC's public reference rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. In addition, because Lyondell's common stock is listed on the New York Stock Exchange, reports and other information concerning Lyondell can also be inspected at the office of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. Our SEC filings are also available from our web site at www.lyondell.com. Information contained on our web site or any other web site is not incorporated into this prospectus and does not constitute a part of this prospectus. Lyondell has incorporated by reference information into this prospectus, which means that it is disclosing important information to you by referring you to those documents. The information incorporated by reference is an important part of this prospectus, and information that we file later with the SEC will automatically update and supersede the information in this prospectus. Lyondell incorporates by reference the documents listed below and any future filings made with the SEC (file no. 1-10145) under Section 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934, as amended, until the exchange offer expires or is terminated. (1) Annual Report on Form 10-K.............. Year ended December 31, 2000 (2) Currents Report on Form 8-K............... Filed on February 6, 2001 and December 4, 2001 (3) Quarterly Reports on Form 10-Q.............. Filed on May 14, 2001, August 6, 2001 and November 13, 2001
You may request a copy of these filings, at no cost, by writing or telephoning Lyondell at the following address: Lyondell Chemical Company 1221 McKinney, Suite 700 Houston, Texas 77010 Telephone: (713) 652-7200 Attention: Investor Relations Whether or not required by the rules and regulations of the SEC, as long as any notes are outstanding, Lyondell has agreed to furnish to the Trustee and to the holders of the notes: (1) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if Lyondell were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, with respect to the annual information only, a report thereon by Lyondell's certified independent accountants; and (2) all current reports that would be required to be filed with the SEC on Form 8-K if Lyondell were required to file such reports. In addition, whether or not required by the rules and regulations of the SEC, Lyondell will file a copy of all such information and reports with the SEC for public availability and make such information available to securities analysts and prospective investors upon request. In addition, Lyondell has agreed that, for so long as any outstanding notes remain outstanding, it will furnish to the holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. Any such request and requests for the agreements summarized herein should be directed to the address referred to above. 89 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PROSPECTUS dated , 2002 LYONDELL CHEMICAL COMPANY $393,000,000 Offer to Exchange REGISTERED 9 1/2% Senior Secured Notes due 2008 FOR ALL OUTSTANDING 9 1/2% Senior Secured Notes due 2008 You should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized anyone to provide you with different information. We are not offering to exchange notes in any jurisdiction where the offer is not permitted. We do not claim the accuracy of the information in this prospectus as of any date other than the date stated on the cover. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. Indemnification of Directors and Officers By-Law Provisions. Lyondell's Amended and Restated By-Laws provide that Lyondell will indemnify each of its officers and directors to the fullest extent authorized by Section 145 of the General Corporation Law of the State of Delaware. Article V of the By-Laws reads as follows: (a) Indemnification of Officers and Directors. Lyondell shall indemnify the officers and directors of Lyondell with respect to all matters to which Section 145 of the General Corporation Law of the State of Delaware may in any way relate, to the fullest extent permitted or allowed by the laws of the State of Delaware, whether or not specifically required, permitted or allowed by said Section 145. Any repeal or modification of this Section shall not in any way diminish any rights to indemnification of such person or the obligations of Lyondell that may have previously arisen hereunder. (b) Non-Exclusivity of Rights. The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Section shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, Lyondell's Certificate of Incorporation, any By-Law, any agreement, a vote of Company stockholders or of disinterested Company directors or otherwise, both as to action in that person's official capacity and as to action in any other capacity by holding such office, and shall continue after the person ceases to serve Lyondell as a director or officer or to serve another entity at the request of Lyondell. (c) Insurance. Lyondell may maintain insurance, at its expense, to protect itself and any director or officer of Lyondell or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not Lyondell would have the power to indemnify such person against such expense, liability or loss under the General Corporation Law of Delaware. (d) Indemnity Agreements. Lyondell may from time to time enter into indemnity agreements with the persons who are members of its Board of Directors, its elected officers and with such other persons as the Board of Directors may designate, the form of such indemnity agreements to be approved by a majority of the Board then in office. (e) Indemnification of Employees and Agents of Lyondell. Lyondell may, under procedures authorized from time to time by the Board of Directors, grant rights to indemnification, and to payment by Lyondell of the expenses incurred in defending any proceeding in advance of its final disposition to any employee or agent of Lyondell to the fullest extent of the provisions of this Article V. Delaware General Corporation Law Provisions. Section 145 of the General Corporation Law of the State of Delaware provides: (a) A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person's conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or II-1 upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person's conduct was unlawful. (b) A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. (c) To the extent that a present or former director or officer of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b) of this section, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith. (d) Any indemnification under subsections (a) and (b) of this section (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because the person has met the applicable standard of conduct set forth in subsections (a) and (b) of this section. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (1) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (2) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (3) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (4) by the stockholders. (e) Expenses (including attorneys' fees) incurred by an officer or director in defending any civil, criminal, administrative, or investigative action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation as authorized in this section. Such expenses (including attorneys' fees) incurred by former directors and officers and other employees and agents may be so paid upon such terms and conditions, if any, as the corporation deems appropriate. (f) The indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of this section shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office. (g) A corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person's status as such, whether or not the corporation would have the power to indemnify such person against such liability under this section. II-2 (h) For purposes of this section, references to "the corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this section with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. (i) For purposes of this section, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to "serving at the request of the corporation" shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the corporation" as referred to in this section. (j) The indemnification and advancement of expenses provided by, or granted pursuant to, this section shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. (k) The Court of Chancery is hereby vested with exclusive jurisdiction to hear and determine all actions for advancement of expenses or indemnification brought under this section or under any bylaw, agreement, vote of stockholders or disinterested directors, or otherwise. The Court of Chancery may summarily determine a corporation's obligation to advance expenses (including attorneys' fees). Certificate of Incorporation Provisions. Lyondell's Amended and Restated Certificate of Incorporation limits the personal liability of directors to Lyondell and its stockholders for monetary damages resulting from certain breaches of the directors' fiduciary duties. Article VII of the Certificate of Incorporation provides as follows: To the fullest extent permitted by the General Corporation Law of Delaware as the same exists or may hereafter be amended, a director of Lyondell shall not be liable to Lyondell or its stockholders for monetary damages for breach of fiduciary duty as a director. If the General Corporation Law of Delaware is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of Lyondell shall be eliminated or limited to the fullest extent permitted by the General Corporation Law of Delaware, as so amended. Any repeal or modification of this Article VII by the stockholders of Lyondell shall not adversely affect any right or protection of a director of Lyondell existing at the time of such repeal or modification or with respect to events occurring prior to such time. Notwithstanding anything contained in Lyondell's Certificate of Incorporation to the contrary, the affirmative vote of the holders of not less than 66 2/3 percent of all votes entitled to be cast by the holders of stock of Lyondell shall be required to amend or repeal this Article VII or to adopt any provision inconsistent herewith. Section 102(b)(7) of the General Corporation Law of the State of Delaware provides that a corporation's Certificate of Incorporation may contain the following: (7) A provision eliminating or limiting the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that such provision shall not eliminate or limit the liability of a director: . for any breach of the director's duty of loyalty to the corporation or its stockholders; II-3 . for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; . under section 174 of this title; or . for any transaction from which the director derived an improper personal benefit. No such provision shall eliminate or limit the liability of a director for any act or omission occurring prior to the date when such provision becomes effective. All references in this paragraph to a director shall also be deemed to refer (x) to a member of the governing body of a corporation which is not authorized to issue capital stock, and (y) to such other person or persons, if any, who, pursuant to a provision of the certificate of incorporation in accordance with section 141(a) of this title, exercise or perform any of the powers or duties otherwise conferred or imposed upon the board of directors by this title. ITEM 21. Exhibits
Exhibit No. Exhibit ------- -------------------------------------------------------------------- 3.1 Certificate of Incorporation of ARCO Chemical Technology, Inc., as amended 3.2 By-Laws of ARCO Chemical Technology, Inc. 3.3 Certificate of Incorporation of Lyondell Chemical Nederland, Ltd. 3.4 Amended and Restated By-Laws of Lyondell Chemical Nederland, Ltd. *3.5 Amended and Restated Certificate of Incorporation of Lyondell Chemical Company (Filed as an exhibit to Lyondell's Annual Report on Form 10-K for the year ended December 31, 1996 and incorporated herein by reference) *3.5(a) Certificate of Ownership and Merger dated July 31, 1998 (Filed as an exhibit to Lyondell's Annual Report on Form 10-K for the year ended December 31, 1999 and incorporated herein by reference) *3.6 Amended and Restated By-Laws of Lyondell Chemical Company (Filed as an exhibit to Lyondell's Quarterly Report on Form 10-Q for the period ended June 30, 1997 and incorporated herein by reference) 3.7 Certificate of Limited Partnership of ARCO Chemical Technology, L.P. 3.8 Agreement of Limited Partnership of ARCO Chemical Technology, L.P. 4.1 Registration Rights Agreement dated as of December 4, 2001 by and among Lyondell Chemical Company, ARCO Chemical Technology, Inc., ARCO Chemical Technology, LP, Lyondell Chemical Nederland, Ltd. and Salomon Smith Barney Inc., J.P. Morgan Securities Inc., Bank of America Securities LLC, Credit Suisse First Boston Corporation, Bank One Capital Markets, Inc., Credit Lyonnais Securities (USA) Inc., Mizuho International plc, Scotia Capital (USA) Inc., and SG Cowen Securities Corporation 4.2 Indenture among Lyondell Chemical Company, the Subsidiary Guarantors party thereto and The Bank of New York, as Trustee, dated as of December 4, 2001, for 9 1/2% Senior Secured Notes due 2008 5 Opinion of Baker Botts L.L.P. 12 Statement setting forth Detail for Computation of Ratio of Earnings to Fixed Charges 23.1 Consent of PricewaterhouseCoopers LLP 23.2 Consent of Deloitte & Touche LLP 23.3 Consent of Baker Botts L.L.P. (included in Exhibit 5) 24.1 Powers of Attorney for Lyondell Chemical Company 24.2 Powers of Attorney for ARCO Chemical Technology, Inc. 24.3 Powers of Attorney for Lyondell Chemical Nederland, Ltd.
II-4
Exhibit No. Exhibit ------- ---------------------------------------------------------------------- 24.4 Powers of Attorney for ARCO Chemical Technology, LP. 25 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of the Trustee for the Senior Secured Notes due 2008 99.1 Form of Letter to DTC Participants for 9 1/2% Senior Secured Notes due 2008 99.2 Form of Letter to Clients for 9 1/2% Senior Secured Notes due 2008 99.3 Form of Notice of Guaranteed Delivery for 9 1/2% Senior Secured Notes due 2008 99.4 Form of Letter of Transmittal for 9 1/2% Senior Secured Notes due 2008
- -------- * Incorporated by reference from the filing indicated. II-5 ITEM 22. Undertakings 1. The undersigned registrants hereby undertake: . to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to: -- include any prospectus required by section 10(a)(3) of the Securities Act of 1933; -- include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to information in the registration statement; and -- reflect in the prospectus any facts or events arising after the effective date of the registration statement or its most recent post-effective amendment which, individually or in the aggregate, represent a fundamental change in the information shown in the registration statement. Any increase or decrease in volume of securities offered if the total dollar value of securities offered would not exceed that which was registered and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC under Rule 424(b) of the Securities Act if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price stated in the "Calculation of Registration Fee" table in the effective registration statement; . that, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. . to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. 2. The undersigned registrants hereby undertake that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrants' annual report under section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering. 3. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrants pursuant to the foregoing provisions, or otherwise, the registrants have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrants will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. 4. The undersigned registrants hereby undertake to respond to requests for information that is incorporated by reference into the prospectus under items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of a request, and to send the incorporated documents by first-class mail or other equally prompt means. This undertaking includes information contained in documents filed after the effective date of the registration statement through the date of responding to the request. 5. The undersigned registrants hereby undertake to supply by means of a posteffective amendment all information concerning a transaction, and the company being acquired therein, that was not the subject of and included in the registration statement when it became effective. II-6 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Lyondell Chemical Company has duly caused this Registration Statement or amendment thereto to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Houston, the State of Texas, on January 10, 2002. Lyondell Chemical Company /s/ Dan F. Smith By: _________________________________ Dan F. Smith President and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this Registration Statement or amendment thereto has been signed by the following persons in the capacities indicated and on January 10, 2002.
Signature Title --------- ----- * Chairman of the Board ______________________________________ William T. Butler /s/ Dan F. Smith President, Chief Executive Officer and ______________________________________ Director Dan F. Smith (Principal Executive Officer) * Director ______________________________________ Carol A. Anderson * Director ______________________________________ Travis Engen * Director ______________________________________ Stephen F. Hinchliffe, Jr. * Director ______________________________________ David J. Lesar * Director ______________________________________ Dudley C. Mecum II * Director ______________________________________ William R. Spivey * Director ______________________________________ Paul R. Staley /s/ Robert T. Blakely Executive Vice President and Chief ______________________________________ Financial Officer Robert T. Blakely (Principal Financial Officer) /s/ Charles L. Hall Vice President and Controller ______________________________________ Charles L. Hall (Principal Accounting Officer) /s/ Kerry A. Galvin *By: _________________________________ Kerry A. Galvin, as Attorney-in-fact
II-7 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, ARCO Chemical Technology, Inc. has duly caused this Registration Statement or amendment thereto to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Greenville, the State of Delaware, on January 10, 2002. ARCO Chemical Technology, Inc. /s/ Francis P. McGrail By: _________________________________ Francis P. McGrail President and Treasurer Pursuant to the requirements of the Securities Act of 1933, this Registration Statement or amendment thereto has been signed by the following persons in the capacities indicated and on January 10, 2002.
Signature Title --------- ----- /s/ Francis P. McGrail President & Treasurer ______________________________________ Francis P. McGrail (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) * Director ______________________________________ Eva Chu * Director ______________________________________ Laura C. Fulton * Director ______________________________________ Charles L. Hall * Director ______________________________________ David J. Prilutski /s/ Kerry A. Galvin *By: _________________________________ Kerry A. Galvin, as Attorney-in-fact
II-8 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, ARCO Chemical Technology, LP has duly caused this Registration Statement or amendment thereto to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Greenville, the State of Delaware, on January 10, 2002 ARCO Chemical Technology, LP. By: ARCO Chemical Technology Management, Inc., its general partner /s/ Francis P. McGrail By: _________________________________ Francis P. McGrail President and Treasurer, ARCO Chemical Technology Management, Inc. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement or amendment thereto has been signed by the following persons in the capacities indicated and on January 10, 2002.
Signature Title --------- ----- /s/ Francis P. McGrail President, Treasurer and Director, ARCO ______________________________________ Chemical Technology Management, Inc. Francis P. McGrail (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer of ARCO Chemical Technology Management, Inc.) * Director, ARCO Chemical Technology ______________________________________ Management, Inc. Eva Chu * Director, ARCO Chemical Technology ______________________________________ Management, Inc. Laura C. Fulton * Director, ARCO Chemical Technology ______________________________________ Management, Inc. Charles L. Hall * Director, ARCO Chemical Technology ______________________________________ Management, Inc. David J. Prilutski /s/ Kerry A. Galvin *By: _________________________________ Kerry A. Galvin, as Attorney-in-fact
II-9 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Lyondell Chemical Nederland, Ltd. has duly caused this Registration Statement or amendment thereto to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Houston, the State of Texas, on January 10, 2002. Lyondell Chemical Nederland, Ltd. /s/ Morris Gelb By: _________________________________ Morris Gelb President Pursuant to the requirements of the Securities Act of 1933, this Registration Statement or amendment thereto has been signed by the following persons in the capacities indicated and on January 10, 2002.
Signature Title --------- ----- /s/ Morris Gelb President and Director ______________________________________ Morris Gelb (Principal Executive Officer) * Director ______________________________________ Robert T. Blakely * Director ______________________________________ T. Kevin DeNicola /s/ Karen A. Twitchell Vice President and Treasurer ______________________________________ Karen A. Twitchell (Principal Financial Officer and Principal Accounting Officer) /s/ Kerry A Galvin *By: _________________________________ Kerry A. Galvin, as Attorney-in-fact
II-10 INDEX TO EXHIBITS
Exhibit No. Exhibit ------- -------------------------------------------------------------------- 3.1 Certificate of Incorporation of ARCO Chemical Technology, Inc., as amended 3.2 By-Laws of ARCO Chemical Technology, Inc. 3.3 Certificate of Incorporation of Lyondell Chemical Nederland, Ltd. 3.4 Amended and Restated By-Laws of Lyondell Chemical Nederland, Ltd. *3.5 Amended and Restated Certificate of Incorporation of Lyondell Chemical Company (Filed as an exhibit to Lyondell's Annual Report on Form 10-K for the year ended December 31, 1996 and incorporated herein by reference) *3.5(a) Certificate of Ownership and Merger dated July 31, 1998 (Filed as an exhibit to Lyondell's Annual Report on Form 10-K for the year ended December 31, 1999 and incorporated herein by reference) *3.6 Amended and Restated By-Laws of Lyondell Chemical Company (Filed as an exhibit to Lyondell's Quarterly Report on Form 10-Q for the period ended June 30, 1997 and incorporated herein by reference) 3.7 Certificate of Limited Partnership of ARCO Chemical Technology, L.P. 3.8 Agreement of Limited Partnership of ARCO Chemical Technology, L.P. 4.1 Registration Rights Agreement dated as of December 4, 2001 by and among Lyondell Chemical Company, ARCO Chemical Technology, Inc., ARCO Chemical Technology, LP, Lyondell Chemical Nederland, Ltd. and Salomon Smith Barney Inc., J.P. Morgan Securities Inc., Bank of America Securities LLC, Credit Suisse First Boston Corporation, Bank One Capital Markets, Inc., Credit Lyonnais Securities (USA) Inc., Mizuho International plc, Scotia Capital (USA) Inc., and SG Cowen Securities Corporation 4.2 Indenture among Lyondell Chemical Company, the Subsidiary Guarantors party thereto and The Bank of New York, as Trustee, dated as of December 4, 2001, for 9 1/2% Senior Secured Notes due 2008 5 Opinion of Baker Botts L.L.P. 12 Statement setting forth Detail for Computation of Ratio of Earnings to Fixed Charges 23.1 Consent of PricewaterhouseCoopers LLP 23.2 Consent of Deloitte & Touche LLP 23.3 Consent of Baker Botts L.L.P. (included in Exhibit 5) 24.1 Powers of Attorney for Lyondell Chemical Company 24.2 Powers of Attorney for ARCO Chemical Technology, Inc. 24.3 Powers of Attorney for Lyondell Chemical Nederland, Ltd. 24.4 Powers of Attorney for ARCO Chemical Technology, LP. 25 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of the Trustee for 9 1/2% Senior Secured Notes due 2008 99.1 Form of Letter to DTC Participants for 9 1/2% Senior Secured Notes due 2008 99.2 Form of Letter to Clients for 9 1/2% Senior Secured Notes due 2008 99.3 Form of Notice of Guaranteed Delivery for 9 1/2% Senior Secured Notes due 2008 99.4 Form of Letter of Transmittal for 9 1/2% Senior Secured Notes due 2008
- -------- * Incorporated by reference from the filing indicated. II-11 EX-3.1 3 dex31.txt CERTIFICATE OF INCORPORATION OF ARCO CHEMICAL TECHNOLOGY, INC. EXHIBIT 3.1 CERTIFICATE OF INCORPORATION OF ARCO TECHNOLOGY, INC. CERTIFICATE OF INCORPORATION OF ARCO TECHNOLOGY, INC. ------O------ 1. The name of the corporation is ARCO TECHNOLOGY, INC. 2. The address of its registered office in the State of Delaware is No. 100 West Tenth Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is: To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. 4. The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) and the par value of each of such shares is Ten Dollars ($10.00) amounting in the aggregate to Ten Thousand Dollars ($10,000.00). 5. The name and mailing address of each incorporator is as follows: NAME MAILING ADDRESS - ----------------------------------- -------------------------------------- F. J. Obara, Jr. 100 West Tenth Street Wilmington, Delaware 19801 S. S. Simpson 100 West Tenth Street Wilmington, Delaware 19801 G. J. Coyle 100 West Tenth Street Wilmington, Delaware 19801 6. The corporation is to have perpetual existence. 7. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized to make, alter or repeal the By-Laws of the corporation. 8. Meetings of stockholders may be held within or without the State of Delaware, as the By-Laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the By-Laws of the corporation. Elections of directors need not be by written ballot unless the By-laws of the corporation shall so provide. 9. The corporation reserves the right to amend, alter, change, or repeal any provision contained in this certificate of incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is our act and deed and the facts herein stated are true, and accordingly have hereunto set our hands this 14th day of March, 1997. /s/ F. J. OBARA, JR. --------------------------------- F. J. Obara, Jr. /s/ S. S. SIMPSON --------------------------------- S. S. Simpson /s/ G. J. COYLE --------------------------------- G. J. Coyle 2 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION ARCO Technology, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That the Board of Directors of said corporation, by unanimous written consent of its members, filed with the minutes of the Board, adopted a resolution proposing and declaring advisable the following amendment to the Certificate of Incorporation of said corporation: RESOLVED, that the Certificate of Incorporation of ARCO Technology, Inc. be amended by changing the first Article thereof so that, as amended, said Article shall be and read as follows: "1. The name of the corporation is ARCO Chemical Technology, Inc." SECOND: That in lieu of a meeting and vote of stockholders, the stockholders have given unanimous written consent to said amendment in accordance with the provisions of Section 228 of the General Corporation Law of the State of Delaware. THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of Sections 242 and 228 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, said ARCO Technology, Inc. has caused this certificate to be signed by Harold A. Sorgenti, its President, and attested by Harry W. Gill, Jr., its Secretary this 25th day of February, 1988. ARCO TECHNOLOGY, INC. ATTEST: By /s/ HARRY W. GILL, JR. /s/ HAROLD A. SORGENTI ------------------------- ------------------------------- Harry W. Gill, Jr. Harold A. Sorgenti Secretary President 2/24/88 2 EX-3.2 4 dex32.txt BY-LAWS OF ARCO CHEMICAL TECHNOLOGY, INC. EXHIBIT 3.2 BY-LAWS of ARCO Chemical Technology, Inc. ARTICLE I OFFICES Section 1. Principal Office.--The principal office shall be established and maintained at the office of the Corporation Trust Company, in the City of Wilmington, in the County of New Castle, in the State of Delaware, and said corporation shall be the resident agent of this corporation in charge thereof. Section 2. Other Offices.--The corporation may have other offices, either within or outside of the State of Delaware at such place or places as the Board of Directors may from time to time appoint or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. Place of Meetings.--All meetings of stockholders shall be held at the principal office of the corporation or at such other place as shall be fixed by the Board of Directors or by vote of the stockholders. Section 2. Annual Meetings.--The annual meeting of stockholders for the election of directors and the transaction of other business shall be held once per calendar year on the second Thursday in June of such year at 10:00 a.m. local time or on such other day and at such other time as shall be fixed by the Board of Directors or by vote of the stockholder. At each annual meeting, the stockholders entitled to vote shall elect a Board of Directors and they may transact such other corporate business as shall be stated in the notice of the meeting. Section 3. Voting.--Each stockholder entitled to vote in accordance with the terms of the Certificate of Incorporation and in accordance with the provisions of these By-laws, shall be entitled to one vote, in person or by proxy, for each share of stock entitled to vote held by such stockholder, but no proxy shall be voted after three years from its date unless such proxy provides for a longer period. All elections for directors shall be decided by plurality vote; all other questions shall be decided by majority vote except as otherwise provided by the Certificate of Incorporation or the Delaware General Corporation Law (the "DGCL"). Section 4. Quorum.--Except as otherwise required by the Certificate of Incorporation, these By-Laws or the DGCL, the presence, in person or by proxy, of stockholders holding a majority of the stock of the corporation entitled to vote shall constitute a quorum at all meetings of the stockholders. In case a quorum shall not be present at any meeting, a majority in interest of the stockholders entitled to vote thereat, present in person or by proxy, shall have power to adjourn the meeting from time to time without notice other than announcement at the 1 meeting, until the requisite amount of stock entitled to vote shall be present. At any such adjourned meeting at which the requisite amount of stock entitled to vote shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed; but only those stockholders entitled to vote at the meeting as originally noticed shall be entitled to vote at any adjournment or adjournments thereof. Section 5. Special Meetings.--Special meetings of the stockholders for any purpose or purposes may be called by the Board of Directors, the Chairman of the Board, if any, the President, any Vice President, the Secretary or any Assistant Secretary or by vote of the stockholders. No business other than that stated in the notice of the meeting shall be transacted at any special meeting. Section 6. Notice of Meetings.--Notice of any meeting, stating the place, date and hour of the meeting, and in the case of a duly called special meeting, the purpose or purposes for which the meeting is called, shall be given by the Chairman of the Board, if any, the President, any Vice President, the Secretary, or any Assistant Secretary by written, telegraphic, or by any other means of communication to each stockholder entitled to vote at his address as it appears on the records of the corporation not less than ten days nor more than sixty days before the meeting. Section 7. Action without Meeting.--Whenever the vote of stockholders at a meeting thereof is required or permitted to be taken in connection with any corporate action by any provisions of the Certificate of Incorporation, these By-Laws or the DGCL, the meeting and vote of stockholders may be dispensed with, if, subject to the provisions of the DGCL, a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all stockholders entitled to vote thereon were present and voted. Section 8. Organization.--Meetings of the stockholders shall be presided over by the Chairman of the Board, if any, the President, any Vice President, or in their absence by a chairman to be chosen by a majority of the stockholders entitled to vote at the meeting who are present in person or by proxy. The Secretary, an Assistant Secretary, or in their absence, any person appointed by the chairman of the meeting shall act as secretary of the meeting. ARTICLE III DIRECTORS Section 1. Number and Term.--The number of directors which shall constitute the whole board shall be one or more, with the specific number thereof to be determined from time to time by the Board of Directors or by the stockholders. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 3 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Resignations.--Any director may resign at any time. Such resignation shall be made in writing, and shall take effect at the time specified therein, and if no time be 2 specified, at the time of its receipt by the President or the Secretary. The acceptance of a resignation shall not be necessary to make it effective. Section 3. Vacancies.--Unless otherwise provided in the Certificate of Incorporation or these By-Laws, vacancies and newly created directorships resulting from any increase in the authorized number of directors, may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. If at any time, by reason of death or resignation or other cause, the corporation should have no directors in office, then any officer or any stockholder may call a special meeting of stockholders in accordance with the provisions of the Certificate of Incorporation or these By- Laws to elect one or more directors. Section 4. Removal.--Any director or directors may be removed with or without cause at any time by the affirmative vote of the holders of a majority of all the shares of stock outstanding and entitled to vote. Section 5. Powers.--The Board of Directors shall exercise all of the powers of the corporation except such as are conferred upon or reserved to the stockholders by the Certificate of Incorporation, these By-Laws or otherwise by law. Section 6. Committees.--The Board of Directors may, by resolution or resolutions, passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation, which, to the extent provided in said resolution or resolutions or in these By-Laws, shall have and may exercise the powers of the Board in the management of the business and affairs of the corporation. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board. The committees shall keep regular minutes of their proceedings and report the same to the board when required. The Board shall have power at any time to fill vacancies in, change the membership of, designate one or more directors as alternate members of, or discharge any such committee. Section 7. Meetings.--An annual organizational meeting of the Board of Directors may be held without notice immediately after the annual meeting of the stockholders or at such other time and place as may be fixed by consent in writing of all the directors. Regular meetings of the Board of Directors may be held without notice at such places and times as shall be determined from time to time by resolution of the Board. Special meetings of the Board of Directors may be called by Chairman of the Board, if any, the President, the Secretary or the greater of one director or one-third of the entire Board on at least two days' notice to each director and shall be held at such place or places as may be agreed upon by the directors, or as shall be stated in the call of the meeting. Members of the Board of Directors or any committee designated by the Board, may participate in a meeting of the Board or of such committee, as the case may be, by conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this procedure shall constitute presence in person at such meeting. 3 Meetings of the Board of Directors shall be presided over by the Chairman of the Board, if any, or in his absence by the President, or in their absence by a chairman chosen at the meeting. The Secretary or an Assistant Secretary shall act as secretary of the meeting, but in their absence the chairman of the meeting may appoint any person to act as secretary of the meeting. Section 8. Action Without Meeting.--Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all the members of the Board or of such committee, as the case may be, consent thereto in writing and such written consent is filed with the minutes of the proceedings of the Board or committee. Section 9. Quorum.--At all meetings of the Board of Directors or of any committee thereof, one-third of the entire Board or committee shall constitute a quorum for the transaction of business. However, whenever the Board or the stockholders shall determine that there be two or less members of the Board or committee, then and only then, one director shall constitute a quorum. Except as otherwise provided by the Certificate of Incorporation, these By-Laws or the DGCL, the act of a majority of the directors at a meeting at which a quorum is present shall be the act of the Board of Directors. If at any meeting of the Board a quorum shall not be present, the members of the Board present may adjourn the meeting from time to time until a quorum shall have been obtained. Section 10. Compensation.--Directors shall not receive any stated salary for their services as directors or as members of committees, but by resolution of the board a fixed fee and expenses of attendance may be allowed for attendance at each meeting. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity as an officer, agent or otherwise, and receiving compensation therefor. ARTICLE IV OFFICERS Section 1. Officers.--The officers of the corporation shall be a President, one or more Vice Presidents, a Treasurer, and a Secretary, and such Assistant Treasurers and Assistant Secretaries as the Board of Directors may deem proper. In addition, the Board may elect a Chairman of the Board. All of such officers shall be elected by the Board. None of the officers, except the Chairman of the Board, if any, need be directors. The officers shall be elected at the first meeting of the Board after each annual meeting of stockholders and each officer elected shall hold office until his successor is elected and qualified or until his earlier resignation or removal. Any number of offices may be held by the same person, except that the President shall not also be the Secretary. Section 2. Other Officers and Agents.--The Board of Directors may appoint such other officers and agents as it may deem advisable, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board. 4 Section 3. Chairman.--The Chairman of the Board, if one be elected, shall preside at all meetings of the Board of Directors and he shall have and perform such other duties as from time to time may be assigned to him by the Board. Section 4. President.--The President shall be the chief executive officer of the corporation and shall have the general powers and duties of supervision and management and execution usually vested in the office of President of a corporation. He shall preside, in the absence or non-election of the Chairman of the Board, at all meetings of the stockholders and of the Board of Directors, shall have general supervision, direction and control of the business of the corporation and shall perform such other duties as from time to time may be specified by the Board. Section 5. Treasurer.--The Treasurer shall have the care and custody of the funds and securities of the corporation and shall have such powers and perform such duties as are incident to the office of Treasurer, or as may from time to time be specified by the Board of Directors. The Treasurer shall be subject to the control of the Board and to the powers of the President. Section 6. Secretary.--The Secretary shall attend all meetings of the Board of Directors and of the stockholders and shall have the care and custody of the seal and the minute books of the corporation and shall have such powers and perform such duties as are incident to the office of the Secretary or as may from time to time be specified by the Board. The Secretary shall be subject to the control of the Board. Section 7. Assistant Officers.--Unless otherwise provided in these By- Laws, the Vice Chairman of the Board, any Vice President, any Assistant Secretary and any Assistant Treasurer, if any, shall, in the order of their respective seniorities, in the absence or disability of the Chairman of the Board, President, Secretary or Treasurer, respectively, perform the duties of such officer and shall generally assist the Chairman of the Board, President, Secretary or Treasurer, respectively. Section 8. Resignations.--Any officer may resign at any time upon written notice to the corporation. Such resignation shall take effect at the time specified therein, or if no time specified, at the time of its receipt by the President, the Secretary or the Board of Directors. Section 9. Vacancies.--A vacancy in any office arising from any cause may be filled by the Board of Directors. Section 10. Removal.--The Board of Directors may remove any officer with or without cause at any time. ARTICLE V MISCELLANEOUS Section 1. Certificates of Stock.--Certificates of stock, numbered and with the seal of the corporation affixed, signed by the President or Vice President, and the Treasurer or an Assistant Treasurer, or Secretary or an Assistant Secretary, shall be issued to each stockholder certifying the number of shares owned by him in the corporation. When such certificates are 5 signed by a transfer agent or an assistant transfer agent or by a transfer clerk acting on behalf of the corporation and a registrar, the signatures of such officers may be facsimiles. Section 2. Lost Certificate.--A new certificate of stock may be issued in the place of any certificate therefore issued by the corporation, alleged to have been lost or destroyed, and the directors may, in their discretion, require the owner of the lost or destroyed certificate, or his legal representatives, to give the corporation a bond, in such sum as they may direct, not exceeding double the value of the stock, to indemnify the corporation against any claim that may be made against it on account of the alleged loss of any such certificate, or the issuance of any such new certificate. Section 3. Transfer of Shares.--The shares of stock of the corporation shall be transferable only upon its books by the holders thereof in person or by their duly authorized attorneys or legal representatives, and upon such transfer the old certificates shall be surrendered to the corporation by the delivery thereof to the person in charge of the stock and transfer books and ledgers, or such other person as the directors may designate, by whom they shall be cancelled, and new certificates shall thereupon be issued. A record shall be made of each transfer, and a duplicate thereof mailed to the Delaware office, and whenever a transfer shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer. Section 4. Closing of Transfer Books.--The Board of Directors shall have power to close the stock transfer books of the corporation for a period not more than five days preceding the date of any meeting of stockholders, the date for payment of any dividend, the date for the allotment of rights or the date when any change or conversion or exchange of capital stock shall go into effect; provided, however, that in lieu of closing the stock transfer books as aforesaid, the Board of Directors may fix in advance a date not more than sixty days, and in the case of any meeting of stockholders not less than ten days, preceding the day of any meeting of stockholders or the date for the payment of any dividend, the date for the allotment of rights or the date when any change or conversion or exchange of capital stock shall go into effect, as a record date for the determination of the stockholders entitled to notice of, and to vote at, any such meeting, or entitled to receive payment of any such dividends or any such allotment of rights or to exercise the rights in respect of any such change, conversion or exchange of capital stock, and in such case such stockholders only as shall be stockholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting, or to receive payment of such dividend or to receive such allotment of rights or to exercise such rights, as the case may be, notwithstanding any transfer of any stock on the books of the corporation after any such record date fixed as aforesaid. Section 5. Dividends.--Subject to the provisions of the Certificate of Incorporation and the DGCL, the Board of Directors may, out of funds legally available therefor at any regular or special meeting, declare dividends upon the capital stock of the corporation as and when they deem expedient. Before declaring any dividend there may be set apart out of any funds of the corporation available for dividends, such sum or sums as the directors from time to time in their discretion deem proper for working capital or as a reserve fund to meet contingencies or for equalizing dividends or for such other purposes as the directors shall deem conducive to the interests of the corporation. 6 Section 6. Seal.--The corporate seal shall be circular in form and shall contain the name of the corporation, the year of its creation and the words "CORPORATE SEAL DELAWARE." Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. Section 7. Fiscal Year.--The fiscal year of the corporation shall be the calendar year, unless otherwise determined by the Board of Directors. Section 8. Checks.--All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation, and in such manner as shall be determined from time to time by resolution of the Board of Directors. Section 9. Notice and Waiver of Notice.--Whenever any notice is required by these By-Laws to be given, personal notice is not meant unless expressly so stated and any notice so required shall be deemed to be sufficient if given by depositing the same in a post office box in a sealed post-paid wrapper, addressed to the person entitled thereto at his last known post office address, and such notice shall be deemed to have been given on the day of such mailing. Stockholders not entitled to vote shall not be entitled to receive notice of any meetings except as otherwise provided by the DGCL. Whenever any notice whatever is required to be given under the provisions of the Certificate of Incorporation, these By-Laws or the DGCL, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. Section 10. Voting Other Stocks.--Unless otherwise directed by the Board of Directors, the Chairman of the Board, if any, the President, any Vice President, the Treasurer or the Secretary may vote any shares of stock issued by another corporation and owned by the corporation at any stockholders' meeting of such other corporation and the Chairman of the Board, if any, the President, any Vice President, the Treasurer or the Secretary shall have the authority on behalf of the corporation to execute and deliver a proxy or proxies for any stockholders' meeting or give any stockholders' consent in respect of the shares of stock of such other corporation owned by the corporation. ARTICLE VI AMENDMENTS These By-Laws may be altered or repealed and By-Laws may be made at any annual meeting of the stockholders or at any special meeting thereof if notice of the proposed alteration or repeal of By-Law or By-Laws to be made, be contained in the notice of such special meeting, by the affirmative vote of a majority of the Board of Directors, at any regular meeting of the Board of Directors, or at any special meeting of the Board of Directors, if notice of the proposed alteration or repeal, or By-Laws to be made, be contained in the notice of such special meeting. 7 EX-3.3 5 dex33.txt CERTIFICATE OF INCORPORATION OF LYONDELL CHEMICAL NEDERLAND, LTD. EXHIBIT 3.3 WILLET LIMITED * * * * * * * * * * * * * * * * * * * * * CERTIFICATE OF INCORPORATION * * * * * * * * * * * * * * * * * * * * * Organized under the laws of the STATE OF DELAWARE * * * * * * * * * * * * * * * * * * * * * CERTIFICATE OF INCORPORATION OF WILLET LIMITED * * * * * FIRST. The name of the corporation is WILLET LIMITED. SECOND. Its registered office in the State of Delaware is located at No. 100 West Tenth Street, in the City of Wilmington, County of Newcastle. The name and address of its registered agent is The Corporation Trust Company, No. 100 West Tenth Street, Wilmington, Delaware. THIRD. The nature of the business, or objects or purposes to be transacted, promoted or carried on are: To construct, own and operate plants and other facilities for manufacturing, refining, producing, processing, blending, marketing and preparing any and all petroleum products or derivatives thereof, any and all chemical products and derivatives thereof, and any and all products useful in manufacturing, refining, producing, processing, blending and preparing any and all such petroleum and chemical products and derivatives thereof whether or not consumed in whole or in part in such process, and metals, ores and mineral substances of every description and kind; to provide management and sales agency services; and barter, trade or otherwise dispose of all manner of goods, wares and merchandise. To engage in the business of developing, improving and acquiring technical information concerning manufacturing processes in the petrochemical field and to acquire, hold, use, sell, assign, lease, mortgage, grant licenses and sublicenses in respect of letters patent of the United States or any foreign country, patent rights, licenses and privileges, inventions, processes, 1 copyrights, trade-marks and trade names relating to or useful in connection with any business of the corporation. To manufacture, purchase or otherwise acquire, invest in, own, mortgage, pledge, sell, assign and transfer or otherwise dispose of, trade, deal in and deal with goods, wares and merchandise and personal property of every class and description. To acquire, and pay for in cash, stock or bonds of this corporation or otherwise, the good will, rights, assets and property, and to undertake or assume the whole or any part of the obligations or liabilities of any person, firm, association or corporation. To acquire by purchase, subscription or otherwise, and to receive, hold, own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or otherwise dispose of or deal in and with any of the shares of the capital stock, or any voting trust certificates in respect of the shares of capital stock, scrip, warrants, rights, bonds, debentures, notes, trust receipts, and other securities, obligations, choses in action and evidences of indebtedness or interest issued or created by any corporations, joint stock companies, syndicates, associations, firms, trusts or persons, public or private, or by the government of the United States of America, or by any foreign government, or by any state, territory, province, municipality or other political subdivision or by any governmental agency, and as owner thereof to possess and exercise all the rights, powers and privileges of ownership, including the right to execute consents and vote thereon, and to do any and all acts and things necessary or advisable for the preservation, protection, improvement and enhancement in value thereof. To enter into, make and perform contracts of every kind and description with any person, firm, association, corporation, municipality, county, state, body politic or government or colony or dependency thereof. 2 To borrow or raise moneys for any of the purposes of the corporation and, from time to time without limit as to amount, to draw, make, accept, endorse, execute and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures and other negotiable or non-negotiable instruments and evidences of indebtedness, and to secure the payment of any thereof and of the interest thereon by mortgage upon or pledge, conveyance or assignment in trust of the whole or any part of the property of the corporation, whether at the time owned or thereafter acquired, and to sell, pledge or otherwise dispose of such bonds or other obligations of the corporation for its corporate purposes. To loan to any person, firm or corporation any of its surplus funds, either with or without security. To purchase, hold, sell and transfer the shares of its own capital stock; provided it shall not use its funds or property for the purchase of its own shares of capital stock when such use would cause any impairment of its capital except as otherwise permitted by law, and provided further that shares of its own capital stock belonging to it shall not be voted upon directly or indirectly. To have one or more offices, to carry on all or any of its operations and business and without restriction or limit as to amount, to purchase, lease or otherwise acquire, hold, own, mortgage, sell, convey or otherwise acquire, hold, own, mortgage, sell, convey or otherwise dispose of, real and personal property of every class and description in any of the states, districts, territories or colonies of the United States, and in any and all foreign countries, subject to the laws of such state, district, territory, colony or country. In general, to carry on any other business in connection with the foregoing, and to have and exercise all the powers conferred by the laws of Delaware upon corporations formed 3 under the General Corporation Law of the State of Delaware, and to do any or all of the things hereinbefore set forth to the same extent as natural persons might or could do. The objects and purposes specified in the foregoing clauses shall, except where otherwise expressed, be in nowise limited or restricted by reference to, or inference from, the terms of any other clause in this certificate of incorporation, but the objects and purposes specified in each of the foregoing clauses of this article shall be regarded as independent objects and purposes. FOURTH. The total number of shares of stock which the corporation shall have authority to issue is eleven thousand (11,000) shares of which ten thousand (10,000) shares of the par value of One Hundred Dollars ($100.00) each, amounting in the aggregate to One Million Dollars ($1,000,000.00) shall be Preferred stock and one thousand (1,000) shares of the par value of Ten Dollars ($10.00) each, amounting in the aggregate to Ten Thousand Dollars ($10,000.00) shall be Common Stock. The board of directors is hereby expressly vested with authority to fix and determine by resolution at the time of issuance, the preferences, qualifications, privileges, limitations, restrictions, and other special or relative rights and terms and conditions of the Preferred stock. The board of directors is authorized to fix by resolution or resolutions, the voting powers, if any, full or limited, the designations and the powers, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, in respect of the Preferred stock to the full extent now or hereafter permitted by the laws of Delaware, except as otherwise provided in the certificate of incorporation or any amendment thereto or any certificate setting forth the resolutions fixing the terms of any class. 4 Every holder of shares of Common stock shall be entitled to one (1) vote at all stockholders' meetings for each share so held. The holders of shares of the Preferred stock shall have no right to vote and shall not be entitled to notice of any meeting of stockholders of the corporation nor to participate in any such meeting, except as required by law or as herein otherwise expressly provided. FIFTH. The minimum amount of capital with which the corporation will commence business is One Thousand Dollars ($1,000.00). SIXTH. The names and mailing addresses of the incorporators are as follows: NAMES MAILING ADDRESS ----- --------------- B.J. CONSONO 100 West Tenth Street Wilmington, Delaware F.J. OBARA, Jr. 100 West Tenth Street Wilmington, Delaware J.L. RIVERA 100 West Tenth Street Wilmington, Delaware SEVENTH. The Corporation is to have perpetual existence. EIGHTH. The private property of the stockholders shall not be subject to the payment of corporate debts to any extent whatever. NINTH. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized: To make, alter or repeal the by-laws of the corporation. To authorize and cause to be executed mortgages and liens upon the real and personal property of the corporation. 5 To set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any property purpose and to abolish any such reserve in the manner in which it was created. By resolution passed by a majority of the whole board, to designate one or more committees, each committee to consist of two or more of the directors of the corporation, which, to the extent provided in the resolution or in the by-laws of the corporation, shall have and may exercise the powers of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be stated in the by-laws of the corporation or as may be determined from time to time by resolution adopted by the board of directors. When and as authorized by the affirmative vote of the holders of a majority of the stock issued and outstanding having voting power given at a stockholders' meeting duly called for that purpose, or when authorized by the written consent of the holders of a majority of the voting stock issued and outstanding, to sell, lease or exchange all of the property and assets of the corporation, including its good will and its corporate franchises, upon such terms and conditions and for such consideration, which may be in whole or in part shares of stock in, and/or other securities of, any other corporation or corporations, as its board of directors shall deem expedient and for the best interests of the corporation. TENTH. Whenever a compromise or arrangement is proposed between this corporation and its creditors or any class of them and/or between this corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this corporation or of any creditor or 6 stockholder thereof, or on the application of any receiver or receivers appointed for this corporation under the provisions of section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this corporation under the provisions of section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this corporation, as the case may be, and also on this corporation. ELEVENTH. Meetings of stockholders may be held outside the State of Delaware, if the by-laws so provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation. Elections of directors need not be by ballot unless the by-laws of the corporation shall so provide. TWELFTH. The corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. 7 WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that the facts herein stated are true, and accordingly have hereunto set our hands and seals this 11th day of March, 1970. ---------------------------------------- ---------------------------------------- ---------------------------------------- 8 STATE OF DELAWARE ) ) SS: COUNTY OF NEW CASTLE ) BE IT REMEMBERED that on this 11th day of March, 1970, personally came before me, a Notary Public for the State of Delaware, B. J. CONSONO, F.J. OBARA, Jr. and J. L. RIVERA all of the parties to the foregoing certificate of incorporation, known to me personally to be such, and severally acknowledged the said certificate to be the act and deed of the signers respectively and that the facts stated therein are true. GIVEN under my hand and seal of office the day and year aforesaid. Notary Public 9 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION WILLET LIMITED, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That the Board of Directors of said corporation, at a meeting duly held, adopted a resolution proposing and declaring advisable the following amendment to the Certificate of Incorporation of said corporation: RESOLVED, that the Certificate of Incorporation of WILLET LIMITED be amended by changing the first Article thereof so that, as amended, said article shall be and read as follows: "FIRST. The name of the corporation OXIRANE CHEMIE NEDERLAND, LTD." SECOND: That in lieu of a meeting and vote of stockholders, the stockholders have given unanimous written consent to said amendment in accordance with the provisions of section 228 of the General Corporation Law of the State of Delaware. THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of sections 242 and 228 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, said WILLET LIMITED has caused this certificate to be signed by H.A. Sorgenti, its president, and attested by Helen Wozno, its Asst. secretary, this 15 day of December, 1980. WILLET LIMITED By: /s/ H. A. SORGENTI --------------------------------------- President ATTEST: By: /s/ HELEN WONZO -------------------------- Asst. Secretary 10 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OXIRANE CHEMIE NEDERLAND, LTD., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That the Board of Directors of said corporation adopted a resolution by the unanimous consent of its members, filed with the minutes of the board, proposing and declaring advisable the following amendment to the Certificate of Incorporation of said corporation: RESOLVED, that the Certificate of Incorporation of Oxirane Chemie Nederland, Ltd. be amended by changing the first Article thereof so that, as amended, said article shall be and read as follows: "1. The name of the corporation ARCO Chemie Neterland, LTD." SECOND: That in lieu of a meeting and vote of stockholders, the stockholders have given unanimous written consent to said amendment in accordance with the provisions of section 228 of the General Corporation Law of the State of Delaware. THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of sections 242 and 228 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, said OXIRANE CHEMIE NEDERLAND, LTD. has caused this certificate to be signed by D. W. McPhail, its Vice President, and attested by H. W. Gill, Jr., its Secretary, this 28th day of September, 1981. OXIRANE CHEMIE NEDERLAND, LTD. By: /s/ D. W. McPHAIL ---------------------------------------- Vice President ATTEST: By: /s/ H. W. GILL, JR. -------------------------- Secretary 11 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION ARCO CHEMIE NEDERLAND, LTD., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That the Board of Directors of said corporation, by the unanimous written consent of its members, filed with the minutes of the Board, adopted a resolution proposing and declaring advisable the following amendment to the Certificate of Incorporation of said corporation: RESOLVED, that the Certificate of Incorporation of ARCO CHEMIE NEDERLAND, LTD. be amended by changing the First Article thereof so that, as amended, said Article shall be and read as follows: "1. The name of the corporation is LYONDELL CHEMIE NEDERLAND, LTD." SECOND: That in lieu of a meeting and vote of stockholders, the stockholders have given unanimous written consent to said amendment in accordance with the provisions of Section 228 of the General Corporation Law of the State of Delaware. THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of Sections 242 and 228 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, said ARCO CHEMIE NEDERLAND, LTD. has caused this certificate to be signed by Robert J. Millstone, its Vice President, and attested by Connie E. Cothran, its Assistant Secretary, this 23rd day of September, 1998. ARCO CHEMIE NEDERLAND, LTD. By: /s/ ROBERT J. MILLSTONE ---------------------------------------- Vice President ATTEST: By: /s/ CONNIE E. COTHRAN ----------------------------- Assistant Secretary 12 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION LYONDELL CHEMIE NEDERLAND, LTD., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That the Board of Directors of said corporation, by a unanimous written consent of its members, filed with the minutes of the Board, adopted a resolution proposing and declaring advisable the following amendment to the Certificate of Incorporation of said corporation: RESOLVED, that the Certificate of Incorporation of LYONDELL CHEMIE NEDERLAND, LTD. be amended by changing the First Article thereof so that, as amended, said Article shall be and read as follows: "1. The name of the corporation is LYONDELL CHEMICAL NEDERLAND, LTD." SECOND: That in lieu of a meeting and vote of stockholders, the stockholders have given unanimous written consent to said amendment in accordance with the provisions of Section 228 of the General Corporation Law of the State of Delaware. THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of Sections 242 and 228 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, said LYONDELL CHEMIE NEDERLAND, LTD. has caused this certificate to be signed by Robert J. Millstone, its Vice President, and attested by Connie E. Cothran, its Assistant Secretary, this 6th day of October, 1998. LYONDELL CHEMIE NEDERLAND, LTD. By: /s/ ROBERT J. MILLSTONE --------------------------------------- Vice President ATTEST: By: /s/ CONNIE E. COTHRAN ----------------------------- Assistant Secretary 13 EX-3.4 6 dex34.txt BY-LAWS OF LYONDELL CHEMICAL NEDERLAND, LTD. EXHIBIT 3.4 BY-LAWS OF ARCO CHEMIE NEDERLAND, LTD. ARTICLE I OFFICES Section 1. Principal Office.--The principal office shall be established and maintained at the office of the Corporation Trust Company, in the City of Wilmington, in the County of New Castle, in the State of Delaware, and said corporation shall be the resident agent of this corporation in charge thereof. Section 2. Other Offices.--The corporation may have other offices, either within or outside of the State of Delaware at such place or places as the Board of Directors may from time to time appoint or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. Place of Meetings.--All meetings of stockholders shall be held at the principal office of the corporation or at such other place as shall be fixed by the Board of Directors or by vote of the stockholders. Section 2. Annual Meetings.--The annual meeting of stockholders for the election of directors and the transaction of other business shall be held once per calendar year on the second Thursday in June of such year at 10:00 a.m. local time or on such other day and at such other time as shall be fixed by the Board of Directors or by vote of the stockholder. At each annual meeting, the stockholders entitled to vote shall elect a Board of Directors and they may transact such other corporate business as shall be stated in the notice of the meeting. Section 3. Voting.--Each stockholder entitled to vote in accordance with the terms of the Certificate of Incorporation and in accordance with the provisions of these By-Laws, shall be entitled to one vote, in person or by proxy, for each share of stock entitled to vote held by such stockholder, but no proxy shall be voted after three years from its date unless such proxy provides for a longer period. All elections for directors shall be decided by plurality vote; all other questions shall be decided by majority vote except as otherwise provided by the Certificate of Incorporation or the Delaware General Corporation Law (the "DGCL"). Section 4. Quorum.--Except as otherwise required by the Certificate of Incorporation, these By-Laws or the DGCL, the presence, in person or by proxy, of stockholders holding a majority of the stock of the corporation entitled to vote shall constitute a quorum at all meetings of the stockholders. In case a quorum shall not be present at any meeting, a majority in interest of the stockholders entitled to vote thereat, present in person or by proxy, shall have power to adjourn the meeting from time to time without notice other than announcement at the meeting, until the requisite amount of stock entitled to vote shall be present. At any such adjourned meeting at which the requisite amount of stock entitled to vote shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed; but only those stockholders entitled to vote at the meeting as originally noticed shall be entitled to vote at any adjournment or adjournments thereof. Section 5. Special Meetings.--Special meetings of the stockholders for any purpose or purposes may be called by the Board of Directors, the Chairman of the Board, if any, the President, any Vice President, the Secretary or any Assistant Secretary or by vote of the stockholders. No business other than that stated in the notice of the meeting shall be transacted at any special meeting. Section 6. Notice of Meetings.--Notice of any meeting, stating the place, date and hour of the meeting, and in the case of a duly called special meeting, the purpose or purposes for which the meeting is called, shall be given by the Chairman of the Board, if any, the President, any Vice President, the Secretary, or any Assistant Secretary by written, telegraphic, or by any other means of communication to each stockholder entitled to vote at his address as it appears on the records of the corporation not less than ten days nor more than sixty days before the meeting. Section 7. Action without Meeting.--Whenever the vote of stockholders at a meeting thereof is required or permitted to be taken in connection with any corporate action by any provisions of the Certificate of Incorporation, these By-Laws or the DGCL, the meeting and vote of stockholders may be dispensed with, if, subject to the provisions of the DGCL, a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all stockholders entitled to vote thereon were present and voted. Section 8. Organization.--Meetings of the stockholders shall be presided over by the Chairman of the Board, if any, the President, any Vice President, or in their absence by a chairman to be chosen by a majority of the stockholders entitled to vote at the meeting who are present in person or by proxy. The Secretary, an Assistant Secretary, or in their absence, any person appointed by the chairman of the meeting shall act as secretary of the meeting. ARTICLE III DIRECTORS Section 1. Number and Term.--The number of directors which shall constitute the whole board shall be one or more, with the specific number thereof to be determined from time to time by the Board of Directors or by the stockholders. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 3 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Resignations.--Any director may resign at any time. Such resignation shall be made in writing, and shall take effect at the time specified therein, and if no time be specified, at the time of its receipt by the President or the Secretary. The acceptance of a resignation shall not be necessary to make it effective. 2 Section 3. Vacancies.--Unless otherwise provided in the Certificate of Incorporation or these By-Laws, vacancies and newly created directorships resulting from any increase in the authorized number of directors, may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. If at any time, by reason of death or resignation or other cause, the corporation should have no directors in office, then any officer or any stockholder may call a special meeting of stockholders in accordance with the provisions of the Certificate of Incorporation or these By- Laws to elect one or more directors. Section 4. Removal.--Any director or directors may be removed with or without cause at any time by the affirmative vote of the holders of a majority of all the shares of stock outstanding and entitled to vote. Section 5. Powers.--The Board of Directors shall exercise all of the powers of the corporation except such as are conferred upon or reserved to the stockholders by the Certificate of Incorporation, these By-Laws or otherwise by law. Section 6. Committees.--The Board of Directors may, by resolution or resolutions, passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation, which, to the extent provided in said resolution or resolutions or in these By-Laws, shall have and may exercise the powers of the Board in the management of the business and affairs of the corporation. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board. The committees shall keep regular minutes of their proceedings and report the same to the board when required. The Board shall have power at any time to fill vacancies in, change the membership of, designate one or more directors as alternate members of, or discharge any such committee. Section 7. Meetings.--An annual organizational meeting of the Board of Directors may be held without notice immediately after the annual meeting of the stockholders or at such other time and place as may be fixed by consent in writing of all the directors. Regular meetings of the Board of Directors may be held without notice at such places and times as shall be determined from time to time by resolution of the Board. Special meetings of the Board of Directors may be called by Chairman of the Board, if any, the President, the Secretary or the greater of one director or one-third of the entire Board on at least two days' notice to each director and shall be held at such place or places as may be agreed upon by the directors, or as shall be stated in the call of the meeting. Members of the Board of Directors or any committee designated by the Board, may participate in a meeting of the Board or of such committee, as the case may be, by conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this procedure shall constitute presence in person at such meeting. Meetings of the Board of Directors shall be presided over by the Chairman of the Board, if any, or in his absence by the President, or in their absence by a chairman chosen at the meeting. The Secretary or an Assistant Secretary shall act as secretary of the meeting, but in their absence the chairman of the meeting may appoint any person to act as secretary of the meeting. 3 Section 8. Action Without Meeting.--Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all the members of the Board or of such committee, as the case may be, consent thereto in writing and such written consent is filed with the minutes of the proceedings of the Board or committee. Section 9. Quorum.--At all meetings of the Board of Directors or of any committee thereof, one-third of the entire Board or committee shall constitute a quorum for the transaction of business. However, whenever the Board or the stockholders shall determine that there be two or less members of the Board or committee, then and only then, one director shall constitute a quorum. Except as otherwise provided by the Certificate of Incorporation, these By- Laws or the DGCL, the act of a majority of the directors at a meeting at which a quorum is present shall be the act of the Board of Directors. If at any meeting of the Board a quorum shall not be present, the members of the Board present may adjourn the meeting from time to time until a quorum shall have been obtained. Section 10. Compensation.--Directors shall not receive any stated salary for their services as directors or as members of committees, but by resolution of the board a fixed fee and expenses of attendance may be allowed for attendance at each meeting. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity as an officer, agent or otherwise, and receiving compensation therefor. ARTICLE IV OFFICERS Section 1. Officers.--The officers of the corporation shall be a President, one or more Vice Presidents, a Treasurer, and a Secretary, and such Assistant Treasurers and Assistant Secretaries as the Board of Directors may deem proper. In addition, the Board may elect a Chairman of the Board. All of such officers shall be elected by the Board. None of the officers, except the Chairman of the Board, if any, need be directors. The officers shall be elected at the first meeting of the Board after each annual meeting of stockholders and each officer elected shall hold office until his successor is elected and qualified or until his earlier resignation or removal. Any number of offices may be held by the same person, except that the President shall not also be the Secretary. Section 2. Other Officers and Agents.--The Board of Directors may appoint such other officers and agents as it may deem advisable, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board. Section 3. Chairman.--The Chairman of the Board, if one be elected, shall preside at all meetings of the Board of Directors and he shall have and perform such other duties as from time to time may be assigned to him by the Board. Section 4. President.--The President shall be the chief executive officer of the corporation and shall have the general powers and duties of supervision and management and execution usually vested in the office of President of a corporation. He shall preside, in the 4 absence or non-election of the Chairman of the Board, at all meetings of the stockholders and of the Board of Directors, shall have general supervision, direction and control of the business of the corporation and shall perform such other duties as from time to time may be specified by the Board. Section 5. Treasurer.--The Treasurer shall have the care and custody of the funds and securities of the corporation and shall have such powers and perform such duties as are incident to the office of Treasurer, or as may from time to time be specified by the Board of Directors. The Treasurer shall be subject to the control of the Board and to the powers of the President. Section 6. Secretary.--The Secretary shall attend all meetings of the Board of Directors and of the stockholders and shall have the care and custody of the seal and the minute books of the corporation and shall have such powers and perform such duties as are incident to the office of the Secretary or as may from time to time be specified by the Board. The Secretary shall be subject to the control of the Board. Section 7. Assistant Officers.--Unless otherwise provided in these By-Laws, the Vice Chairman of the Board, any Vice President, any Assistant Secretary and any Assistant Treasurer, if any, shall, in the order of their respective seniorities, in the absence or disability of the Chairman of the Board, President, Secretary or Treasurer, respectively, perform the duties of such officer and shall generally assist the Chairman of the Board, President, Secretary or Treasurer, respectively. Section 8. Resignations.--Any officer may resign at any time upon written notice to the corporation. Such resignation shall take effect at the time specified therein, or if no time specified, at the time of its receipt by the President, the Secretary or the Board of Directors. Section 9. Vacancies.--A vacancy in any office arising from any cause may be filled by the Board of Directors. Section 10. Removal.--The Board of Directors may remove any officer with or without cause at any time. ARTICLE V MISCELLANEOUS Section 1. Certificates of Stock.--certificates of stock, numbered and with the seal of the corporation affixed, signed by the President or Vice President, and the Treasurer or an Assistant Treasurer, or Secretary or an Assistant Secretary, shall be issued to each stockholder certifying the number of shares owned by him in the corporation. When such certificates are signed by a transfer agent or an assistant transfer agent or by a transfer clerk acting on behalf of the corporation and a registrar, the signatures of such officers may be facsimiles. Section 2. Lost Certificate.--A new certificate of stock may be issued in the place of any certificate therefore issued by the corporation, alleged to have been lost or destroyed, and the directors may, in their discretion, require the owner of the lost or destroyed certificate, or his legal representatives, to give the corporation a bond, in such sum as they may direct, not exceeding double the value of the stock, to indemnify the corporation against any claim that may 5 be made against it on account of the alleged loss of any such certificate, or the issuance of any such new certificate. Section 3. Transfer of Shares.--The shares of stock of the corporation shall be transferable only upon its books by the holders thereof in person or by their duly authorized attorneys or legal representatives, and upon such transfer the old certificates shall be surrendered to the corporation by the delivery thereof to the person in charge of the stock and transfer books and ledgers, or such other person as the directors may designate, by whom they shall be cancelled, and new certificates shall thereupon be issued. A record shall be made of each transfer, and a duplicate thereof mailed to the Delaware office, and whenever a transfer shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer. Section 4. Closing of Transfer Books.--The Board of Directors shall have power to close the stock transfer books of the corporation for a period not more than five days preceding the date of any meeting of stockholders, the date for payment of any dividend, the date for the allotment of rights or the date when any change or conversion or exchange of capital stock shall go into effect; provided, however, that in lieu of closing the stock transfer books as aforesaid, the Board of Directors may fix in advance a date not more than sixty days, and in the case of any meeting of stockholders not less than ten days, preceding the day of any meeting of stockholders or the date for the payment of any dividend, the date for the allotment of rights or the date when any change or conversion or exchange of capital stock shall go into effect, as a record date for the determination of the stockholders entitled to notice of, and to vote at, any such meeting, or entitled to receive payment of any such dividends or any such allotment of rights or to exercise the rights in respect of any such change, conversion or exchange of capital stock, and in such case such stockholders only as shall be stockholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting, or to receive payment of such dividend or to receive such allotment of rights or to exercise such rights, as the case may be, notwithstanding any transfer of any stock on the books of the corporation after any such record date fixed as aforesaid. Section 5. Dividends.--Subject to the provisions of the Certificate of Incorporation and the DGCL, the Board of Directors may, out of funds legally available therefor at any regular or special meeting, declare dividends upon the capital stock of the corporation as and when they deem expedient. Before declaring any dividend there may be set apart out of any funds of the corporation available for dividends, such sum or sums as the directors from time to time in their discretion deem proper for working capital or as a reserve fund to meet contingencies or for equalizing dividends or for such other purposes as the directors shall deem conducive to the interests of the corporation. Section 6. Seal.--The corporate seal shall be circular in form and shall contain the name of the corporation, the year of its creation and the words "CORPORATE SEAL DELAWARE." Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. Section 7. Fiscal Year.--The fiscal year of the corporation shall be the calendar year, unless otherwise determined by the Board of Directors. 6 Section 8. Checks.--All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation, and in such manner as shall be determined from time to time by resolution of the Board of Directors. Section 9. Notice and Waiver of Notice.--Whenever any notice is required by these By-Laws to be given, personal notice is not meant unless expressly so stated and any notice so required shall be deemed to be sufficient if given by depositing the same in a post office box in a sealed post-paid wrapper, addressed to the person entitled thereto at his last known post office address, and such notice shall be deemed to have been given on the day of such mailing. Stockholders not entitled to vote shall not be entitled to receive notice of any meetings except as otherwise provided by the DGCL. Whenever any notice whatever is required to be given under the provisions of the Certificate of Incorporation, these By-Laws or the DGCL, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. Section 10. Voting Other Stocks.--Unless otherwise directed by the Board of Directors, the Chairman of the Board, if any, the President, any Vice President, the Treasurer or the Secretary may vote any shares of stock issued by another corporation and owned by the corporation at any stockholders' meeting of such other corporation and the Chairman of the Board, if any, the President, any Vice President, the Treasurer or the Secretary shall have the authority on behalf of the corporation to execute and deliver a proxy or proxies for any stockholders' meeting or give any stockholders' consent in respect of the shares of stock of such other corporation owned by the corporation. ARTICLE VI AMENDMENTS These By-Laws may be altered or repealed and By-Laws may be made at any annual meeting of the stockholders or at any special meeting thereof if notice of the proposed alteration or repeal of By-Law or By-Laws to be made, be contained in the notice of such special meeting, by the affirmative vote of a majority of the Board of Directors, at any regular meeting of the Board of Directors, or at any special meeting of the Board of Directors, if notice of the proposed alteration or repeal, or By-Laws to be made, be contained in the notice of such special meeting. 7 EX-3.7 7 dex37.txt CERTIFICATE OF LIMITED PARTNERSHIP OF ARCO CHEMICAL TECHNOLOGY, L.P. EXHIBIT 3.7 CERTIFICATE OF LIMITED PARTNERSHIP This certificate is filed pursuant to Section 17-201 of the Delaware Limited Partnership Act. 1. The name of the limited partnership is: ARCO Chemical Technology, L.P. 2. The address of the registered office and name of the registered agent is: Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 3. The name and address of the general partner is: ARCO Chemical Technology Management, Inc. 201 North Walnut Street, Suite 902 Wilmington, Delaware 19801 ARCO CHEMICAL TECHNOLOGY, L.P. By: ARCO CHEMICAL TECHNOLOGY MANAGEMENT, INC., the General Partner and a Delaware corporation By: /s/ JOHN WAGNER ------------------------------------ John Wagner Vice President Date: December 1, 1991 CONSENT TO USE OF NAME ARCO Chemical Technology, Inc., a corporation organized under the laws of the State of Delaware, hereby consents to the organization of ARCO Chemical Technology, L.P. in the State of Delaware. IN WITNESS WHEREOF, the said ARCO Chemical Technology, Inc. has caused this consent to be executed by its vice president and attested by its _________ secretary, this 13th day of December, 1991. ARCO CHEMICAL TECHNOLOGY, INC. By: /s/ JOHN WAGNER --------------------------- John Wagner, Vice President Attest: /s/ LOIS McCAUGHAN - ------------------------- Lois McCaughan, Secretary STATE OF DELAWARE CERTIFICATE TO RESTORE TO GOOD STANDING A DELAWARE LIMITED PARTNERSHIP (PURSUANT TO TITLE 6, SEC. 17-1109) 1. Name of Limited Partnership: ARCO Chemical Technology, L.P. 2. Date of original filing with Delaware Secretary of State: December 13, 1991 I, John M. Wagner, General Partner or Liquidating Trustee of the above named limited partnership do hereby certify that this limited partnership is paying all annual taxes, penalties and interest due to the State of Delaware. I do hereby request this limited partnership be restored to Good Standing. /s/ JOHN M. WAGNER --------------------------------- General Partner or Liquidating Trustee EX-3.8 8 dex38.txt AGREEMENT OF LIMITED PARTNERSHIP OF ARCO CHEMICAL TECHNOLOGY, L.P. EXHIBIT 3.8 _____________________________________ ARCO CHEMICAL TECHNOLOGY, L.P. _____________________________________ AGREEMENT OF LIMITED PARTNERSHIP PREAMBLE This Agreement of Limited Partnership, which is made and dated as of the lst day of December, 1991, is by and between ARCO Chemical Technology Management, Inc., as the general partner, and ARCO Chemical Technology, Inc., as the limited partner. In consideration of the rights conferred and the obligations assumed herein, and intending to be legally bound, the parties hereto hereby agree as follows. ARTICLE I. FORMATION OF LIMITED PARTNERSHIP Section 1.1 Formation. The parties hereto hereby form a limited partnership pursuant to Del. Code Ann. tit. 6, (S)(S) 17-101, et seq., known as the Delaware Revised Uniform Limited Partnership Act. Section 1.2 Certificate and Filings. The parties hereto shall forthwith execute an appropriate certificate of limited partnership and such other documents as may be required in connection with the formation of a Delaware limited partnership, which the General Partner shall cause to be appropriately filed as required by law. ARTICLE II. DEFINITIONS Section 2.1 Defined Terms. The following terms shall have the meanings indicated below wherever they appear in this Agreement and such meanings shall be equally applicable to both the singular and plural forms of the terms herein defined. References to an agreement, instrument or document shall, unless otherwise expressly provided, include such agreement, instrument or document as the same may be amended, modified or supplemented from time to time in accordance with its terms, and shall include all schedules, appendices, annexes and exhibits thereto, as the same may be so amended, modified, or supplemented from time to time. "Accountants" shall mean such firm or firms of internationally recognized certified public accountants as may be appointed by the General Partner. "Act" shall mean the Delaware Revised Uniform Limited Partnership Act, as it may be amended from time to time, and any successor thereto. 1 "ACTI" shall mean ARCO Chemical Technology, Inc., a Delaware corporation. "ACTM" shall mean ARCO Chemical Technology Management, Inc., a Delaware corporation. "Affiliate" shall mean, with respect to two Persons, that (i) one, directly or indirectly, is wholly owned by the other or (ii) both are directly or indirectly wholly owned by the same Person. "Agreement" shall mean this Agreement of Limited Partnership, including all appendices and other exhibits or attachments hereto, as amended from time to time. "Assets" shall mean all property, real and personal, tangible and intangible, of the Partnership. "Available Cash" of the Partnership shall mean all funds of the Partnership on hand from time to time after (i) payment of all expenses of the Partnership as of such time and (ii) provision for a reserve reasonably necessary for Partnership operations and additional investments and reinvestments in the course of business of the Partnership. "Capital Account" shall mean a capital account for each Partner established on the books of the Partnership in accordance with Article V. "Capital Contributions" in respect of any Partner shall mean the amount of all cash or other consideration contributed or deemed contributed by such Partner and any predecessor in interest of such Partner to the capital of the Partnership pursuant to Article VI. "Certificate of Limited Partnership" means the Partnership's Certificate of Limited Partnership as filed with the Secretary of State of Delaware, as it may be amended, supplemented or restated from time to time. 2 "Code" shall mean the Internal Revenue Code of 1986, as it may be amended from time to time, and any successor thereto. "Fiscal Year" shall mean the calendar year, except that any tax year of the Partnership for federal income tax purposes that does not commence on January 1 and end on December 31 of a calendar year shall also be considered a Fiscal Year. "GAAP" shall mean generally accepted accounting principles in the United States of America, consistently applied for the periods involved. "General Partner" shall mean ACTM in its capacity as a general partner of the Partnership, or any successor or assign thereof. "Limited Partner" shall mean ACTI and any Person who is or becomes a party to this Agreement as a limited partner in the Partnership, in its capacity as a limited partner in the Partnership, or any other Person admitted as an additional or substitute limited partner in the Partnership pursuant to this Agreement, in such Person's capacity as a limited partner in the Partnership. "Partner" shall mean any Limited Partner or General Partner. "Partnership" shall mean the limited partnership organized pursuant to this Agreement and the Certificate of Limited Partnership. "Partnership Interest" shall mean the interest of a Partner, or an assignee of a Partner, in Partnership Assets and in Profits, Losses and Partnership distributions. "Partnership Return" shall mean the Partnership's United States federal income tax return. "Percentage Interest" shall mean the percentage specified in Section 6.5. 3 "Person" shall mean any individual, partnership, firm, trust, association, corporation, joint venture, unincorporated organization, other business entity or governmental authority or political subdivision, including any agency, department or instrumentality thereof. "Profits" and "Losses" shall mean, for each Fiscal Year or other period, the profit or loss of the Partnership determined in accordance with Section 4.1. "Regulations" shall mean the income tax regulations promulgated by the U.S. Treasury Department pursuant to the Code and reference to any section of such regulations shall include any successor thereto. "Tax Credit" shall mean any amount that may be used as a credit against the tax imposed by the Code or by any state or municipal law. "Tax Matters Partner" shall have the meaning specified in Section 13.2 of this Agreement. ARTICLE III. NAME, PURPOSE, TERM, AND PLACE OF BUSINESS Section 3.1 Name. The business of the Partnership shall be conducted under the Partnership name "ARCO Chemical Technology, L.P.", or such name as may from time to time be designated by the General Partner upon notice to the Limited Partner. The abbreviation "L.P." shall be included in the Partnership's name where necessary for the purposes of complying with the laws of any jurisdiction that so requires. Section 3.2 Purpose. The purpose of the Partnership shall be to own, purchase, develop and license technology. 4 Section 3.3 Term. The Partnership shall continue in existence until 11:59 p.m., local time in Wilmington, Delaware on December 31, 2021, or until earlier terminated according to Article XII. Section 3.4 Place of Business. The principal place of business and commercial domicile of the Partnership shall be in the State of Delaware, or such other place as the General Partner, upon notice to the Limited Partner, may from time to time designate. Section 3.5 Principal Office; Registered Office. The principal office of the Partnership shall be at 201 North Walnut Street, 3 Christina Center, Suite 902, Wilmington, Delaware 19801, or such other place as may from time to time be designated by the General Partner upon notice to the Limited Partner. The address of the registered office of the Partnership in the State of Delaware shall be 1209 Orange Street, Wilmington, Delaware 19801, and the registered agent for service of process on the Partnership in the State of Delaware at such registered office shall be CT Corporation System, or such other agent or address as may from time to time be designated by the General Partner upon notice to the Limited Partner. ARTICLE IV. BOOKS OF ACCOUNT AND BUDGETS Section 4.1 Accounting. The General Partner shall cause to be maintained, at the Partnership's principal office, on behalf of the Partnership, proper books and records with respect to the Partnership's business. The books of the Partnership shall be maintained to reflect commencement and formation of the Partnership for accounting purposes as of the date of this Agreement. The books of the Partnership shall be maintained on the accrual basis. For purposes of computing the amount of any item of income, gain, loss, deduction or credit to be reflected in the Partners' Capital Accounts, the determination, recognition and classification of any such item 5 shall be the same as its determination, recognition and classification for federal income tax purposes, provided that: (a) Any deductions for depreciation, cost recovery or amortization attributable to property contributed by a Partner to the Partnership shall be determined as if the adjusted basis of such property on the date it was contributed was equal to the fair market value of the property; and (b) Any income, gain or loss attributable to the taxable disposition of any property contributed by a Partner shall be determined as if the adjusted basis of the property as of the date of disposition was equal to the fair market value of the property at the time of contribution reduced by all depreciation, cost recovery and amortization deductions charged to the Partners' Capital Accounts with respect to such property pursuant to Section 5.2. Section 4.2 Banking. All funds of the Partnership shall be deposited in the name of the Partnership in an account or accounts with one or more banks or similar depository institutions as shall be determined by the General Partner. Section 4.3 Financial Reporting. The General Partner shall inform the Limited Partner of the adjustments necessary to reflect the net profit and loss in accordance with GAAP. Section 4.4 Reserves. Each Fiscal Year, the General Partner shall determine, after consultation with the Limited Partner, the amount of the reserve, if any, that may be reasonably necessary for Partnership operations and additional investments and reinvestments in the course of business of the Partnership. 6 ARTICLE V. CAPITAL ACCOUNTS Section 5.1 Establishment of Capital Accounts. A separate Capital Account shall be established and maintained in respect of each Partner. Section 5.2 Maintenance of Capital Accounts. Each Partner's Capital Account shall be credited with (i) the amount of cash and the fair market value of other property (net of liabilities that the Partnership is considered to assume or take subject to, under Section 752 of the Code) contributed by such Partner to the capital of the Partnership and (ii) allocations to it pursuant to Section 7.1 of income (or items thereof) including tax-exempt income and gain. A Partner's Capital Account shall be debited with (i) the cash and fair market value of property distributed to such Partner (net of liabilities that such Partner is considered to assume or take subject to, under Section 752 of the Code), (ii) allocations to it of expenditures of the Partnership described in Section 705(a)(2)(b) of the Code, and (iii) allocations to it pursuant to Sections 7.1 and 7.2 of deduction or loss (or items thereof). If any property other than cash is distributed to a Partner, the Capital Accounts of the Partners shall be adjusted as if the property had instead been sold by the Partnership for a price equal to its fair market value, with the resulting gain or loss allocated among the Partners pursuant to Sections 7.1 and 7.2, and the proceeds thereof distributed. The Partners shall maintain their Capital Accounts in accordance with the Code and the Regulations. Section 5.3 Transferred Capital Accounts. In the event that any Partnership Interest or portion thereof is transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor Partner to the extent such Capital Account relates to the transferred Partnership Interest or portion thereof. 7 Section 5.4 Compliance with Regulations. The provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Section 1.704-1(b) of the Regulations and shall be interpreted and applied in a manner consistent with such Regulations. In the event that the General Partner shall determine, after consultation with the Limited Partner, that it is prudent to modify the manner in which the Capital Accounts are computed in order to comply with changes in such Regulations or for other reasons, the General Partner may in its sole discretion make such modification. ARTICLE VI. CAPITAL CONTRIBUTIONS AND PERCENTAGE INTERESTS Section 6.1 General Partner Capital. The General Partner, in its capacity as General Partner, shall contribute cash or cash equivalents to the Partnership's capital at such times as Capital Contributions are made by the Limited Partner in an amount equal to 1.01% of the amount contributed by the Limited Partner, as determined pursuant to Sections 6.2, 6.3 and 6.4. It is intended that the General Partner's Capital Contributions shall result in a 1% Percentage Interest for the General Partner. Section 6.2 Limited Partner Capital Contributions. The Limited Partner shall contribute as a Capital Contribution the property described in an assignment and assumption agreement dated as of the date hereof (the "Assignment and Assumption Agreement"), the form of which is attached as Appendix A hereto. Such Capital Contribution shall be a net contribution comprising certain assets which will be assigned to the Partnership by the Limited Partner net of certain liabilities which will be assumed by the Partnership, all pursuant to the Assignment and Assumption or Agreement. It is intended that the Limited Partner's Capital Contribution shall result in a 99% Percentage Interest for the Limited Partner. 8 Section 6.3 Contributions of Property. The Partners agree that the fair market value of the property contributed pursuant to Section 6.2 shall be as set forth in Appendix B hereto. Section 6.4 Estimated Fair Market Value. If the Partners are unable, at the time of execution of this Agreement, to establish the fair market value of all or any part of any property contributed by the Limited Partner pursuant to Section 6.2, the Partners may initially set forth an estimated value for such property pending final determination of the fair market value thereof. In such event, the General Partner's contribution pursuant to Section 6.1 shall initially be calculated using the estimated value of such property. Adjustments (either additional contributions from the General Partner or refund of excess contributions to the General Partner, as the case may be) shall be effected upon the final determination by the Partners of the fair market value of such property. Section 6.5 Percentage Interests. The Partners' respective Percentage Interests shall be the percentage determined by dividing the amount of each Partner's Capital Account by the total of the aggregate Capital Accounts of all Partners. It is intended that the General Partner's Percentage Interest shall be 1% and that the Limited Partner's Percentage Interest shall be 99%. In the event that any Partnership Interest or portion thereof is transferred in accordance with this Agreement, the transferee shall succeed to the Percentage Interest of the transferor Partner to the extent that such Percentage Interest relates to the transferred Partnership Interest or portion thereof. Section 6.6 Additional Capital Contributions. The Partners may, but shall not be required to, make additional Capital Contributions. 9 Section 6.7 Loans to the Partnership. Loans by Partners to the Partnership shall not be considered Capital Contributions, nor shall Capital Contributions by the Partners be deemed loans. If any Partner advances funds to the Partnership in excess of the amounts required hereunder or in any separate agreement with the General Partner to be contributed by it to the capital of the Partnership, the making of any such advance shall not result in any increase in the amount of the Capital Account or Partnership Interest of such Partner. The amount of any such advance shall be a debt of the Partnership to such Partner and shall be payable or collectible only out of the Partnership Assets in accordance with the terms and conditions upon which such advance is made. Section 6.8 Limitations. No Partner, without the prior written consent of the General Partner, which consent may be withheld for any reason or for no reason, may (i) withdraw or reduce its Capital Contribution to the Partnership, (ii) bring an action for partition against the Partnership, (iii) except as provided in Section 6.2, contribute or receive property other than cash as or for its Capital Contributions, (iv) have priority over any other Partner as to the return of its Capital Contribution or as to the Partnership's Profits, Losses or distributions or (v) pledge, mortgage or otherwise encumber all or part of its Partnership Interest. ARTICLE VII. ALLOCATIONS Section 7.1 Allocation of Profits and Losses. The Profits and Losses of the Partnership shall be allocated among the Partners by allocating each item of income, gain, loss, deduction and credit of the Partnership, determined in accordance with Article IV, for each Fiscal Year as follows: 10 (a) Except as otherwise provided in this Agreement, all items of income, gain, loss, deduction and credit of the Partnership shall be allocated among the Partners in accordance with their respective Percentage Interests. (b) Deductions for expenses incurred pursuant to Section 8.2 that are the sole responsibility of the General Partner shall be allocated to the General Partner. Deductions for expenses incurred pursuant to Section 8.2 for which all of the Partners are responsible shall be allocated among the Partners in accordance with their respective Percentage Interests. (c) Notwithstanding the foregoing provisions of this Article VII, if any Partner unexpectedly receives an adjustment, allocation or distribution described in paragraphs (5) or (6) of Section 1.704-1(b)(2)(ii)(d) of the Regulations, which creates a deficit balance in its Capital Account that exceeds such Partner's share of minimum gain, plus such Partner's obligation to restore such deficit, such Partner shall be allocated items of income and gain in an amount sufficient to eliminate any such deficit balance as quickly as possible in accordance with the rules of Section 1.704-1(b)(2)(ii)(d) of the Regulations. Section 7.2 Gain or Loss from the Sale; Involuntary Conversion or Other Disposition of Partnership Property. The General Partner shall allocate any gains or losses from the sale, exchange, involuntary conversion or other disposition of all or any part of the Partnership Assets between the Partners in accordance with their respective Percentage Interests. Section 7.3 Allocations for Tax Purposes. (a) Except as otherwise provided in this Agreement, for Federal income tax purposes, any item of Partnership income, gain, loss, deduction and credit (and the character and 11 source of such items) shall be allocated among the Partners in the same manner as the corresponding item of income, gain, loss, deduction or credit is allocated to Capital Accounts pursuant to this Article, and the Partnership shall maintain such books, records, and accounts as are necessary to make such allocations. (b) If, as a result of contributions of property by a Partner to the Partnership, Section 704(c) of the Code requires allocations of income, gain, loss and deduction of the Partnership in a manner different from that set forth in this Section, the provisions of Section 704(c) of the Code and the Regulations thereunder shall control, solely for federal income tax purposes, with regard to allocations of items of Partnership income, gain, loss and deduction. (c) If a Partner sells or exchanges a part of its interest in the Partnership, or if the interest of a Partner is reduced, the Partner's distributive share of items allocated pursuant to Section 7.3(a) shall be determined as if the Partnership's books of account were closed on the date on which such sale, exchange or reduction of interest occurred. ARTICLE VIII. FEES AND EXPENSES OF GENERAL PARTNER Section 8.1 General Partner Management Fee. The General Partner shall receive no management fee or other compensation for its services to the Partnership. Section 8.2 General Partner Expenses. The General Partner shall be responsible for all normal expenses incurred in fulfilling its obligations with respect to the administration of the Partnership. Expenses, such as the costs of litigation in behalf of the Partnership and tax audits, that are not incurred by a general partner in the normal course of carrying out such responsibilities shall be reimbursed to the General Partner by the other Partners 12 in proportion to their Percentage Interests in the Partnership, except insofar as such expenses are due to the willful or negligent act or omission of the General Partner or anyone acting on its behalf. ARTICLE IX. DISTRIBUTIONS Section 9.1 Distributions of Income. (a) The General Partner shall cause the Partnership to distribute income to the Partners at such times as the General Partner determines. Distributions of income shall be allocated among the Partners in accordance with their respective Percentage Interests. (b) Any cash realized by the Partnership from the sale of Partnership Assets shall be distributed at such times and in such amounts as the General Partner determines. Such distributions shall be allocated among the Partners in accordance with their respective Percentage Interests. (c) Not withstanding anything else in Section 9.1, to the extent that Section 7.1(c) overrides the allocation of income under the preceding provisions of Section 7.1, an adjustment to distributions under this Section 9.1 shall be made in accordance with the principles of Section 7.1(c). Section 9.2 Distributions in Liquidation. Notwithstanding anything to the contrary contained in this Agreement, distributions upon termination of the Partnership and upon liquidation of a Partner's interest in the Partnership shall be made in accordance with Article XII. 13 Section 9.3 Amounts Withheld. Any charges, duties, fees or other amounts withheld by the General Partner pursuant to the Code or any provision of any federal, state or local tax law with respect to any payment or distribution to the Partners shall be treated as amounts distributed to the Partners pursuant to this Article for all purposes of this Agreement. Section 9.4 Tax Liabilities. Any asset used by the Partnership to satisfy the income tax liabilities of a Partner or Partners and any withholding tax paid by the Partnership (including interest and penalties, if any) with respect to such Partner's share of the income of the Partnership shall be treated as a distribution of cash by the Partnership to such Partner or Partners, as the case may be. Section 9.5 Transferred Interest. If a portion of a Partnership Interest is transferred in accordance with the terms of this Agreement, any Available Cash with respect to such transferred Partnership Interest for the period up to the date on which the Partnership Interest was transferred shall be distributed to the Person who owned such interest or partial interest immediately prior to such transfer. ARTICLE X. RIGHTS, POWERS AND OBLIGATIONS OF THE GENERAL PARTNER Section 10.1 Powers. (a) The General Partner shall have all the rights and powers of a general partner as provided in the Act, under any other applicable law, or in this Agreement, except to the extent that such powers may be expressly limited by the Act, such other laws, or this Agreement. Except as so limited, the General Partner shall have the exclusive right and power to manage the Partnership and its assets and business, and shall be authorized to do on behalf of the 14 Partnership all things that, in its sole discretion (unless otherwise provided herein), are necessary or appropriate to carry out the Partnership's purpose as set forth in Section 3.2 including without limitation the following: (1) Enter into, execute, acknowledge, deliver, cancel and terminate any and all contracts, agreements and other instruments to carry on the business of the Partnership as set forth herein; (2) Cause to be paid all amounts due and payable by the Partnership to any person and collect all amounts due to the Partnership; (3) Delegate any or all of its duties and powers under this Agreement, and engage agents, employees, managers, accountants, attorneys, consultants and other persons to carry out the business and affairs of the Partnership, whether or not any such Persons so employed are affiliated with or related to any Partner, and to pay such fees, expenses, salaries, wages and other compensation to such persons as the General Partner shall in its discretion determine; (4) Pay, extend, renew, modify, adjust, submit to arbitration, prosecute, defend or compromise, upon such terms as the General Partner may determine and upon such evidence as it may deem sufficient, any obligation, suit, liability, cause of action, right or claim, either in favor of or against the Partnership; (5) Pay any fee or expense incurred in connection with the Partnership's organization, the management of the Partnership's business or affairs, or the carrying out of the General Partner's obligations and responsibilities under this Agreement or the Act; 15 (6) Prosecute and defend or cause to be prosecuted and defended, all proprietary rights, including all licenses and permits and all applications with respect thereto, that may be held by the Partnership, and prosecute and defend all rights of the Partnership in connection therewith; (7) Cause to be paid any and all taxes, charges and assessments that may be levied, assessed or imposed upon any of the assets of the Partnership, unless the same are contested by the General Partner in good faith; (8) Establish, operate and close one or more accounts for the Partnership in such financial institutions as the General Partner may from time to time determine; (9) Make distributions periodically according to the provisions of this Agreement; (10) Keep, or cause to be kept, the Partnership books and records; (11) Secure the necessary goods and services required in performing the General Partner's duties for the Partnership; (12) Collect and disburse the Partnership's funds and invest any excess funds of the Partnership in such investments as the General Partner shall determine; (13) Subject to the consent of the other Partners, which consent shall not unreasonably be withheld, mortgage, pledge or otherwise encumber the Partnership's assets; 16 (14) Cause the Partnership to use excess Partnership cash to make equity investments in, and advance loans to, corporations, and to exercise the Partnership's rights as a stockholder of, or a lender to, such corporations, as the case may be; (15) Take any and all action that is permitted under the Act and that is customary or reasonably related to the business of the Partnership; and (16) Execute any and all documents that, in its sole discretion, are needed to carry out the purposes of the above powers. (b) With respect to each of its rights, powers and obligations under this Agreement, and subject to the restrictions herein, the General Partner shall be authorized to execute and deliver, for and on behalf of the Partnership, such documents, promissory notes and other evidences of indebtedness, contracts, assignments, deeds, leases, loan agreements and other agreements as it deems necessary or appropriate, all on such terms and conditions as it deems proper. (c) The General Partner may cause the Partnership to adopt by-laws governing the Partnership's internal organization and affairs. Without limiting the generality of the foregoing, the by-laws so adopted may: (i) create titles for management employees; (ii) establish the power and authority associated with such titles (up to and including power and authority coextensive with that of the General Partner) to represent the Partnership in dealings with third parties; and (iii) provide for the appointment and removal of management employees to and from the positions so created. 17 Section 10.2 Qualifications and Filings. The General Partner shall cause to be filed such certificates or documents as are necessary or appropriate for the continuation, qualification or operation of the Partnership as a limited partnership in the State of Delaware and any other jurisdiction in which the Partnership may elect to do business. Subject to applicable law, the General Partner may omit from any and all filings in and reports to any state, and from all amendments thereto, the names and addresses of the Partners, information relating to the Partners' Capital Contributions and shares of Profits and Losses, and information relating to compensation of the Partners, or may state such information in the aggregate rather than with respect to any individual Partner. Section 10.3 Reliance of Third Parties. Any person dealing with the Partnership shall be entitled to deal with the General Partner as if it were the sole party in interest in the Partnership's assets and business, both legally and beneficially. Every agreement, instrument and document executed by the General Partner with respect to any business or property of the Partnership shall be conclusive evidence in favor of any person relying thereon or claiming thereunder that (i) at the time of the execution or delivery thereof, this Agreement was in full force and effect, (ii) such agreement, instrument or document was duly executed in accordance with this Agreement and is binding upon the Partnership, and (iii) the General Partner was duly authorized and empowered to execute and deliver such agreement, instrument or document for and on behalf of the Partnership. Section 10.4 Duties. The General Partner shall manage and control the Partnership and its business and affairs. The General Partner shall devote itself to the business of the Partnership to the extent it determines necessary for the efficient conduct thereof. The 18 General Partner shall notify the other Partners of all non-routine actions regarding the Partnership. Section 10.5 Admission of New Partners. The General Partner may admit other Limited Partners on such terms and conditions as it may, in its sole discretion, deem appropriate, provided that the rights of the existing Limited Partners are not impaired thereby. The General Partner shall not admit any new General Partner without the consent of all of the Limited Partners, which consent shall not unreasonably be withheld. Section 10.6 General Partner Power to Amend. Provided that the other Partners are notified within thirty days thereafter, the General Partner may amend this Agreement to (i) add (subject to the consent of the other Partners and to the other provisions of this Agreement) to the General Partner's duties or obligations, (ii) correct any error or resolve any ambiguity in or inconsistency among the provisions of this Agreement, (iii) delete or add any provision required to be deleted or added by any state securities commission or similar governmental authority for the benefit or protection of the other Partners, (iv) add to or change the name or principal place of business of the Partnership or add Limited Partners, subject to Section 10.6 above, or (v) make any change that in the General Partner's sole opinion is necessary or prudent to satisfy any requirement, condition or guideline contained in any opinion, directive, order or ruling of any U.S., state, regional, or local agency or judicial authority, or contained in any U.S., state, or local statute, code or regulation. However, such amendments shall not without the consent of each affected Partner: (i) reduce any Partner's Percentage Interest, (ii) change the liabilities of any Partner, (iii) convert any Limited Partner to a General Partner, (iv) allow any Limited Partner to exercise control of the Partnership's business or (v) otherwise adversely affect any other Partner. 19 The General Partner may execute, swear to, acknowledge, deliver, file and record any document that may be required in connection with any such amendment. Section 10.7 Limitations on General Partner's Authority. Except with the consent of all other Partners, nothing in this Agreement shall authorize the General Partner to: (a) Manage the affairs or business of the Partnership in a manner contrary to this Agreement; (b) Sell, trade, give or otherwise alienate the Partnership's Assets except in the ordinary course of business or in a liquidation; (c) Negligently do any act that would subject any Limited Partner to liability as a general partner in any jurisdiction or that would cause the Partnership to be classified as other than a partnership for federal income tax purposes; and (d) Except in the ordinary course of business, cause the Partnership to borrow money without the consent of the other Partners, which consent shall not be unreasonably withheld. ARTICLE XI. TRANSFER BY THE PARTNERS OF PARTNERSHIP INTERESTS Section 11.1 General. (a) No Limited Partner may mortgage, pledge, hypothecate or otherwise encumber all or any part of its Partnership Interest. (b) No Limited Partner may sell, trade, give, transfer, abandon or otherwise alienate (together hereafter in this Article XI referred to as "transfer") its Partnership Interest 20 except in accordance with this Article XI, and any transfer or purported transfer not in accordance with this Article XI shall be null and void and shall not bind or be recognized by the Partnership. (c) No Limited Partner may transfer part but not all of its Partnership Interest. Section 11.2 Transfer to Affiliates. Subject to Section 11.5 below, a Limited Partner may transfer its Partnership Interest to an Affiliate. Section 11.3 Consent of General Partner. No Partner may transfer its Partnership Interest without the written consent of the General Partner, which consent shall not be unreasonably withheld. In determining whether to give or withhold its consent to such transfer, the General Partner may consider, among other things: (a) Whether the transfer may violate any agreement or any law or other governmental requirement or prohibition; (b) Whether the transfer may affect the Partnership's existence or qualification as a limited partnership under the Act or result in a termination of the Partnership under Section 708 of the Code; and (c) Whether the transfer may cause the Partnership to be classified other than as a partnership for federal or state tax purposes. 21 Section 11.4 Requirements on Transfer. For any transfer of a Partner's Partnership Interest, the General Partner may require any or all of the following: (a) That the transferee, at the General Partner's option, either take the transferor's place in the Partnership and become a party to this Agreement and any other applicable agreement between the transferor and the General Partner, or undertake obligations to the General Partner equivalent to those of the transferor; (b) That the transferee be, or be guaranteed by, an entity that, in the General Partner's reasonable opinion, is financially and otherwise ready, willing and able to perform its obligations under 11.4(a) above; (c) That the transferor and the transferee execute and deliver documents pertaining to the transfer that are satisfactory to the General Partner; and (d) That the transferor and/or the transferee pay the Partnership's expenses, including legal expenses and legal fees, incident to the transfer. Section 11.5 Release from Liability. Upon completion of a transfer in compliance with this Article XI: (a) The transferring Partner shall (i) be deemed to have withdrawn from the Partnership and (ii) be released from all liability under this Agreement except as to undischarged obligations accruing, or based on events occurring, prior thereto; 22 (b) The other Partners and the Partnership shall be released from all liability under this Agreement to the transferring Partner except as to undischarged obligations accruing, or based on events occurring, prior thereto; and (c) This Agreement shall otherwise be deemed terminated as to such transferring Partner. Section 11.6 Transfers of General Partner's Interest. The General Partner may transfer its Partnership Interest to any Person without the consent of any other Partner. ARTICLE XII. DISSOLUTION AND WINDING UP OF PARTNERSHIP Section 12.1 Dissolution. The Partnership shall be dissolved upon the first to occur of any of the following: (a) The expiration of the term of the Partnership as provided in Section 2.3; (b) In the event of the acquisition by the General Partner of the Partnership Interests of all of the Partners, the completion of the last such acquisition; (c) The withdrawal of the sole remaining General Partner unless a successor General Partner is admitted to continue the Partnership's business; and (d) Any event of dissolution under the Act. Section 12.2 Election to Continue Partnership. Within ninety days following the occurrence of any event referred to in Section 12.1, all remaining Partners, if any, may agree in writing to continue the Partnership's business. 23 Section 12.3 Winding Up. Unless the Partnership is to be continued pursuant to Section 12.2 above, upon dissolution of the Partnership the General Partner shall take full account of the Partnership's assets and liabilities, and shall liquidate those assets not agreed by the Partners to be distributed in kind in such manner as it shall determine to be in the best interests of the Partnership. Section 12.4 Distribution Upon Termination. Upon termination of the Partnership, as provided herein, the following shall occur: (a) First, any item of income, gain, loss, deduction and credit that has not heretofore been allocated pursuant to Articles VI and VII shall be so allocated; (b) Second, liabilities owed to creditors of the Partnership, other than creditors who are Partners, shall be satisfied, whether by payment or the making of reasonable provisions for payment thereof (including provision for contingent liabilities determined by the General Partner to be appropriate for such purposes); (c) Third, if any loans made to the Partnership by any Partner are then outstanding, such loans (including any accrued interest) shall be repaid in full or, if such loans cannot be repaid in full, cash shall be applied to the pro rata repayment of any such loans; and (d) The remaining cash or non-cash assets shall be distributed to the Partners in accordance with their Capital Accounts; and thereafter in accordance with the Partners' respective Percentage Interests. Section 12.5 General Partner Deficit Makeup. If the General Partner has a deficit balance in its Capital Account following the liquidation of its Partnership Interest, as 24 determined after taking into account all Capital Account adjustments for the taxable year during which such liquidation occurs (other than those made pursuant to this Section 12.5), it shall contribute an amount equal to such deficit to the Partnership by the end of such taxable year, or, if later, within ninety days following the date of such liquidation. Any amount contributed to the Partnership pursuant to this Section 12.5 shall be distributed according to Section 12.4. ARTICLE XIII. TAX MATTERS Section 13.1 Tax Returns. The General Partner shall file on behalf of the Partnership such Partnership Returns as are required by law. The Partners agree to file their separate federal income tax returns in accordance with applicable federal income tax law and in a manner consistent with the Partnership Returns and the provisions of this Agreement. Section 13.2 Tax Matters Partner. The General Partner is hereby designated as the Partnership's tax matters partner (the "Tax Matters Partner") as defined in Section 6231(a)(7) of the Code and shall have all the powers and obligations set forth in this Article XIII or of a tax matters partner pursuant to the Code. The Tax Matters Partner shall incur no liability to the other Partners for actions taken in its capacity as Tax Matters Partner, including, but not limited to, liability for any additional taxes, interest or penalties owed by the other Partners due to adjustments of Partnership items of income, gain, loss or deduction at the Partnership level. Section 13.3 Duties of the Tax Matters Partner. The Tax Matters Partner shall cooperate with the other Partners and, for other than routine correspondence, shall keep the other Partners reasonably informed of discussions with the Internal Revenue Service. The Tax Matters Partner shall, in its sole discretion, determine what is reasonable with regard to communication of such matters. The Tax Matters Partner shall have the power, in its sole discretion, to extend 25 the period of limitations for assessments, file a petition or complaint in any court, file a request for an administrative adjustment of Partnership items after any return has been filed, or enter into any settlement agreement with the Internal Revenue Service or Department of the Treasury with respect to Partnership items of income, gain, loss or deduction. The Tax Matters Partner may request extension to file any tax return or statement without the consent of, but shall so inform, the other Partners. The provisions of this Agreement regarding the Partnership's tax returns shall survive the termination of the Partnership and the transfer of any Partner's Partnership Interest and shall remain in effect for the period of time necessary to resolve any and all matters regarding the federal income taxation of the Partnership and items of Partnership income, gain, loss and deduction. Section 13.4 Tax Policy. The General Partner shall make any and all tax accounting and reporting elections and adopt such procedures as are necessary relating to income, gain, expense, loss, deduction and credit in order to minimize taxable income and gain and maximize taxable loss, deductions and credits allocable to the Partners. For all property with respect to which deductions for depreciation may be claimed, the Partnership shall, except as otherwise decided upon by the Partners, utilize the depreciation or amortization method that will provide the depreciation to the Partnership at the earliest possible time. Section 13.5 Partnership Tax Status. No Partner shall take any action that would result in the Partnership being treated other than as a partnership for federal income tax purposes. Section 13.6 Section 708 Termination. Notwithstanding any other provision of this Article XIII in the event that the Partnership is liquidated within the meaning of Section 26 1.704-1(b)(2)(ii)(g) of the Regulations but no liquidating event has occurred, the Assets shall not be liquidated, the Partnership's liabilities shall not be paid or discharged, and the Partnership's affairs shall not be wound up. ARTICLE XIV. POWER OF ATTORNEY; FURTHER ASSURANCES Section 14.1 Grant of Power. Coincident with its execution of this Agreement, the Limited Partner shall give to the General Partner a Power of Attorney regarding the Partnership in the form set forth in Appendix C hereto. Section 14.2 Further Assurances. Promptly upon the General Partner's request, the Limited Partner shall (i) execute, acknowledge, deliver, file and/or record such further certificates, amendments, instruments and documents and (ii) do all other acts and things, as may be required by law or deemed by the General Partner necessary or prudent to implement the purpose or intent of this Agreement or conduct the business of the Partnership. ARTICLE XV. PARTNER REPRESENTATIONS AND WARRANTIES Section 15.1 Partner Representations and Warranties. (a) Each Partner represents and warrants: (1) That it has the full legal right, power and authority to enter into this Agreement and perform its obligations hereunder; (2) That it intends to enter the Partnership as an investment and not for sale or distribution; 27 (3) That it is aware (i) that interests in the Partnership have not been registered under the United States Securities Act of 1933, or any comparable state law, and that such interests cannot be sold or otherwise disposed of unless they are registered thereunder or unless such sale or disposition is exempt from such registration, (ii) that the Partnership has no present intention of so registering such interests under the Securities Act of 1933, or any comparable state law, and (iii) that accordingly such Partner is able and is prepared to suffer a complete loss of its investment; and (4) That its knowledge and experience in financial and business matters are such that it is capable of evaluating the risks of investing in the Partnership. (b) The General Partner explicitly disclaims any representation or warranty with respect to (i) the success or profitability of the Partnership's business or (ii) the tax treatment or consequences of any Partner's investment in the Partnership. ARTICLE XVI. LIABILITY AND INDEMNIFICATION OF GENERAL PARTNER AND OTHERS Section 16.1 Exoneration. The General Partner shall not be liable to the Partnership or any Partner for any act or omission involving its conduct of the business or affairs of the Partnership if the General Partner has conducted such business and affairs in good faith with respect to such matter and has not acted with gross negligence or in willful misconduct with respect thereto. Section 16.2 Repayment of Capital and Loans. Except to the extent available from the portion of the Partnership Assets corresponding to a Partner's Partnership Interest, and 28 subject to the other provisions of this Agreement, the General Partner shall not be liable to any Partner for repayment of principal or interest on contributions to the Partnership or for repayment of principal or interest an any loan or advance from such Partner to the Partnership. Section 16.3 Indemnification by Partnership. (a) For the purposes of this Section 16.3, "Claim" shall mean any claim, action, demand, loss, cost or expense, and shall be deemed to include, without limitation, any Claim due to governmental requirements or related to the environment. (b) Should the General Partner, because of its status as a general partner in the Partnership and due to any Claim against, or related to, the Partnership or the Partnership's assets, business or activities, become liable, or be subject to any Claim, in excess of its Partnership Interest, the other Partners, each in proportion to its Percentage Interest, shall indemnify and hold harmless the General Partner against such excess and against the General Partner's reasonable costs and expenses of defending itself or the Partnership against such liability or Claim, provided that the General Partner shall be responsible for such portion of such excess, costs and expenses as is proportional to its own Percentage Interest. Section 16.4 Survival. The rights and obligations of this Article XVI shall survive (i) any expiration or termination of this Agreement as to the indemnifying Partner, and (ii) any withdrawal of the indemnifying Partner from the Partnership, but in either case shall apply only to the extent that the Claim accrues, or is based on events occurring, prior to such expiration, termination or withdrawal. 29 ARTICLE XVII. WITHDRAWAL AND REMOVAL OF GENERAL PARTNER Section 17.1 Withdrawal of General Partner. (a) The General Partner shall not withdraw as the Partnership's general partner except upon the transfer of all of its Partnership Interest. (b) The General Partner may withdraw pursuant to Section 17.1(a) above by delivering a notice of withdrawal to the other Partners. Such notice shall state the effective date of the General Partner's withdrawal, which date shall be not less than thirty days subsequent to the date such notice is mailed. (c) Upon withdrawal of the General Partner, the successor to its Partnership Interest shall succeed to all of the General Partner's rights and obligations under this Agreement. Section 17.2 Removal of General Partner. The Limited Partner shall not have any right to remove the General Partner as the Partnership's general partner. ARTICLE XVIII. MISCELLANEOUS Section 18.1 Notices. Any notice, offer, consent or other communication required or permitted to be given or made hereunder shall be in writing and shall be deemed to have been sufficiently given or made when delivered personally to the Party (or an officer of the Party) to whom the same is directed, or (except in the event of a mail strike) five business days after being mailed by first-class mail, certified and postage prepaid, or when received if transmitted by facsimile or sent by overnight express, if to the Partnership, to the principal office described in Section 3.5 or, if to a Partner, to the address set forth in the execution pages hereof. 30 Any Partner may change its address for receiving notice by giving notice of such change to the Partnership and the other Partners, such change to become effective on the tenth day after such notice is given. Section 18.2 Captions. Article and Section captions contained in this Agreement are for reference purposes only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof. Section 18.3 Severability. Each provision of this Agreement is intended to be severable. If any provision hereof is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the validity of the remainder of this Agreement. Section 18.4 Litigation. The General Partner shall prosecute and defend such actions at law or in equity as may be necessary to enforce or protect the interests of the Partnership. The Partnership and the General Partner shall respond to any final decree, judgment or decision of any court, board or authority having jurisdiction. Subject to Article XVI, the General Partner shall satisfy any such judgment, decree or decision first out of any insurance proceeds available therefor, next out of the Assets of the Partnership available therefor, and finally out of the assets of the General Partner. Section 18.5 Right to Rely Upon Authority of General Partner. No person dealing with the General Partner shall be required to determine the General Partner's authority to make any commitment or undertaking on behalf of the Partnership, nor to determine any fact or circumstances bearing upon the existence of such authority. In addition, no purchaser of any asset owned by the Partnership shall be required to determine the sole and exclusive authority of the General Partner to sign and deliver on behalf of the Partnership any such instrument of 31 transfer, or to see to the application or distribution of revenues or proceeds paid or credited in connection therewith, unless such purchaser shall have received written notice from the Partnership affecting the same. Section 18.6 Administration. The Partnership shall be administered in accordance with this Agreement entirely by the General Partner, and shall have no other administrative or policy making body or periodic Partnership meetings. However, any Partner may at any time upon ten days' notice call a Partnership meeting to discuss Partnership business, which meeting shall be held at the Partnership's principal office during normal business hours. Section 18.7 No Agency. Except as explicitly authorized in advance in writing by the General Partner, no other Partner shall act, or represent itself, in any matter as an agent or representative of the Partnership or the General Partner. Section 18.8 Ownership of Partnership Assets. All Partnership Assets shall be deemed to be owned by the Partnership as an entity, and no Partner, individually or collectively, shall have any separate ownership interest in such Partnership Assets or any portion thereof. Legal title to any or all Partnership Assets shall be held in the name of the Partnership, or, with the consent of the other Partners, in the name of the General Partner or one or more nominees in behalf of the Partnership, as the General Partner may determine. The General Partner hereby declares and warrants that any Partnership Assets for which legal title is held in the name of the General Partner or any nominee shall be held in trust by the General Partner or such nominee for the use and benefit of the Partnership in accordance with this Agreement. All Partnership Assets shall be recorded as the property of the Partnership on its books and records, irrespective of the name in which legal title to such Partnership Assets is held. 32 Section 18.9 Governing Law. This Agreement shall be governed by the laws of the State of Delaware (without giving effect to Delaware's rules on the conflict of law) as such laws are applied by Delaware courts to agreements entered into and to be performed in Delaware by and between residents of Delaware. Section 18.10 Successors. This Agreement shall, subject to the restrictions on transferability set forth herein, bind and inure to the benefit of the heirs, executors, personal representatives, successors and assigns of the Parties. Section 18.11 Entire Agreement; Amendment. Except for other written agreements in which it is specifically referred to, this Agreement constitutes the entire agreement of the parties hereto on its subject. It supersedes all prior agreements and understandings between or among them, oral or written, all of which are hereby nullified. Except as otherwise provided in Section 10.6, this Agreement may not be modified or amended other than by a writing signed by all parties hereto. Section 18.12 No Waiver. The failure of any party hereto to seek redress for violation, or to insist on strict performance, of any obligation of this Agreement shall not constitute a waiver of its rights in the future to do so regarding that or any other obligation hereof. Section 18.13 Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument. 33 Section 18.14 Other Business Ventures. Any Partner, or any shareholder, director, employee, Affiliate or Person holding a legal or beneficial interest in any entity that is a Partner, may engage in or possess interests in other business ventures of every nature and description, independently or with others, whether such ventures are competitive with the Partnership or otherwise. Neither the Partnership nor any Partner shall have any right by virtue of this Agreement in or to such independent ventures or to the income or profits derived therefrom. Section 18.15 Creditors. Except as required by any applicable bankruptcy or receivership law or as explicitly provided for herein, no provision of this Agreement shall be for the benefit of or enforceable by any non-party, including any creditor of the Partnership or any Partner. Section 18.16 Remedies. The rights and remedies of the parties hereto shall not be exclusive, and the exercise of any right to which a party hereto is entitled shall not preclude the exercise of any other right that such party may have. Section 18.17 Authority. Each individual executing this Agreement on behalf of a partnership, corporation or other entity warrants that he or she is authorized to do so and that this Agreement will constitute the legally binding obligation of the entity that he or she represents. 34 IN WITNESS WHEREOF, the parties hereto, through their authorized representatives, have executed and delivered this Agreement as of the date first written above. GENERAL PARTNER: ARCO CHEMICAL TECHNOLOGY MANAGEMENT, INC. By: ------------------------------------------ (Signature) ------------------------------------------ (Printed Name) ------------------------------------------ (Title) LIMITED PARTNER: ARCO CHEMICAL TECHNOLOGY, INC. By: ------------------------------------------ (Signature) ------------------------------------------ (Printed Name) ------------------------------------------ (Title) 35 EX-4.1 9 dex41.txt REGISTRATION RIGHTS AGREEEMENT EXHIBIT 4.1 REGISTRATION RIGHTS AGREEMENT Dated as of December 4, 200l by and among Lyondell Chemical Company ARCO Chemical Technology, Inc. ARCO Chemical Technology, L.P. Lyondell Chemical Nederland, Ltd. and Salomon Smith Barney Inc. J.P. Morgan Securities Inc. Banc of America Securities LLC Credit Suisse First Boston Corporation Banc One Capital Markets, Inc. Credit Lyonnais Securities (USA) Inc. Mizuho International plc Scotia Capital (USA) Inc. SG Cowen Securities Corporation This Registration Rights Agreement (this "Agreement") is made and entered into as of December 4, 2001, by and among Lyondell Chemical Company, a Delaware corporation (the "Company"), ARCO Chemical Technology, Inc., a Delaware corporation ("ACTI"), ARCO Chemical Technology, L.P., a Delaware limited partnership ("ACTLP") and Lyondell Chemical Nederland, Ltd., a Delaware corporation (together with ACT1 and ACTLP, the "Guarantors"), and Salomon Smith Barney Inc., J.P. Morgan Securities Inc., Banc of America Securities LLC, Credit Suisse First Boston Corporation, Banc One Capital Markets, Inc., Credit Lyonnais Securities (USA) Inc., Mizuho International plc, Scotia Capital (USA) Inc. and SG Cowen Securities Corporation (each an "Initial Purchaser" and, collectively, the "Initial Purchasers"), each of whom has agreed to purchase the Company's 9%% Senior Secured Notes, due 2008 (the "Initial Notes") pursuant to the Purchase Agreement (as defined below). This Agreement is made pursuant to the Purchase Agreement, dated November 30, 2001, (the "Purchase Agreement"), by and among the Company, the Guarantors and the Initial Purchasers. In order to induce the Initial Purchasers to purchase the Initial Notes, the Company and the Guarantors have agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchasers set forth in Section 2 of the Purchase Agreement. Capitalized terms used herein and not otherwise defined shall have the meaning assigned to them in the Indenture relating to the Initial Notes among the Company, the Guarantors and The Bank of New York, as trustee (the "Indenture"). The parties hereby agree as follows: Section 1. Definitions. As used in this Agreement, the following capitalized terms shall have the following meanings: Act: The Securities Act of 1933, as amended. Affiliate: As defined in Rule 144 of the Act. Broker-Dealer: Any broker or dealer registered under the Exchange Act. Closing Date: The date hereof. Commission: The Securities and Exchange Commission. 2 Consummate: The Exchange Offer shall be deemed "Consummated" for purposes of this Agreement upon the occurrence of (a) the filing and effectiveness under the Act of the Exchange Offer Registration Statement relating to Exchange Notes to be issued in the Exchange Offer, (b) the maintenance of such Exchange Offer Registration Statement continuously effective and the keeping of the Exchange Offer open for a period not less than the period required pursuant to Section 3(b) hereof and (c) the delivery by the Company to the Registrar under the Indenture of Exchange Notes in the same aggregate principal amount as the aggregate principal amount of Initial Notes validly tendered and not withdrawn by Holders thereof pursuant to the Exchange Offer. Consummation Deadline: As defined in Section 3(b) hereof. Effectiveness Deadline: As defined in Sections 3(a) and 4(a) hereof. Exchange Act: The Securities Exchange Act of 1934, as amended. Exchange Notes: The Company's 9 1/2% Senior Secured Exchange Notes, due 2008 to be issued pursuant to the Indenture: (i) in the Exchange Offer or (ii) as contemplated by Section 6(b) hereof. Exchange Offer: The exchange and issuance by the Company of a principal amount of Exchange Notes (which shall be registered pursuant to the Exchange Offer Registration Statement) equal to the outstanding principal amount of the Initial Notes that are validly tendered and not withdrawn by Holders in connection with such exchange and issuance. Exchange Offer Registration Statement: The Registration Statement relating to the Exchange Offer for the Initial Notes, including the related Prospectus. Exempt Resales: The transactions in which the Initial Purchasers propose to sell the Initial Notes to certain "qualified institutional buyers," as such term is defined in Rule 144A under the Act and to certain non U.S. persons in transactions under Regulation S under the Act. Filing Deadline: As defined in Sections 3(a) and 4(a) hereof. Holders: As defined in Section 2 hereof. Majority Holders: As defined in Section 6(c)(xi) hereof. 3 Prospectus: The prospectus included in a Registration Statement at the time such Registration Statement is declared effective, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post- effective amendments, and all material incorporated by reference into such Prospectus. Recommencement Date: As defined in Section 6(d) hereof Registration Default: As defined in Section 5 hereof. Registration Statement: Any registration statement of the Company and the Guarantors relating to (a) an offering of Exchange Notes pursuant to an Exchange Offer or (b) the registration for resale of Transfer Restricted Securities pursuant to the Shelf Registration Statement, in each case, (i) that is filed pursuant to the provisions of this Agreement and (ii) including the Prospectus included therein, all amendments and supplements thereto (including post- effective amendments) and all exhibits and material incorporated by reference therein. Rule 144: Rule 144 promulgated under the Act. Shelf Registration Statement: As defined in Section 4 hereof. Suspension Notice: As defined in Section 6(d) hereof. Suspension Period: As defined in Section 4(c) hereof. TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in effect on the Closing Date. Transfer Restricted Securities: (I) Each Initial Note, until the earliest to occur of (a) the date on which such Initial Note is exchanged in an Exchange Offer for an Exchange Note and entitled to be resold to the public without complying with the prospectus delivery requirements of the Act, (b) the date on which such Initial Note has been disposed of in accordance with a Shelf Registration Statement (and, if an Exchange Offer has been Consummated prior to such purchase, purchasers thereof have been issued Exchange Notes), or (c) the date on which such Initial Note is distributed to the public pursuant to Rule 144 under the Act (and, if an Exchange Offer has been Consummated prior to such purchase, purchasers thereof have been issued Exchange Notes) or is saleable pursuant to Rule 144(k) under the Act and (II) each Exchange Note issued to a Broker-Dealer in an Exchange Offer until the date on which such Exchange Note is disposed of by a Broker-Dealer pursuant to the "Plan of Distribution" 4 contemplated by the Exchange Offer Registration Statement (including the delivery of the Prospectus contained therein). Section 2. Holders. A Person is deemed to be a holder of Transfer Restricted Securities (each, a "Holder") whenever such Person owns Transfer Restricted Securities. Section 3. Registered Exchange Offers. (a) Unless an Exchange Offer shall not be permitted by applicable federal law (after the procedures set forth in Section 6(a)(i) below have been complied with), the Company and the Guarantors shall (i) cause the Exchange Offer Registration Statement to be tiled with the Commission as soon as practicable after the Closing Date, but in no event later than 90 days after the Closing Date (such 90th day being the "Filing Deadline"), (ii) use their best efforts to cause the Exchange Offer Registration Statement to become effective at the earliest possible time, but in no event later than 210 days after the Closing Date (such 210th day being the "Effectiveness Deadline"), (iii) in connection with the foregoing, (A) file all pre-effective amendments to the Exchange Offer Registration Statement as may be necessary in order to cause it to become effective, (B) file, if applicable, a post-effective amendment to the Exchange Offer Registration Statement pursuant to Rule 430A under the Act and (C) cause all necessary filings, if any, in connection with the registration and qualification of the Exchange Notes to be made under the Blue Sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer, and (iv) upon the effectiveness of such Exchange Offer Registration Statement and within the time period contemplated by Section 3(b) hereof, commence and Consummate the Exchange Offer. The Exchange Offer shall be on the appropriate form permitting (i) registration of the Exchange Notes to be offered in exchange for the Initial Notes that are Transfer Restricted Securities and (ii) resales of Exchange Notes by Broker-Dealers that tendered into the Exchange Offer Initial Notes that such Broker-Dealer acquired for its own account as a result of market making activities or other trading activities (other than Initial Notes acquired directly from the Company or any of its Affiliates) as contemplated by Section 3(c) below. (b) The Company and the Guarantors shall use their respective best efforts to cause the Exchange Offer Registration Statement to be effective continuously, and shall keep the Exchange Offer open for a period of not less than the minimum period required under applicable federal and state securities laws to Consummate such Exchange Offer; provided, however, that in no event shall such period be less than 20 Business Days. The Company and the Guarantors shall cause the Exchange Offer to comply with all applicable federal and state securities 5 laws. No securities other than the Exchange Notes shall be included in the Exchange Offer Registration Statement. The Company and the Guarantors shall use their respective best efforts to cause the Exchange Offer to be Consummated on the earliest practicable date after the Exchange Offer Registration Statement has become effective, but in no event later than 30 business days thereafter (such 30th business day being the "Consummation Deadline"). (c) The Company shall include a "Plan of Distribution" section in the Prospectus contained in the Exchange Offer Registration Statement and indicate therein that any Broker-Dealer who holds Transfer Restricted Securities that were acquired for the account of such Broker-Dealer as a result of market-making activities or other trading activities (other than Initial Notes acquired directly from the Company or any Affiliate of the Company), may exchange such Transfer Restricted Securities pursuant to the Exchange Offer. Such "Plan of Distribution" section shall also contain all other information with respect to such sales by such Broker-Dealers that the Commission may require in order to permit such sales pursuant thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer or disclose the amount of Transfer Restricted Securities held by any such Broker-Dealer, except to the extent required by the Commission as a result of a change in policy, rules or regulations after the date of this Agreement. See the Shearman & Sterling no-action letter (available July 2, 1993). Because such Broker-Dealer may be deemed to be an "underwriter" within the meaning of the Act and must, therefore, deliver a prospectus meeting the requirements of the Act in connection with its initial sale of any Exchange Notes received by such Broker-Dealer in the Exchange Offer, the Company and Guarantors shall permit the use of the Prospectus contained in the Exchange Offer Registration Statement by such Broker-Dealer to satisfy such prospectus delivery requirement. To the extent necessary to ensure that the Prospectus contained in the Exchange Offer Registration Statement is available for sales of Exchange Notes by Broker-Dealers, the Company and the Guarantors agree to use their respective best efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented, amended and current as required by and subject to the provisions of Sections 6(a) and 6(c) hereof and in conformity with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of 180 days from the Consummation Deadline or such shorter period as will terminate when all Transfer Restricted Securities covered by such Registration Statement have been sold pursuant thereto or are no longer outstanding. The Company and the Guarantors shall provide sufficient copies of the latest version of such Prospectus to such Broker-Dealers, promptly upon request, and in no event later than one day after such request, at any time during such period. Section 4. Shelf Registration. 6 (a) Shelf Registration. If(i) the Exchange Offer is not permitted by applicable law or Commission policy (after the Company and the Guarantors have complied with the procedures set forth in Section 6(a)(i) below) or (ii) if any Holder of Transfer Restricted Securities shall notify the Company within 20 Business Days following the Consummation of the Exchange Offer that (A) such Holder was prohibited by law or Commission policy from participating in the Exchange Offer or (B) such Holder may not resell the Exchange Notes acquired by it in the Exchange Offer to the public without delivering a prospectus and the Prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by such Holder or (C) such Holder is a Broker-Dealer and holds Initial Notes acquired directly from the Company or any of its Affiliates, then the Company and the Guarantors shall: (x) cause to be filed, on or prior to 30 days after the earlier of(i) the date on which the Company determines that the Exchange Offer Registration Statement cannot be filed as a result of clause 4(a)(i) above and (ii) the date on which the Company receives the notice specified in clause 4(a)(ii) above, (such earlier date, the "Filing Deadline"), a shelf registration statement pursuant to Rule 415 under the Act (which may be an amendment to the Exchange Offer Registration Statement (the "Shelf Registration Statement")), relating to (1) all Transfer Restricted Securities with respect to which an Exchange Offer is not permitted in the case of clause 4(a)(i) above or (2) the Transfer Restricted Securities specified in any notice in the case of clause 4(a)(ii), and (y) shall use their respective best efforts to cause such Shelf Registration Statement to become effective on or prior to 60 days after the Filing Deadline for the Shelf Registration Statement (such 60th day the "Effectiveness Deadline"). If, after the Company has filed an Exchange Offer Registration Statement that satisfies the requirements of Section 3(a) above, the Company is required to file and make effective a Shelf Registration Statement solely because the Exchange Offer is not permitted under applicable law or Commission policy (i.e., clause 4(a)(i) above), then the filing of the Exchange Offer Registration Statement shall be deemed to satisfy the requirements of clause (x) above; provided that, in such event, the Company shall remain obligated to meet the Effectiveness Deadline set forth in clause (y). To the extent necessary to ensure that the Shelf Registration Statement is available for sales of Transfer Restricted Securities by the Holders thereof entitled to the benefit of this Section 4(a) and the other securities required to be registered therein pursuant to Section 6(b)(ii) hereof, the Company and the Guarantors shall 7 use their respective best efforts to keep any Shelf Registration Statement required by this Section 4(a) continuously effective, supplemented, amended and current as required by and subject to the provisions of Sections 6(b) and 6(c) hereof and in conformity with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of at least two years (as extended pursuant to Section 6(d)) following the Closing Date, or such shorter period as will terminate on the earlier of the date when all Transfer Restricted Securities covered by such Shelf Registration Statement have been sold pursuant thereto, no longer constitute Transfer Restricted Securities or are no longer outstanding. (b) Provision by Holders of Certain Information in Connection with the ShelfRegistration Statement. No Holder of Transfer Restricted Securities may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Company in writing, within 20 days after receipt of a request therefor, the information specified in Item 507 or 508 of Regulation S-K, as applicable, of the Act for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein. No Holder of Transfer Restricted Securities shall be entitled to liquidated damages pursuant to Section 5 hereof unless and until such Holder shall have provided all such information which is required by rules of the Commission to be included in the Shelf Registration Statement prior to the time it is declared effective. Each selling Holder agrees to promptly furnish additional information required to be disclosed in order to make the information previously furnished to the Company by such Holder not materially misleading. (c) Suspension. The Company and the Guarantors will have the ability to suspend the Shelf Registration Statement (a "Suspension Period"), if the Company and the Guarantors determine, in their reasonable best judgment, upon written advice of counsel, that the continued effectiveness and use of the Shelf Registration Statement would require the disclosure of confidential information or interfere with any financing, acquisition, reorganization or other material transaction involving the Company. A Suspension Period shall commence on and include the date that the Company and the Guarantors give notice that the Shelf Registration Statement is no longer effective or the Prospectus included therein is no longer usable for offers and sales of Transfer Restricted Securities covered by such Registration Statement and continue until holders of such Transfer Restricted Securities either receive the copies of the supplemented or amended prospectus contemplated by Section 6(c) hereof or are advised in writing by the Company and the Guarantors that use of the Prospectus may be resumed. Any such suspensions may not exceed (i) 60 days in the aggregate in the first twelve month period after the Closing Date, (ii) 60 days in the aggregate in the twelve month 8 period immediately thereafter and (iii) 90 days in the aggregate during any subsequent twelve month period. Section 5. Liquidated Damages. If (a) any Registration Statement required by this Agreement is not filed with the Commission on or prior to the applicable Filing Deadline, (b) any such Registration Statement has not been declared effective by the Commission on or prior to the applicable Effectiveness Deadline, (c) the Exchange Offer has not been Consummated on or prior to the Consummation Deadline or (d) any Registration Statement required by this Agreement is filed and declared effective but shall thereafter cease to be effective or fail to be usable (provided that the unavailability of a Registration Statement for the use of a Holder as a result of such Holder's failure to provide information pursuant to Section 4(b) or make representations required by Section 6(a)(ii) shall not be deemed to make the Registration Statement fail to be usable) for its intended purpose (except as provided in, and during the time periods specified in, Section 4(c)) without being succeeded within five days by a post-effective amendment to such Registration Statement that cures such failure and that is itself declared effective within 10 days of the filing of such post-effective amendment (each such event referred to in clauses (a) through (d), a "Registration Default"), then the Company and each of the Guarantors hereby jointly and severally agree to pay to each Holder of Transfer Restricted Securities affected thereby liquidated damages in an amount equal to $.05 per week per $1,000 in principal amount of Transfer Restricted Securities held by such Holder for each week or portion thereof that the Registration Default continues for the first 90-day period immediately following the occurrence of such Registration Default. The amount of the liquidated damages shall increase by an additional $.05 per week per $1,000 in principal amount of Transfer Restricted Securities with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of liquidated damages of $.25 per week per $1,000 in principal amount of Transfer Restricted Securities; provided that the Company and the Guarantors shall in no event be required to pay liquidated damages for more than one Registration Default at any given time. Notwithstanding anything to the contrary set forth herein, (i) upon filing of the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement), in the case of clause (a) above, (ii) upon the effectiveness of the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement), in the case of clause (b) above, (iii) upon Consummation of the Exchange Offer, in the case of clause (c) above, or (iv) upon the filing of a post-effective amendment to the Registration Statement or an additional Registration Statement that causes the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement) to again be declared effective or made usable in the case of clause (d) above, the 9 liquidated damages payable with respect to the Transfer Restricted Securities as a result of such clause (a), (b), (c) or (d), as applicable, shall cease to accrue. All accrued liquidated damages shall be paid to the record Holders entitled thereto, in the manner provided for the payment of interest in the Indenture, on each Interest Payment Date, as more fully set forth in the Indenture and the Notes. Notwithstanding the fact that any securities for which liquidated damages are due cease to be Transfer Restricted Securities, all obligations of the Company and the Guarantors to pay liquidated damages with respect to securities shall survive until such time as such obligations with respect to such securities shall have been satisfied in full. Section 6. Registration Procedures. (a) Exchange Offer Registration Statement. In connection with the Exchange Offer, the Company and the Guarantors shall (x) comply with all applicable provisions of Section 6(c) below, (y) use their respective best efforts to effect such exchange and to permit the resale of Exchange Notes by Broker-Dealers that tendered in the Exchange Offer Initial Notes that such Broker-Dealer acquired for its own account as a result of its market making activities or other trading activities (other than Initial Notes acquired directly from the Company or any of its Affiliates) being sold in accordance with the intended method or methods of distribution thereof, and (z) comply with all of the following provisions: (i) If, following the date hereof there has been announced a change in Commission policy with respect to exchange offers such as the Exchange Offer, that in the reasonable opinion of counsel to the Company raises a substantial question as to whether the Exchange Offer is permitted by applicable federal law, the Company and the Guarantors hereby agree to seek a no-action letter or other favorable decision from the Commission allowing the Company and the Guarantors to Consummate an Exchange Offer for such Transfer Restricted Securities. The Company and the Guarantors hereby agree to pursue the issuance of such a decision to the Commission staff level but shall not be required to take commercially unreasonable action to effect a change of Commission policy. In connection with the foregoing, the Company and the Guarantors hereby agree to take all such other actions (other than such actions as may be commercially unreasonable) as may be requested by the Commission or otherwise required in connection with the issuance of such decision, including without limitation (A) participating in telephonic conferences with the Commission, (B) delivering to the Commission staff an analysis prepared by counsel to the Company setting forth the legal bases, if any, upon which such counsel has concluded that such an Exchange Offer 10 should be permitted and (C) diligently pursuing a resolution (which need not be favorable) by the Commission staff. (ii) As a condition to its participation in the Exchange Offer, each Holder of Transfer Restricted Securities (including, without limitation, any Holder who is a Broker Dealer) shall furnish, upon the request of the Company, prior to the Consummation of the Exchange Offer, a written representation to the Company and the Guarantors (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (A) such Holder is not an Affiliate of the Company or a Broker-Dealer tendering Initial Notes acquired directly from the Company for its own account, (B) such Holder will have no arrangement or understanding with any person to participate in the distribution of the Initial Notes or the Exchange Notes within the meaning of the Act, (C) if the Holder is not a Broker-Dealer or is a Broker-Dealer but will not receive Exchange Notes for its own account in exchange for Initial Notes, neither the Holder nor any such other Person is engaged in or intends to participate in a distribution of the Exchange Notes, and (D) any Exchange Notes received by such Holder will be acquired in the ordinary course of its business. If the Holder is a Broker-Dealer that will receive Exchange Notes for its own account in exchange for Initial Notes, it will represent that the Initial Notes to be exchanged for the Exchange Notes were acquired by it as a result of market-making activities or other trading activities, and will acknowledge that it will deliver a prospectus meeting the requirements of the Act in connection with any resale of such Exchange Notes. It is understood that, by acknowledging that it will deliver, and by delivering, a prospectus meeting the requirements of the Act in connection with any resale of such Exchange Notes, the Holder is not admitting that it is an "underwriter" within the meaning of the Act. (iii) Prior to effectiveness of the Exchange Offer Registration Statement, the Company and the Guarantors shall provide a supplemental letter to the Commission (A) stating that the Company and the Guarantors are registering the Exchange Offer in reliance on the position of the Commission enunciated in Exxon Capital Holdings Corporation (available May 13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) as interpreted in the Commission's letter to Shearman & Sterling dated July 2, 1993, and, if applicable, any no-action letter obtained pursuant to Section 6(a)(i) above, (B) including a representation that neither the Company nor any of the Guarantors has entered into any arrangement or understanding with any Person to distribute the Exchange Notes to be received in the Exchange Offer and that, to the best of the Company's and each Guarantor's information and belief, each Holder 11 participating in the Exchange Offer is acquiring the Exchange Notes in its ordinary course of business and has no arrangement or understanding with any Person to participate in the distribution of the Exchange Notes received in the Exchange Offer and (C) any other undertaking or representation required by the Commission as set forth in any no-action letter obtained pursuant to Section 6(a)(i) above, if applicable. (b) Shelf Registration Statement. In connection with the Shelf Registration Statement, the Company and the Guarantors shall (i) comply with all the provisions of Section 6(c) below and use their respective reasonable best efforts to effect such registration to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof (as indicated in the information furnished to the Company pursuant to Section 4(b) hereof), and pursuant thereto the Company and the Guarantors will prepare and file with the Commission a Registration Statement relating to the registration on any appropriate form under the Act, which form shall be available for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution thereof within the time periods and otherwise in accordance with the provisions hereof, and (ii) issue, upon the request of any Holder or purchaser of Initial Notes covered by any Shelf Registration Statement contemplated by this Agreement, Exchange Notes having an aggregate principal amount equal to the aggregate principal amount of Initial Notes sold pursuant to the Shelf Registration Statement and surrendered to the Company for cancellation; the Company shall register Exchange Notes on the Shelf Registration Statement for this purpose and issue the Exchange Notes to the purchaser(s) of securities subject to the Shelf Registration Statement in the names as such purchaser(s) shall designate. (c) General Provisions. In connection with any Registration Statement and any related Prospectus required by this Agreement, the Company and the Guarantors shall: (i) use their respective best efforts to keep such Registration Statement continuously effective and provide all requisite financial statements for the period specified in Section 3 or 4 of this Agreement, as applicable. Upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain an untrue statement of material fact or omit to state any material fact necessary to make the statements therein not misleading or (B) not to be effective and usable for resale of Transfer Restricted Securities during the 12 period required by this Agreement, the Company and the Guarantors shall, subject to Section 4(c), tile promptly an appropriate amendment to such Registration Statement curing such defect, and, if Commission review is required, use their respective reasonable best efforts to cause such amendment to be declared effective as soon as practicable. (ii) prepare and file with the Commission such amendments and post- effective amendments to the applicable Registration Statement as may be necessary to keep such Registration Statement effective for the applicable period set forth in Section 3 or 4 hereof, as the case may be; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Act, and to comply fully with Rules 424,430A and 462, as applicable, under the Act in a timely manner; and comply with the provisions of the Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus; (iii) advise the Initial Purchasers and, in the case of a Shelf Registration Statement, each Holder of securities covered thereby, promptly and, if requested by such Holder, confirm such advice in writing, (A) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to any applicable Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, and (D) of the existence of any fact or the happening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Registration Statement in order to make the statements therein not misleading, or that requires the making of any additions to or changes in the Prospectus in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order 13 suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or Blue Sky laws, the Company and the Guarantors shall use their respective best efforts to obtain the withdrawal or lifting of such order at the earliest possible time; (iv) subject to Section 4(c), if any fact or event contemplated by Section 6(c)(iii)(D) above shall exist or have occurred, prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (v) furnish to the Initial Purchasers and, in the case of a Shelf Registration Statement, each Holder of securities covered thereby, in connection with such exchange or sale, if any, before filing with the Commission, copies of any Registration Statement or any Prospectus included therein or any amendments or supplements to any such Registration Statement or Prospectus (including all documents incorporated by reference after the initial filing of such Registration Statement), which documents will be subject to the review and comment of such Holders in connection with such sale, if any, for a period of at least five Business Days, and the Company will not file any such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus (including all such documents incorporated by reference) to which such Holders shall reasonably object within five Business Days after the receipt thereof. A Holder shall be deemed to have reasonably objected to such filing if such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading or fails to comply with the applicable requirements of the Act; (vi) promptly prior to the filing of any document that is to be incorporated by reference into a Registration Statement or Prospectus, provide copies of such document to the Initial Purchasers and in the case of a Shelf Registration Statement, each Holder of securities covered thereby, in connection with such exchange or sale, if any, make the Company's and each Guarantor's representatives available for discussion of such document and other customary due diligence matters, and include such information in such document prior to the filing thereof as the Initial Purchasers or such Holders may reasonably request; 14 (vii) make available, at reasonable times, for inspection by the Initial Purchasers and, in the case of a Shelf Registration Statement, each Holder of securities covered thereby, and the designated counsel or any accountant retained by such Holders, all financial and other records, pertinent corporate documents of the Company and each Guarantor and cause the Company's and each Guarantor's officers, directors and employees to supply all information reasonably requested by any such Initial Purchaser, Holder, attorney or accountant in connection with such Registration Statement or any post-effective amendment thereto subsequent to the filing thereof and prior to its effectiveness; provided, however, that such persons shall first agree in writing with the Company and the Guarantors that any information that is reasonably and in good faith designated by the Company and the Guarantors in writing as confidential at the time of delivery of such information shall be kept confidential by such persons, unless (i) disclosure of such information is required by court or administrative order or is necessary to respond to inquiries of regulatory authorities, (ii) disclosure of such information is required by law (including any disclosure requirements pursuant to federal securities laws in connection with the filing of such Registration Statement or the use of any Prospectus), (iii) such information becomes generally available to the public other than as a result of a disclosure or failure to safeguard such information by such person or (iv) such information becomes available to such person from a source other than the Company and its subsidiaries and such source is not known, after due inquiry, by such person to be bound by a confidentiality agreement; provided further, that the foregoing investigation shall be coordinated on behalf of such persons by one representative designated by and on behalf of such persons and any such confidential information shall be available from such representative to such persons so long as any person agrees to be bound by such confidentiality agreement; (viii) if requested by the Initial Purchasers and, in the case of a Shelf Registration Statement, any Holders of securities covered thereby, in connection with such exchange or sale, promptly include in any Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such Persons may reasonably request to have included therein, including, without limitation, information relating to the "Plan of Distribution" of the Transfer Restricted Securities; and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after the Company is notified of the matters to be included in such Prospectus supplement or post-effective amendment; 15 (ix) furnish to the Initial Purchasers and, in the case of a Shelf Registration Statement, each Holder of securities covered thereby, in connection with such exchange or sale, without charge, at least one copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, including all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference); (x) deliver to each Holder without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; the Company and the Guarantors hereby consent to the use (in accordance with law) of the Prospectus and any amendment or supplement thereto by each selling Holder in connection with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto; (xi) in the case of a Shelf Registration Statement, enter into such agreements (including underwriting agreements) and, in the case of any Registration Statement contemplated by this Agreement, make such representations and warranties and take all such other actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to any applicable Registration Statement contemplated by this Agreement as may be reasonably requested by any Initial Purchaser or, in the case of a Shelf Registration Statement, the Holders of a majority in aggregate principal amount of the Transfer Restricted Securities covered thereby (the "Majority Holders") in connection with any sale or resale pursuant to any applicable Registration Statement. In such connection, the Company shall: (A) upon request of the Majority Holders (in the case of a Shelf Registration Statement) or any Initial Purchaser (in the case of an Exchange Offer), furnish (or in the case of Sections WGWW) and 6W(xiKW), use its best efforts to cause to be furnished) to each Holder upon Consummation of the Exchange Offer or upon the effectiveness of the Shelf Registration Statement, as the case may be: (1) a certificate, dated such date, signed on behalf of the Company and each Guarantor by (x) the President or any Vice President and (y) a principal financial or accounting officer of the Company and the Guarantor, confirming, as of the date thereof, the matters set forth in 16 Sections 6(d), 9(a) and 9(b) of the Purchase Agreement and such other similar matters as may be reasonably requested; (2) an opinion, dated the date of Consummation of the Exchange Offer or the date of effectiveness of the Shelf Registration Statement, as the case may be, of counsel for the Company and the Guarantors covering matters similar to those set forth in paragraphs (e), (f), (g) and (h) of Section 9 of the Purchase Agreement and such other matter as may be reasonably requested, and in any event including a statement to the effect that such counsel has participated in conferences with officers and other representatives of the Company and the Guarantors, representatives of the independent public accountants for the Company and the Guarantors and have considered the matters required to be stated therein and the statements contained therein, although such counsel has not independently verified the accuracy, completeness or fairness of such statements; and that such counsel advises that, on the basis of the foregoing (relying as to materiality to the extent such counsel deems appropriate upon the statements of officers and other representatives of the Company and the Guarantors and without independent check or verification), no facts came to such counsel's attention that caused such counsel to believe that the applicable Registration Statement, at the time such Registration Statement or any post- effective amendment thereto became effective and, in the case of the Exchange Offer Registration Statement, as of the date of Consummation of the Exchange Offer, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus contained in such Registration Statement as of its date and, in the case of the opinion dated the date of Consummation of the Exchange Offer, as of the date of Consummation, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Without limiting the foregoing, such counsel may state further that such counsel assumes no responsibility for, and has not indepen- dently verified, the accuracy, completeness or fairness of the financial statements, notes and schedules and other 17 financial data included in any Registration Statement contemplated by this Agreement or the related Prospectus; and (3) a customary comfort letter, dated the date of Consummation of the Exchange Offer, or as of the date of effectiveness of the Shelf Registration Statement, as the case may be, from the Company's independent accountants, in the customary form and covering matters of the type customarily covered in comfort letters to underwriters in connection with underwritten offerings, and affirming the matters set forth in the comfort letters delivered pursuant to Section 9(j) of the Purchase Agreement; and (B) deliver such other documents and certificates as may be reasonably requested by any of the Initial Purchasers or, in the case of any Shelf Registration Statement, the Majority Holders, to evidence compliance with the matters covered in Section 6(c)(xi)(A) above and with any customary conditions contained in any agreement entered into by the Company and the Guarantors pursuant to this Section 6(c)(xi); (xii) prior to any public offering of Transfer Restricted Securities, cooperate with the Holders named in the applicable Registration Statement (or any prospectus supplement thereto) and their counsel in connection with the registration and qualification of the Transfer Restricted Securities under the securities or Blue Sky laws of such jurisdictions as any such Holders may request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the applicable Registration Statement; provided, however, that neither the Company nor any Guarantor shall be required to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to the service of process in suits or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where it is not now so subject; (xiii) in connection with any sale of Transfer Restricted Securities that will result in such securities no longer being Transfer Restricted Securities, cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and, subject to the provisions of the Indenture regarding global securities, to register such Transfer Restricted Securities in such denominations and such names as 18 the selling Holders may request at least two Business Days prior to such sale of Transfer Restricted Securities; (xiv) use their respective best efforts to cause the disposition of the Transfer Restricted Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof to consummate the disposition of such Transfer Restricted Securities, subject to the proviso contained in Section 6(c)(xii) above; (xv) provide a CUSIP number for all Transfer Restricted Securities not later than the effective date of a Registration Statement covering such Transfer Restricted Securities and provide the Trustee with printed certificates for the Transfer Restricted Securities which are in a form eligible for deposit with the Depository Trust Company; (xvi) otherwise use their respective best efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security holders with regard to any applicable Registration Statement, as soon as practicable, a consolidated earnings statement meeting the requirements of Rule 158 (which need not be audited) covering a twelve-month period beginning after the effective date of the Registration Statement (as such term is defined in paragraph (c) of Rule 158 under the Act); (xvii) cause the Indenture to be qualified under the TIA not later than the effective date of the first Registration Statement required by this Agreement and, in connection therewith, cooperate with the Trustee and the Holders to effect such changes to the Indenture as may be required for such Indenture to be so qualified in accordance with the terms of the TIA; and execute and use its best efforts to cause the Trustee to execute, all documents that may be required to effect such changes and all other forms and documents required to be riled with the Commission to enable such Indenture to be so qualified in a timely manner; and (xviii) provide promptly to each Holder, upon request, each document filed with the Commission pursuant to the requirements of Section 13 or Section 15(d) of the Exchange Act. (d) Restrictions on Holders. Each Holder agrees by acquisition of a Transfer Restricted Security that, upon receipt of the notice referred to in Section 4(c) or Section 6(c)(iii)(C) or any notice from the Company of the existence of any fact of the kind described in Section 6(c)(iii)(D) hereof (in each case, a "Suspension Notice"), such Holder will forthwith discontinue disposition of 19 Restricted Securities pursuant to the applicable Registration Statement until (i) such Holder has received copies of the supplemented or amended Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Holder is advised in writing by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus (in each case, the "Recommencement Date"). Each Holder receiving a Suspension Notice hereby agrees that it will either (i) destroy any Prospectuses, other than permanent file copies, then in such Holder's possession which have been replaced by the Company with more recently dated Prospectuses or (ii) deliver to the Company (at the Company's expense) all copies, other than permanent file copies, then in such Holder's possession of the Prospectus covering such Transfer Restricted Securities that was current at the time of receipt of the Suspension Notice. The time period regarding the effectiveness of such Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended by a number of days equal to the number of days in the period from and including the date of delivery of the Suspension Notice to the date of delivery of the Recommencement Date. No holder may participate in any underwritten registration under the Agreement unless such Holder (a) agrees to sell such Holder's Transfer Restricted Securities on the basis provided in any underwriting arrangements approved by the Persons entitled under this Agreement to approve such arrangements and (b) completes and executes all reasonable questionnaires, powers of attorneys, indemnities, underwriting agreements, lock-up letters and other documents required under the terms of such underwriting arrangements. Section 7. Registration Expenses. (a) All expenses incident to the Company's and the Guarantors' performance of or compliance with this Agreement will be borne by the Company, regardless of whether a Registration Statement becomes effective, including without limitation: (i) all registration and filing fees and expenses; (ii) all fees and expenses of compliance with federal securities and state Blue Sky or securities laws; (iii) all expenses of printing (including printing certificates for the Exchange Notes to be issued in the Exchange Offer and printing of Prospectuses), messenger and delivery services and telephone; (iv) all fees and disbursements of counsel for the Company, the Guarantors and, in accordance with Section 7(b) below, the Holders of Transfer Restricted Securities; (v) all application and filing fees in connection with listing the Exchange Notes on a national securities exchange or automated quotation system pursuant to the requirements hereof; and (vi) all fees and disbursements of independent certified public accountants of the Company and the Guarantors (including the expenses of any special audit and comfort letters required by or incident to such performance). 20 The Company will, in any event, bear its and the Guarantors' internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by the Company or any Guarantor. (b) In connection with any Registration Statement required by this Agreement (including, without limitation, the Exchange Offer Registration Statement and the Shelf Registration Statement), the Company and the Guarantors will reimburse the Initial Purchasers and the Holders of Transfer Restricted Securities who are tendering Initial Notes in the Exchange Offer and/or selling or reselling Initial Notes or Exchange Notes pursuant to the "Plan of Distribution" contained in the Exchange Offer Registration Statement or the Shelf Registration Statement, as applicable, for the reasonable fees and disbursements of not more than one counsel, who shall be Davis Polk & Wardwell, unless another firm shall be chosen by the Holders of a majority in principal amount of the Transfer Restricted Securities for whose benefit such Registration Statement is being prepared. Section 8. Indemnification. (a) The Company and each of the Guarantors agree, jointly and severally, to indemnify and hold harmless each Holder, its directors, officers and each Person, if any, who controls such Holder (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act), from and against any and all losses, claims, damages, liabilities, judgments, (including without limitation, any legal or other expenses incurred in connection with investigating or defending any matter, including any action that could give rise to any such losses, claims, damages, liabilities or judgments) caused by any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, preliminary prospectus or Prospectus (or any amendment or supplement thereto) provided by the Company to any Holder or any prospective purchaser of Exchange Notes or registered Initial Notes, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, liabilities or judgments are caused by an untrue statement or omission or alleged untrue statement or omission that is based upon information relating to any of the Holders furnished in writing to the Company by any of the Holders provided, however, that the foregoing indemnity agreement with respect to the preliminary prospectus shall not inure to the benefit of any Holder who failed to deliver the Prospectus, as then amended or supplemented (so long as the Prospectus and any such amendment or supplement was provided by the Company to the Holders in the requisite quantity and on a timely basis to permit proper delivery) to the person asserting any losses, claims, damages, liabilities or 21 judgments caused by any untrue statement or alleged untrue statement of a material fact contained in the preliminary prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, if such material misstatement or omission or alleged material misstatement or omission was cured in the Prospectus, as so amended or supplemented. (b) Each Holder of Transfer Restricted Securities agrees, severally and not jointly, to indemnify and hold harmless the Company and the Guarantors, and their respective directors and officers, and each person, if any, who controls (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act) the Company or the Guarantors to the same extent as the foregoing indemnity from the Company and the Guarantors set forth in Section S(a) above, but only with reference to information relating to such Holder furnished in writing to the Company by such Holder expressly for use in any Registration Statement, preliminary prospectus or Prospectus (or any amendment or supplement thereto). In no event shall any Holder, its directors, officers or any Person who controls such Holder be liable or responsible for any amount in excess of the total amount received by such Holder with respect to its sale of Transfer Restricted Securities pursuant to a Registration Statement exceeds the amount of any damages that such Holder, its directors, officers or any Person who controls such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. (c) In case any action shall be commenced involving any person in respect of which indemnity may be sought pursuant to Section 8(a) or S(b) (the "indemnified party"), the indemnified party shall promptly notify the person against whom such indemnity may be sought (the "indemnifying person") in writing and the indemnifying party shall assume the defense of such action, including the employment of counsel reasonably satisfactory to the indemnified party and the payment of all fees and expenses of such counsel, as incurred (except that in the case of any action in respect of which indemnity may be sought pursuant to both Sections S(a) and 8(b), a Holder shall not be required to assume the defense of such action pursuant to this Section 8(c), but may employ separate counsel and participate in the defense thereof, but the fees and expenses of such counsel, except as provided below, shall be at the expense of the Holder). Any indemnified party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the indemnified party unless (i) the employment of such counsel shall have been specifically authorized in writing by the indemnifying party, (ii) the indemnifying party shall have failed to assume the defense of such action or employ counsel reasonably satisfactory to the indemnified party or (iii) the named parties to any such action (including any impleaded parties) include both the indemnified party and the indemnifying party, and the indemnified party, 22 shall have been advised by such counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the indemnifying party (in which case the indemnifying party shall not have the right to assume the defense of such action on behalf of the indemnified party). In any such case, the indemnifying party shall not, in connection with any one action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all indemnified parties and all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by a majority of the Holders, in the case of the parties indemnified pursuant to Section 8(a), and by the Company and the Guarantors, in the case of parties indemnified pursuant to Section 8(b). The indemnifying party shall indemnify and hold harmless the indemnified party from and against any and all losses, claims, damages, liabilities and judgments by reason of any settlement of any action (i) effected with its written consent or (ii) effected without its written consent if the settlement is entered into more than sixty days after the indemnifying party shall have received a request from the indemnified party for reimbursement for the fees and expenses of counsel (in any case where such fees and expenses are at the expense of the indemnifying party) and more than twenty days after the indemnifying party shall have received notice of the proposed settlement and, prior to the date of such settlement, the indemnifying party shall have failed to comply with such reimbursement request. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement or compromise of, or consent to the entry of judgment with respect to, any pending or threatened action in respect of which the indemnified party is or could have been a party and indemnity or contribution may be or could have been sought hereunder by the indemnified party, unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability on claims that are or could have been the subject matter of such action and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of the indemnified party. (d) To the extent that the indemnification provided for in this Section 8 is unavailable to an indemnified party in respect of any losses, claims, damages, liabilities or judgments referred to therein, then each indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or judgments in such proportion as is appropriate to reflect the relative fault of the Company and the Guarantors, on the one hand, and of the Holder, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or judgments, as well as any other relevant equitable considerations. The relative fault of the Company and the Guarantors, on the one hand, and of the Holder, on the other hand, shall be 23 determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Guarantors, on the one hand, or by the Holder, on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Guarantors and each Holder agree that it would not be just and equitable if contribution pursuant to this Section 8(d) were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or judgments referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by such indemnified party in connection with investigating or defending any matter, including any action, that could have given rise to such losses, claims, damages, liabilities or judgments. Notwithstanding the provisions of this Section 8, no Holder, its directors, its officers or any Person, if any, who controls such Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the total received by such Holder with respect to the sale of Transfer Restricted Securities pursuant to a Registration Statement exceeds the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11 (f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Holders' obligations to contribute pursuant to this Section 8(d) are several in proportion to the respective principal amount of Transfer Restricted Securities held by each Holder hereunder and not joint. Section 9. Rule 144A and Rule 144. The Company and each Guarantor agrees with each Holder, for so long as any Transfer Restricted Securities remain outstanding and during any period in which the Company or any Guarantor (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make available, upon request of any Holder, to such Holder or beneficial owner of Transfer Restricted Securities in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities designated by such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A, and (ii) is subject to Section 13 or 15 (d) of the Exchange Act, to make all filings required thereby in a timely manner in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144. 24 Section 10. Miscellaneous. (a) Remedies. The Company and the Guarantors acknowledge and agree that any failure by the Company and/or any Guarantor to comply with their respective obligations under Sections 3 and 4 hereof may result in material irreparable injury to the Initial Purchasers or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchasers or any Holder may obtain such relief as may be required to specifically enforce the Company's and the Guarantors' obligations under Sections 3 and 4 hereof. The Company and the Guarantors further agree to waive the defense in any action for specific performance that a remedy at law would be adequate. (b) No Inconsistent Agreements. Neither the Company nor any Guarantor will, on or after the date of this Agreement, enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. Neither the Company nor any Guarantor has previously entered into any agreement which remains in effect granting any registration rights with respect to its securities to any Person. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's and the Guarantors' securities under any agreement in effect on the date hereof. (c) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given unless (i) in the case of Section 5 hereof and this clause 10(c)(i), the Company has obtained the written consent of Holders of all outstanding Transfer Restricted Securities and (ii) in the case of all other provisions hereof, the Company has obtained the written consent of Holders of a majority of the outstanding principal amount of Transfer Restricted Securities (excluding Transfer Restricted Securities held by the Company or its Affiliates). Notwithstanding the foregoing, a waiver or consent to departure from the provisions hereof that relates exclusively to the rights of Holders whose Transfer Restricted Securities are being tendered pursuant to the Exchange Offer, and that does not affect directly or indirectly the rights of other Holders whose Transfer Restricted Securities are not being tendered pursuant to such Exchange Offer, may be given by the Holders of a majority of the outstanding principal amount of Transfer Restricted Securities subject to such Exchange Offer. (d) Third Party Beneficiary. The Holders shall be third party beneficiaries to the agreements made hereunder between the Company and the Guarantors, on the one hand, and the Initial Purchasers, on the other hand, and 25 shall have the right to enforce such agreements directly to the extent they may deem such enforcement necessary or advisable to protect its rights or the rights of Holders hereunder. (e) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), telex, telecopier, or air courier guaranteeing overnight delivery: (i) if to a Holder, at the address set forth on the records of the Registrar under the applicable Indenture, with a copy to the Registrar under such Indenture; and (ii) if to the Company or the Guarantors: One Houston Center, Suite 700 1221 McKinney Street Houston, Texas 77010 Telecopier No.: 713-309-2143 Attention: General Counsel With a copy to: Baker Botts L.L.P. 910 Louisiana Houston, Texas 77002 Telecopier No.: 713-229-1522 Attention: Stephen Massad, Esq. All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and on the next business day, if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address specified in the Indenture. (f) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders; provided, that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Transfer Restricted Securities in violation of the 26 terms hereof or of the Purchase Agreement or the Indenture. If any transferee of any Holder shall acquire Transfer Restricted Securities in any manner, whether by operation of law or otherwise, such Transfer Restricted Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Transfer Restricted Securities such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement, including the restrictions on resale set forth in this Agreement and, if applicable, the Purchase Agreement, and such Person shall be entitled to receive the benefits hereof. (g) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (h) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF. (j) Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (k) Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. 27 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. LYONDELL CHEMICAL COMPANY By: /s/ Karen A. Twitchell --------------------------- Name: Karen A. Twitchell Title: Vice President & Treasurer ARCO CHEMICAL TECHNOLOGY, INC. By:___________________________ Name: Title: ARCO CHEMICAL TECHNOLOGY, L.P. By: ARCO Chemical Technology Management, Inc., its General Partner By:___________________________ Name: Title: LYONDELL CHEMICAL NEDERLAND, LTD. By: /s/ Karen A. Twitchell --------------------------- Name: Karen A. Twitchell Title: Vice President & Treasurer IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. LYONDELL CHEMICAL COMPANY By:_______________________________ Name: Title: ARCO CHEMICAL TECHNOLOGY, INC. By: /s/ Francis P. McGrail ------------------------------- Name: Francis P. McGrail Title: President and Treasurer ARCO CHEMICAL TECHNOLOGY, L.P. By: ARCO Chemical Technology Management, Inc., its General Partner By: /s/ Francis P. McGrail ------------------------------- Name: Francis P. McGrail Title: President and Treasurer LYONDELL CHEMICAL NEDERLAND, LTD. By:_______________________________ Name: Title: SALOMON SMITH BARNEY INC. J.P. MORGAN SECURITIES INC. BANC OF AMERICA SECURITIES LLC CREDIT SUISSE FIRST BOSTON CORPORATION BANC ONE CAPITAL MARKETS, INC. CREDIT LYONNAIS SECURITIES (USA) INC. MIZUHO INTERNATIONAL PLC SCOTIA CAPITAL (USA) INC. SG COWEN SECURITIES CORPORATION By: SALOMON SMITH BARNEY INC. By: /s/ Edward T. Crook ----------------------------- Name: Edward T. Crook Title: Managing Director EX-4.2 10 dex42.txt INDENTURE EXHIBIT 4.2 LYONDELL CHEMICAL COMPANY, the SUBSIDIARY GUARANTORS party hereto and THE BANK OF NEW YORK, as Trustee ______________ INDENTURE Dated as of December 4, 2001 ______________ 9 1/2% Senior Secured Notes Due 2008 TABLE OF CONTENTS ------------
Page ---- ARTICLE 1 Definitions and Other Provisions of General Application. Section 1.01. Definitions........................................................................ 1 Section 1.02. Other Definitions.................................................................. 29 Section 1.03. Rules of Construction.............................................................. 30 Section 1.04. Incorporation by Reference of TIA.................................................. 30 Section 1.05. Conflict with TIA.................................................................. 31 Section 1.06. Compliance Certificates and Opinions............................................... 31 Section 1.07. Form of Documents Delivered to Trustee............................................. 32 Section 1.08. Acts of Noteholders; Record Dates.................................................. 32 Section 1.09. Notices, Etc., to Trustee and Company.............................................. 34 Section 1.10. Notices to Holders; Waivers........................................................ 34 Section 1.11. Effect of Headings and Table of Contents........................................... 35 Section 1.12. Successors and Assigns............................................................. 35 Section 1.13. Separability Clause................................................................ 35 Section 1.14. Benefits of Indenture.............................................................. 35 Section 1.15. Governing Law...................................................................... 35 Section 1.16. Legal Holidays..................................................................... 36 Section 1.17. No Personal Liability of Directors, Officers, Employees, Incorporators and Stockholders.............................................................................. 36 Section 1.18. Exhibits and Schedules............................................................. 36 Section 1.19. Counterparts....................................................................... 36 ARTICLE 2 Note Forms Section 2.01. Forms Generally.................................................................... 36 Section 2.02. Form of Trustee' Certificate of Authentication..................................... 38 Section 2.03. Restrictive Legends................................................................ 38 ARTICLE 3 The Notes Section 3.01. Title and Terms.................................................................... 41 Section 3.02. Denominations...................................................................... 42 Section 3.03. Execution, Authentication and Delivery and Dating.................................. 42 Section 3.04. Temporary Notes.................................................................... 43 Section 3.05. Registration, Registration of Transfer and Exchange................................ 43 Section 3.06. Mutilated, Destroyed, Lost and Stolen Notes........................................ 44 Section 3.07. Payment of Interest Rights Preserved............................................... 45 Section 3.08. Persons Deemed Owners.............................................................. 46 Section 3.09. Cancellation....................................................................... 46 Section 3.10. Computation of Interest............................................................ 46
Page ---- Section 3.11. Payment of Liquidated Damages....................................................... 46 Section 3.12. CUSIP Numbers....................................................................... 46 Section 3.13. Book-entry Provisions for Global Notes.............................................. 47 Section 3.14. Transfer Provisions................................................................. 48 ARTICLE 4 Covenants Section 4.01. Payment of Principal, Premium and Interest.......................................... 54 Section 4.02. Maintenance of Office or Agency..................................................... 54 Section 4.03. Money for Payments to Be Held in Trust.............................................. 54 Section 4.04. SEC Reports......................................................................... 56 Section 4.05. Certificates to Trustee............................................................. 56 Section 4.06. Limitation on Indebtedness.......................................................... 57 Section 4.07. Limitation on Restricted Payments................................................... 61 Section 4.08. Limitation on Dividend and other Payment Restrictions Affecting Restricted Subsidiaries and Joint Ventures.............................................................. 67 Section 4.09. Limitation on Sales of Assets....................................................... 70 Section 4.10. Limitation on Affiliate Transactions................................................ 72 Section 4.11. Limitation on Liens................................................................. 73 Section 4.12. Equal and Ratable Liens............................................................. 73 Section 4.13. No Amendment to Subordination Provisions............................................ 74 Section 4.14. Repurchase of Notes upon a Change in Control........................................ 74 Section 4.15. Limitation on Sale and Leaseback Transactions....................................... 75 Section 4.16. Limitation on Line of Business...................................................... 75 Section 4.17. Limitation on Accounts Receivable Facilities........................................ 75 Section 4.18. Limited Applicability of Covenants when Notes are Rated Investment-Grade............ 75 Section 4.19. Existence........................................................................... 75 Section 4.20. Payment of Taxes and Other Claims................................................... 76 Section 4.21. Maintenance of Properties and Insurance............................................. 76 Section 4.22. Limitation on Issuance of Guarantees by Restricted Subsidiaries..................... 76 Section 4.23. Payments for Consents............................................................... 77 ARTICLE 5 Consolidation, Merger or Sale of Assets Section 5.01. Consolidation, Merger or Sale of Assets by the Company.............................. 77 Section 5.02. Successor Company Substituted....................................................... 78 Section 5.03. Consolidation, Merger or Sale of Assets by a Subsidiary Guarantor................... 79 Section 5.04. Opinion of Counsel to Trustee....................................................... 80
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Page ----- ARTICLE 6 Remedies Section 6.01. Events of Default................................................................... 80 Section 6.02. Acceleration........................................................................ 81 Section 6.03. Other Remedies...................................................................... 82 Section 6.04. Waiver of Past Defaults............................................................. 82 Section 6.05. Control by Majority................................................................. 82 Section 6.06. Limitation on Suits................................................................. 83 Section 6.07. Rights of Holders to Receive Payment................................................ 83 Section 6.08. Collection Suit by Trustee.......................................................... 83 Section 6.09. Trustee May File Proofs of Claim.................................................... 83 Section 6.10. Priorities.......................................................................... 84 Section 6.11. Undertaking for Costs............................................................... 84 Section 6.12. Restoration of Rights and Remedies.................................................. 84 Section 6.13. Rights and Remedies Cumulative...................................................... 85 Section 6.14. Waiver of Stay, Extension or Usury Laws............................................. 85 ARTICLE 7 The Trustee Section 7.01. Certain Duties and Responsibilities................................................. 85 Section 7.02. Notice of Defaults.................................................................. 86 Section 7.03. Certain Rights of Trustee........................................................... 86 Section 7.04. Not Responsible for Recitals or Issuance of Notes................................... 87 Section 7.05. Trustee's Disclaimer................................................................ 88 Section 7.06. May Hold Notes...................................................................... 88 Section 7.07. Money Held in Trust................................................................. 88 Section 7.08. Compensation and Reimbursement...................................................... 88 Section 7.09. Conflicting Interests............................................................... 89 Section 7.10. Corporate Trustee Required; Eligibility............................................. 89 Section 7.11. Resignation and Removal; Appointment of Successor................................... 89 Section 7.12. Acceptance of Appointment by Successor.............................................. 90 Section 7.13. Merger, Conversion, Consolidation or Succession to Business......................... 91 Section 7.14. Preferential Collection of Claims Against the Company............................... 91 Section 7.15. Appointment of Authenticating Agent................................................. 91 ARTICLE 8 Holders' List and Reports by Trustee and the Company Section 8.01. The Company to Furnish Trustee Names and Addresses of Holders; Stock Exchange Listing.......................................................................... 92 Section 8.02. Preservation of Information; Communications to Holders.............................. 92 Section 8.03. Reports by Trustee.................................................................. 92
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Page ---- ARTICLE 9 Amendment, Supplement or Waiver Section 9.01. Without Consent of the Holders...................................................... 93 Section 9.02. With Consent of Holders............................................................. 93 Section 9.03. Execution of Amendments, Supplements or Waivers..................................... 95 Section 9.04. Revocation and Effect of Consents................................................... 95 Section 9.05. Conformity with TIA................................................................. 96 Section 9.06. Notation on or Exchange of Notes.................................................... 96 ARTICLE 10 Redemption of Notes Section 10.01. Right of Redemption................................................................ 96 Section 10.02. Applicability of Article........................................................... 96 Section 10.03. Election to Redeem; Notice to Trustee.............................................. 96 Section 10.04. Selection by Trustee of Notes to Be Redeemed....................................... 97 Section 10.05. Notice of Redemption............................................................... 97 Section 10.06. Deposit of Redemption Price........................................................ 98 Section 10.07. Notes Payable on Redemption Date................................................... 98 Section 10.08. Notes Redeemed in Part............................................................. 99 ARTICLE 11 Satisfaction and Discharge Section 11.01. Satisfaction and Discharges of Indenture........................................... 99 Section 11.02. Application of Trust Money......................................................... 100 ARTICLE 12 Defeasance and Covenant Defeasance Section 12.01. Option of the Company to Effect Defeasance or Covenant Defeasance.................. 100 Section 12.02. Legal Defeasance and Discharge..................................................... 101 Section 12.03. Covenant Defeasance................................................................ 101 Section 12.04. Conditions to Legal or Covenant Defeasance......................................... 102 Section 12.05. Deposited Money and Government Securities to Be Held in Trust; Other Miscellaneous Provisions.................................................................... 103 Section 12.06. Repayment to Company............................................................... 104 Section 12.07. Reinstatement...................................................................... 104 ARTICLE 13 Subsidiary Guarantees Section 13.01. The Guarantees..................................................................... 104 Section 13.02. Guarantee Unconditional............................................................ 105
iv Section 13.03. Discharge; Reinstatement............................................................. 105 Section 13.04. Waiver by the Subsidiary Guarantors.................................................. 106 Section 13.05. Subrogation and Contribution......................................................... 106 Section 13.06. Stay of Acceleration................................................................. 106 Section 13.07. Limits of Guarantees................................................................. 106 Section 13.08. Execution and Delivery of Note Guarantee............................................. 106 ARTICLE 14 Security Arrangements Section 14.01. Security............................................................................. 107 Section 14.02. Notice of Payment, Discharge or Defeasance........................................... 108
EXHIBIT A - Form of Note EXHIBIT B - Form of Supplemental Indenture EXHIBIT C - Form of Certificate of Beneficial Ownership EXHIBIT D - Form of Regulation S Certificate EXHIBIT E - Form of Institutional Accredited Investor Certificate v INDENTURE, dated as of December 4, 2001 (as amended, supplemented or otherwise modified from time to time, the "Indenture"), among LYONDELL CHEMICAL COMPANY, a Delaware corporation (as further defined below, the "Company"), the Subsidiary Guarantors party hereto and THE BANK OF NEW YORK, a New York banking corporation, as trustee (the "Trustee"). RECITALS OF THE COMPANY The Company and the Subsidiary Guarantors have duly authorized the execution and delivery of this Indenture to provide for the issuance of (i) initially, $393,000,000 aggregate principal amount of 9 1/2% Senior Secured Notes due 2008 of the Company (the "Initial Notes" and, together with any Exchange Notes issued in respect thereof, the "Original Notes") and (ii) if and when issued, additional 9 1/2% Senior Secured Notes due 2008 of the Company (the "Initial Additional Notes" and, together with any Exchange Notes issued in respect thereof, the "Additional Notes") issuable as provided in this Indenture, in each case, guaranteed to the extent provided herein and in the Notes by the Subsidiary Guarantors. All things necessary to make the Original Notes, when duly issued, executed and delivered by the Company and authenticated and delivered by the Trustee hereunder, the valid obligation of the Company, and to make this Indenture a valid agreement of the Company and the Subsidiary Guarantors as of the date hereof, in accordance with the terms of the Original Notes and this Indenture, have been done. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Notes (as defined herein) by the Holders (as defined herein) thereof, it is mutually agreed, for the equal and ratable benefit of all Holders, as follows: ARTICLE 1 Definitions and Other Provisions of General Application Section 1.01 Definitions. "Accounts Receivable Subsidiary" means any Wholly Owned Subsidiary of the Company (i) which is formed solely for the purpose of, and which engages in no activities other than activities in connection with, financing accounts receivable of the Company and/or its Restricted Subsidiaries, (ii) which is designated by the Company as an Accounts Receivables Subsidiary pursuant to an Officer's Certificate delivered to the Trustee, (iii) no portion of Indebtedness or any other obligation (contingent or otherwise) of which (a) is at any time recourse to or obligates the Company or any Restricted Subsidiary in any way, or subjects any property or asset of the Company or any Restricted Subsidiary, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to (I) representations, warranties and covenants (or any indemnity with respect to such representations, warranties and covenants) entered into in the ordinary course of business in connection with the sale (including a sale in exchange for a promissory note of or Equity Interest in such Accounts Receivable Subsidiary) of accounts receivable to such Accounts Receivable Subsidiary or (II) any guarantee of any such accounts receivable financing by the Company or any Restricted Subsidiary that is permitted to be incurred pursuant to Section 4.06, (iv) with which neither the Company nor any Restricted Subsidiary of the Company has any contract, agreement, arrangement or understanding other than contracts, agreements, arrangements and understandings entered into in the ordinary course of business in connection with the sale (including a sale in exchange for a promissory note of or Equity Interest in such Accounts Receivable Subsidiary) of accounts receivable in accordance with Section 4.17 and fees payable in the ordinary course of business in connection with servicing accounts receivable and (v) with respect to which neither the Company nor any Restricted Subsidiary of the Company has any obligation (a) to subscribe for additional shares of Capital Stock or other Equity Interests therein or make any additional capital contribution or similar payment or transfer thereto other than in connection with the sale (including a sale in exchange for a promissory note of or Equity Interest in such Accounts Receivable Subsidiary) of accounts receivable to such Accounts Receivable Subsidiary in accordance with Section 4.17 or (b) to maintain or preserve the solvency, any balance sheet term, financial condition, level of income or results of operations thereof. "Acquired Debt" means, with respect to any specified Person, (i) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, including, without limitation, Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Subsidiary of such specified Person and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "Acquired Disqualified Stock" means, with respect to any specified Person, Disqualified Stock of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, including, without limitation, Disqualified Stock incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Subsidiary of such specified Person. "Acquired Preferred Stock" means, with respect to any specified Person, Preferred Stock of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, including, without limitation, Preferred Stock incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Subsidiary of such specified Person. "Acquiring Person" means a Person other than a Subject Assets Transferee which acquires (i) all or a portion of the Subject Assets or (ii) an interest in a Subject Assets Transferee in connection with a Major Asset Sale. "Additional Notes" means any notes issued under this Indenture in addition to the Original Notes, including any Exchange Notes issued in exchange therefor having the same terms in all respects (or in all respects except payment of interest (i) scheduled and paid prior to the date of issuance of such notes or (ii) payable on the first Interest Payment Date following such date of issuance). 2 "Adjusted Consolidated Cash Flow" means, for any period, the sum of Consolidated Cash Flow of the Company for such period plus the aggregate Distributable Joint Venture Cash Flow of the Company and its Restricted Subsidiaries, determined on a consolidated basis, for such period. "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 purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided that beneficial ownership of 10% or more of the voting securities of a Person shall be deemed to be control; provided further that the foregoing proviso shall not apply for purposes of Section 4.07(b)(vii) and Section 4.07(b)(ix) and clause (d) of the definition of "Unrestricted Subsidiary". "Asset Sale" means (i) the sale, lease, conveyance or other disposition (other than the creation of a Lien) of any assets other than the disposition of inventory, equipment or Cash Equivalents in the ordinary course of business consistent with past practices (provided that the sale, conveyance or other disposition of all or substantially all the assets of the Company and its Restricted Subsidiaries taken as a whole will be governed by the provisions of Section 4.14 and/or the provisions of Section 5.01 and not by the provisions of Section 4.09), (ii) the sale by the Company or any of its Restricted Subsidiaries of Equity Interests of any of the Company's Restricted Subsidiaries, Unrestricted Subsidiaries or Joint Ventures and (iii) the issuance by any of the Company's Restricted Subsidiaries of Equity Interests of such Restricted Subsidiary, in the case of clause (i), (ii) or (iii), whether in a single transaction or a series of related transactions (a) that have a fair market value in excess of $25 million or (b) for Net Proceeds in excess of $25 million. Notwithstanding the foregoing: (a) a transfer of assets by the Company to a Restricted Subsidiary or by a Restricted Subsidiary to the Company or to another Restricted Subsidiary; (b) an issuance of Equity Interests by a Restricted Subsidiary to the Company or to another Restricted Subsidiary; (c) a Restricted Payment that is permitted by Section 4.07; (d) an issuance of Preferred Stock by a Finance Subsidiary that is permitted by Section 4.06; (e) sales (including a sale in exchange for a promissory note of or Equity Interest in such Accounts Receivable Subsidiary) of accounts receivable to an Accounts Receivable Subsidiary in connection with any Receivables Facility permitted by Section 4.17; and (f) Sale and Leaseback Transactions will not be deemed to be an Asset Sale. "Asset Sale Lien" means a Lien on the Subject Assets (including as a Lien for this purpose contractual rights with respect to the operation of the Subject Assets) arising in connection with a Major Asset Sale in favor of the Acquiring Person (or an Affiliate thereof) which Lien does not secure any Indebtedness. "Attributable Debt" in respect of a Sale and Leaseback Transaction that is treated as a capital lease in accordance with GAAP means, at the time of determination, the present value (discounted at the rate of interest implicit in such transaction, 3 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). "Authenticating Agent" means any Person authorized by the Trustee pursuant to Section 7.15 to act on behalf of the Trustee to authenticate Notes of one or more series. "Board of Directors" means the board of directors of the Company or any committee thereof duly authorized to act on behalf of such board of directors. "Board Resolution" means, with respect to any Person, a copy of a resolution certified by the Secretary or an Assistant Secretary of such Person to have been duly adopted by the board of directors (or any committee thereof) of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee. Unless the context otherwise requires, "Board Resolution" refers to a Board Resolution of the Company. "Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in The City of New York or Houston, Texas are authorized by law to close. "Capital Lease Obligation" means, 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 (i) in the case of a corporation, corporate stock, (ii) in the case of an association or a business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership, partnership interests (whether general or limited) and (iv) 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 (a) United States dollars, (b) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than one year from the date of acquisition, (c) demand deposits, time deposits and certificates of deposit with maturities of one year or less from the date of acquisition, bankers' acceptances with maturities not exceeding one year from the date of acquisition and overnight bank deposits, in each case with any bank or trust company organized or licensed under the laws of the United States or any State thereof having capital, surplus and undivided profits in excess of $500 million, (d) repurchase obligations with a term of not more than seven days for underlying securities of the type described in clauses (b) and (c) above entered into with any financial institution meeting the qualifications specified in clause (c) above, (e) commercial paper rated at least P-1 or A-1 by Moody's or S&P, respectively, and in each case maturing within six months after the date of acquisition, (f) any fund investing 4 exclusively in investments of the type described in clauses (a) through (e) above and (g) in the case of a Foreign Subsidiary, substantially similar investments denominated in foreign currencies (including similarly capitalized foreign banks). "Change of Control" means the occurrence of any of the following: (i) the sale, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all the assets of the Company and its Subsidiaries taken as a whole to any Person or group (as such term is used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) other than to a Person or group who, prior to such transaction, held a majority of the voting power of the voting stock of the Company, (ii) the acquisition by any Person or group (as defined above) of a direct or indirect interest in more than 50% of the voting power of the voting stock of the Company, by way of merger or consolidation or otherwise, or (iii) the first day on which a majority of the members of the board of directors of the Company are not Continuing Directors. "Clearsteam" means Clearsteam Banking SA and its successors. "Code" means the Internal Revenue Code of 1986, as amended. "Collateral" means all assets of the Company and its Restricted Subsidiaries which are subject to Liens pursuant to the terms and provisions of the Security Documents in order to secure the Indenture Obligations equally and ratably with the Existing Credit Facility Obligations. "Collateral Agent" means JPMorgan Chase Bank (as successor to Morgan Guaranty Trust Company of New York), in its capacity as collateral agent or administrative agent, or any other collateral agent under any or all of the Security Documents. "Company" means Lyondell Chemical Company, a Delaware corporation, and any successor in interest thereto. "Company Request," "Company Order" and "Company Consent" mean, respectively, a written request, order or consent signed in the name of the Company by an Officer of the Company. "Consolidated Cash Flow" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period (less the Net Income of any Joint Venture to the extent included therein pursuant to clause (i) of the definition of "Consolidated Net Income"), plus in each case, without duplication (i) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period (including any provision for taxes on the Net Income of any Joint Venture that is a pass-through entity for federal income tax purposes, to the extent such taxes are paid or payable by such Person or any of its Restricted Subsidiaries), to the extent that such provision for taxes was included in computing such Consolidated Net Income, 5 (ii) the Fixed Charges of such Person and its Restricted Subsidiaries for such period, to the extent that such Fixed Charges were deducted in computing such Consolidated Net Income, (iii) depreciation and amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation and amortization were deducted in computing such Consolidated Net Income and (iv) any non-cash charges reducing Consolidated Net Income for such period (excluding any such non-cash charge to the extent that it represents an accrual of or reserve for cash expenses in any future period or an amortization of a prepaid cash expense that was paid in a prior period); minus (v) any non-cash items increasing Consolidated Net Income for such period, in each case, on a consolidated basis and determined in accordance with GAAP. Notwithstanding the foregoing, the provision for taxes on the income or profits of, and the depreciation and amortization of, a Restricted Subsidiary of the referent Person shall be added to Consolidated Net Income to compute Consolidated Cash Flow only to the extent (and in the same proportion) that the Net Income of such Restricted Subsidiary was included in calculating the Consolidated Net Income of such Person. "Consolidated Net Income" means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that (i) the Net Income of any Person that is not a Restricted Subsidiary shall be included only to the extent of the lesser of (x) the amount of dividends or distributions paid in cash (but not by means of a loan) to the referent Person or a Restricted Subsidiary thereof or (y) the referent Person's (or a Restricted Subsidiary of the referent Person's) proportionate share of the Net Income of such other Person, (ii) the Net Income (but not loss) 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 Subsidiary or its stockholders, (iii) the Net Income of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition shall be excluded and (iv) the cumulative effect of a change in accounting principles shall be excluded. 6 "Consolidated Net Worth" means, with respect to any Person as of any date, the sum of (i) the consolidated equity of the common stockholders of such Person and its Restricted Subsidiaries as of such date plus (ii) the respective amounts reported on such Person's balance sheet as of such date with respect to any series of Preferred Stock (other than Disqualified Stock), less all write-ups (other than write-ups resulting from foreign currency translations and write-ups of tangible assets of a going concern business made in accordance with GAAP as a result of the acquisition of such business) subsequent to the date of the Indenture in the book value of any asset owned by such Person or a Restricted Subsidiary of such Person, and excluding the cumulative effect of a change in accounting principles, all as determined in accordance with GAAP. "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company who (i) was a member of such Board of Directors on the date of the Indenture or (ii) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election or any successor Continuing Directors appointed by such Continuing Directors (or their successors). "Corporate Trust Office" means the principal office of the Trustee, at which at any particular time its corporate trust business shall be administered, which office on the Issue Date is located at 101 Barclay Street, Floor 21 West, New York, New York 10286. "Default" means any event that is or with the passage of time or the giving of notice or both would be an Event of Default. "Depositary" means The Depository Trust Company, its nominees and successors. "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 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 on which the Notes mature; provided that any Capital Stock that would not constitute Disqualified Stock but for provisions thereof giving holders thereof the right to require such Person to repurchase or redeem such Capital Stock upon the occurrence of an "asset sale" or a "change of control" occurring prior to the date on which the Notes mature shall not constitute Disqualified Stock if the "asset sale" or "change of control" provisions applicable to such Capital Stock are no more favorable to the holders of such Capital Stock than the provisions contained in Section 4.09 of the Senior Subordinated Notes Indenture and Section 4.14 hereof and such Capital Stock specifically provides that such Person will not repurchase or redeem any such stock pursuant to such provision prior to the Company's repurchase of such Notes as are required pursuant to such covenants. "Distributable Joint Venture Cash Flow" means, with respect to any Person for any period, in the case of each Joint Venture that is not a Restricted Subsidiary of the referent Person, the sum of: 7 (I) the lesser of (x) the amount of dividends or distributions paid in cash (but not by means of a loan) by such Joint Venture to the referent Person or Restricted Subsidiary thereof or (y) the referent Person's (or a Restricted Subsidiary of the referent Person's) proportionate share of (i) the Net Income of such Joint Venture for such period, plus (ii) to the extent deducted therefrom, depreciation and amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) of such Joint Venture for such period, plus (iii) any non-cash charges reducing Net Income of such Joint Venture for such period (excluding any such non-cash charge to the extent that it represents an accrual of or reserve for cash expenses in any future period or an amortization of a prepaid cash expense that was paid in a prior period), less (iv) any non-cash items increasing Net Income of such Joint Venture for such period, minus (II) the aggregate amount of all Investments made by the Company or any of its Restricted Subsidiaries in such Joint Venture during such period pursuant to Section 4.07(b)(viii), in each case determined on a consolidated basis and in accordance with GAAP. "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). "Equistar Assumed Debt" means (i) the 9.125% Notes Due 2002 issued by the Company pursuant to an Indenture dated as of March 10, 1992 between the Company and First Trust National Association, as Trustee, as supplemented by the First Supplemental Indenture dated as of March 10, 1992 and the Second Supplemental Indenture dated as of December 1, 1997; (ii) the 6.5% Notes Due 2006 and the 7.55% Notes Due 2026, each issued by the Company pursuant to an Indenture dated as of January 29, 1996 between the Company and Texas Commerce Bank National Association, as Trustee, as supplemented by the First Supplemental Indenture dated as of February 15, 1996 and the Second Supplemental Indenture dated as of December 1, 1997; and (iii) Indebtedness under the medium term notes issued by the Company, maturing at various dates from 2002 to 2005; in each case outstanding as of the Issue Date, and with respect to which, either (x) the Company is a guarantor or (y) as between the Company and Equistar, Equistar is the primary obligor and the Company is an 8 obligor; in each case, as may be amended from time to time, provided that any such amendment does not increase the principal amount thereof or interest rate applicable thereto or shorten the Weighted Average Life to Maturity or Stated Maturity thereof or add any Restricted Subsidiary as an obligor with respect thereto. "Euroclear" means Euroclear Bank S.A./N.V., and its successors or assigns, as operator of the Euroclear System. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exchange Notes" means the debt securities of the Company issued pursuant to this Indenture in exchange for, and in an aggregate principal amount at maturity equal to, the Initial Notes or any Initial Additional Notes, in compliance with the terms of a Registration Rights Agreement and containing terms substantially identical to the Initial Notes or any Initial Additional Notes (except that (i) such Exchange Notes shall not contain terms with respect to transfer restrictions and shall be registered under the Securities Act and (ii) certain provisions relating to Liquidated Damages thereon shall be eliminated). "Exchange Offer" means an offer by the Company to the Holders of the Initial Notes to exchange Outstanding Notes for Exchange Notes, as provided for in a Registration Rights Agreement. "Exchange Offer Registration Statement" means the Exchange Offer Registration Statement as defined in a Registration Rights Agreement. "Existing ARCO Chemical Debt" means the 9.375% Debentures Due 2005, the 10.25% Debentures Due 2010 and the 9.8% Debentures Due 2020, all issued pursuant to the Indenture dated June 15, 1988 between the Company (as successor to ARCO Chemical Company) and The Bank of New York, as Trustee. "Existing Credit Facility" means that certain Credit Agreement dated as of July 23, 1998 and as amended through the date hereof by and among the Company and JPMorgan Chase Bank, as administrative agent, DLJ Capital Funding, Inc., as syndication agent, and the other lenders that are parties thereto, including any related notes, instruments and agreements executed in connection therewith, as amended, restated, modified, extended, renewed, refunded, replaced or refinanced, in whole or in part, from time to time, after the Issue Date (other than with the proceeds of the Initial Notes issued on the Issue Date), whether or not with the same lenders or agents. "Existing Credit Facility Obligations" means all Obligations of the Company and its Subsidiaries outstanding under the Existing Credit Facility and all Hedging Obligations payable to a lender or an Affiliate thereof or to a Person that was a lender or an Affiliate thereof at the time the contract was entered into under the Existing Credit Facility, including, without limitation, interest accruing subsequent to the filing of, or which would have accrued but for the filing of, a petition for bankruptcy, whether or not such interest is an allowable claim in such bankruptcy proceeding. 9 "Existing Indebtedness" means Indebtedness of the Company and its Restricted Subsidiaries in existence, and considered Indebtedness of the Company or any of its Restricted Subsidiaries, on the Issue Date, until such amounts are repaid, including all reimbursement obligations with respect to letters of credit outstanding as of the date of the Indenture. "Existing Notes Issue Date" means May 17, 1999. "Existing Security Documents" means each of the Security Documents referred to in clause (i) of the definition thereof, in each case as amended, modified, restated or supplemented from time to time. "Existing Senior Secured Note Indentures" means the indentures among the Company, the Subsidiary Guarantors party thereto and The Bank of New York, as Trustee, pursuant to which the Company issued the Existing Senior Secured Notes. "Existing Senior Secured Notes" means the Company's 9.625% Senior Secured Notes, Series A, Due 2007 and the 9.875% Senior Secured Notes, Series B, Due 2007. "Finance Subsidiary" means a Restricted Subsidiary of the Company, all the Capital Stock of which (other than Preferred Stock) is owned by the Company that does not engage in any activity other than: (i) holding of Indebtedness of the Company; (ii) the issuance of Capital Stock; and (iii) any activity necessary, incidental or related to the foregoing. "Fixed Charge Coverage Ratio" means with respect to any Person for any period, the ratio of the Adjusted Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. In the event that the Company or any of its Restricted Subsidiaries incurs, assumes or redeems any Indebtedness (other than revolving credit borrowings) or issues or redeems Preferred Stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption or redemption of Indebtedness, or such issuance or redemption of Preferred Stock, as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of making the computation referred to above, (i) acquisitions that have been made by the Company or any of its Restricted Subsidiaries, including through mergers or consolidations 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 shall be deemed to have occurred on the first day of the four-quarter reference period, (ii) the Adjusted Consolidated Cash Flow and Fixed Charges attributable to operations or businesses disposed of prior to the Calculation Date shall be excluded, but, in the case of such Fixed Charges, only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the referent Person or any of its Restricted Subsidiaries following the Calculation Date 10 and (iii) if since the beginning of the four-quarter reference period any Person was designated as an Unrestricted Subsidiary or redesignated as or otherwise became a Restricted Subsidiary, such event shall be deemed to have occurred on the first day of the four-quarter reference period. "Fixed Charges" means, with respect to any Person for any period, the sum, without duplication, of (i) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (including, without limitation, 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 letters of credit or bankers' acceptance financings and net payments or receipts (if any) pursuant to Hedging Obligations) and (ii) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period and (iii) any interest expense on Indebtedness of another Person (other than Non-Recourse Debt of a Joint Venture or an Unrestricted Subsidiary secured by a pledge by the Company or any Restricted Subsidiary of Capital Stock which pledge is permitted by Section 4.07(b)(xi) or Section 4.07(b)(xii)) that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries (whether or not such Guarantee or Lien is called upon) and (iv) the product of (a) all dividend payments (other than any payments to the referent Person or any of its Restricted Subsidiaries) on any series of Preferred Stock of such Person and its Restricted Subsidiaries, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP; provided that (i) interest payments by Equistar on the Equistar Assumed Debt and (ii) interest payments on Indebtedness of a Joint Venture shall, in each case, not be deemed Fixed Charges of the Company as of any date of determination when such Indebtedness is not considered Indebtedness of the Company or any Restricted Subsidiary of the Company. "Foreign Subsidiary" means any Restricted Subsidiary that has 50% or more of its assets located outside the United States or any territory thereof. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, as in effect on the Issue Date. 11 "General Partner" means a Restricted Subsidiary of the Company or any of its Restricted Subsidiaries that has no assets and conducts no operations other than its ownership of a general partnership interest in a Joint Venture. "Guarantee" means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness or Disqualified Stock of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or Disqualified Stock of such other Person (including those arising by virtue of partnership arrangements (other than, in the case of the Company or a Restricted Subsidiary of the Company, with respect to the obligations of a Joint Venture, solely by virtue of a Restricted Subsidiary of the Company being the General Partner of such Joint Venture if, as of the date of determination, no payment on such Indebtedness or obligation has been made by such General Partner of such Joint Venture and such arrangement would not be classified and accounted for, in accordance with GAAP, as a liability on a consolidated balance sheet of the Company)) or (ii) entered into for purposes of assuring in any other manner the obligee of such Indebtedness or Disqualified Stock of the payment thereof or to protect such obligee against loss in respect thereof in whole or in part (including by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, to maintain financial statement conditions or otherwise); provided that the term "Guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning. "Hedging Obligations" means, with respect to any Person, the obligations of such Person under (i) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements, (ii) forward foreign exchange contracts or currency swap agreements, (iii) other agreements or arrangements designed to protect such Person against fluctuations in interest rates or currency values and (iv) agreements designed to protect such Person against fluctuations in raw material prices. "Holder" or "Noteholder" means the Person in whose name a Note is registered on the Registrar's books. "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 deferred and unpaid of the purchase price of any property or representing net Hedging Obligations, except any such balance that constitutes an accrued expense or a trade payable, if and to the extent any of the foregoing indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability on a balance sheet of such Person prepared in accordance with GAAP, as well as all indebtedness of others secured by a Lien on any asset of such Person whether or not such indebtedness is assumed by such Person (provided that, for purposes of determining the amount of any Indebtedness of the type described in this clause, if recourse with respect to such Indebtedness is limited to such asset, the amount of such Indebtedness shall be limited to the lesser of the fair market value of such asset or the amount of such 12 Indebtedness) and, to the extent not otherwise included, the Guarantee by such Person of any indebtedness of the types described above of any other Person; provided that Indebtedness shall not include the pledge by the Company or any of its Restricted Subsidiaries of the Capital Stock of a Joint Venture Subsidiary, an Unrestricted Subsidiary or a Joint Venture permitted by Section 4.07(b)(xi) or Section 4.07(b)(xii) to secure Non-Recourse Debt of such Unrestricted Subsidiary or Joint Venture. The Equistar Assumed Debt shall not constitute Indebtedness of the Company as of any date of determination if the Company has not made any principal or interest payments on such Indebtedness after the Issue Date; provided that, the payment by the Company of any principal or interest thereon shall be deemed to be an incurrence of such Indebtedness on the day of such payment. The amount of any Indebtedness outstanding as of any date shall be (i) the accreted value thereof, in the case of any Indebtedness that does not require current payments of interest and (ii) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. "Indenture Obligations" means (a) all principal of and interest (including, without limitation, (i) any Liquidated Damages and (ii) any interest which accrues after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency or reorganization of the Company, whether or not allowed or allowable as a claim in any such proceeding) on any Note issued pursuant to the Indenture, (b) all other amounts payable by the Company or any Subsidiary Guarantor under the Indenture and (c) any renewals or extensions of any of the foregoing. "Initial Additional Notes" means Additional Notes issued in an offering not registered under the Securities Act. "Initial Notes" means the Company's 9 1/2% Senior Secured Notes Due 2008, issued on the Issue Date (and any Notes issued in respect thereof pursuant to Section 3.04, 3.05, 3.06, 3.13, 3.14 or 10.08), but not including any Exchange Notes issued in exchange therefor. "Institutional Accredited Investor" means an institution that is an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act. "Interest Payment Date" means, when used with respect to any Note and any installment of interest thereon, the date specified in such Note as the fixed date on which such installment of interest is due and payable, as set forth in such Note. "Investment Grade" means a rating of BBB- or higher by S&P or Baa3 or higher by Moody's or the equivalent of such ratings by S&P or Moody's. In the event that the Company shall select any other Rating Agency pursuant to the provisions of the definition thereof, the equivalent of such ratings by such Rating Agency shall be used. "Investments" means, with respect to any Person, all investments by such Person in another Person (including an Affiliate of such Person) in the form of direct or 13 indirect loans, advances or extensions of credit to such other Person (including any Guarantee by such Person of the Indebtedness or Disqualified Stock of such other Person) or capital contributions or purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities of such other Person, together with all items that are or would be classified as investments of such investing Person on a balance sheet prepared in accordance with GAAP; provided that (x) trade credit and accounts receivable in the ordinary course of business, (y) commissions, loans, advances, fees and compensation paid in the ordinary course of business to officers, directors and employees and (z) reimbursement obligations in respect of letters of credit and tender, bid, performance, government contract, surety and appeal bonds, in each case solely with respect to obligations of the Company or any of its Restricted Subsidiaries shall not be considered Investments. 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 4.07(a). "Issue Date" means the date on which the Initial Notes are originally issued. "Joint Venture" means any joint venture between the Company or any Restricted Subsidiary and any other Person, whether or not such joint venture is a Subsidiary of the Company or any Restricted Subsidiary. "Joint Venture Subsidiary" means a Subsidiary of the Company or any of its Subsidiaries that has no assets and conducts no operations other than its ownership of Equity Interests of a Joint Venture. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest (other than, in the case of a Receivables Facilities, security interests under the Uniform Commercial Code arising solely by virtue of the application of Article 9 thereof to sales of accounts) 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, and any lease in the nature thereof) or the assignment or conveyance of any right to receive income therefrom. "Liquidated Damages" means liquidated damages owed to the Holders pursuant to a Registration Rights Agreement. "Lyondell TDI" means Lyondell Chimie France TDI, a French limited partnership and a wholly-owned Subsidiary of the Company. "Major Asset Sale" means an Asset Sale designated by the Company by prior notice to the Trustee as a Major Asset Sale, so long as in connection therewith 14 (i) the Company receives Net Proceeds in an aggregate amount not less than $1,000,000,000 (which shall be deemed Net Proceeds of such Major Asset Sale for purposes of Section 4.09), (ii) at the time of such Major Asset Sale and after giving effect thereto, no Default shall exist, (iii) the sum of the gross cash proceeds received by the Company in respect of such Major Asset Sale plus the value of the interest of the Company in the Subject Assets Transferee (if any) after giving effect to such Major Asset Sale is not less than the value (as conclusively determined by the Board of Directors of the Company) of the portion of the Subject Assets transferred by the Company in connection with such Major Asset Sale, and (iv) the Company directly or indirectly is the operator of the Subject Assets in which it or a Subject Assets Transferee retains an interest. For purposes of clause (i) of this definition (1) a transaction that produces substantially the same economic result as a sale of a partial interest in an asset, as might be achieved, for instance, through contractual arrangement allocating future revenues and costs attributable to the asset, shall be deemed an Asset Sale even though there may be no change in title to the asset or in the ownership of the Person that has title to the asset and (2) a subsequent related transaction with the same Acquired Person (or an Affiliate thereof) contemplated by the terms of the initial Major Asset Sale with such Person shall, for purposes of determining the applicability of and compliance with this definition, be deemed a single cumulative transaction. "Moody's" means Moody's Investors Service, Inc., and its successors. "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, (i) any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with (a) any Asset Sale or any disposition pursuant to a Sale and Leaseback Transaction or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries and (ii) any extraordinary gain or loss, together with any related provision for taxes on such extraordinary gain or loss. "Net Proceeds" means the aggregate cash proceeds (excluding any proceeds deemed to be "cash" pursuant to Section 4.09) received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees and sales commissions) and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), amounts required to be paid to holders of minority interests in Restricted Subsidiaries as a result of such Asset Sale, amounts required to be applied to 15 the repayment of Indebtedness (other than Indebtedness under the Existing Credit Facility, the Existing Senior Secured Notes or the Existing ARCO Chemical Debt) secured by a Lien on any asset sold in such Asset Sale and any reserves for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP and any reserve for future liabilities established in accordance with GAAP; provided that the reversal of any such reserve that reduced Net Proceeds when issued shall be deemed a receipt of Net Proceeds in the amount of such proceeds on such day. "Non-Recourse Debt" means Indebtedness as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets (in each case, other than the stock of a Joint Venture or an Unrestricted Subsidiary or of a Joint Venture Subsidiary that has no assets and conducts no operations other than the holding, directly or indirectly, of Equity Interests of such Joint Venture pledged by the Company or any of its Restricted Subsidiaries to secure debt of such Joint Venture or Unrestricted Subsidiary) of the Company or any of its Restricted Subsidiaries. "Non-U.S. Person" means a Person who is not a U.S. person, as defined in Regulation S. "Notes" means the Initial Notes, any Additional Notes and the Exchange Notes. "Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness and in all cases whether direct or indirect, absolute or contingent, now outstanding or hereafter created, assumed or incurred and including, without limitation, interest accruing subsequent to the filing of a petition in bankruptcy or the commencement of any insolvency, reorganization or similar proceedings at the rate provided in the relevant documentation, whether or not an allowed claim, and any obligation to redeem or defease any of the foregoing. "Officer" means, with respect to the Company, any Subsidiary Guarantor or any other obligor on the Notes, the Chairman of the Board, the President, the Chief Executive Officer, the Chief Financial Officer, the Secretary, the Treasurer, any Assistant Secretary or Assistant Treasurer or any Vice President of such Person. "Officer's Certificate" means, with respect to the Company or any other obligor on the Notes, a certificate signed by an Officer of such Person. "Opinion of Counsel" means a written opinion from legal counsel. The counsel may be an employee of or counsel to the Company or the Trustee. "Original Notes" means the Initial Notes and any Exchange Notes issued in exchange therefor. "Outstanding" when used with respect to Notes means, as of the date of determination, all Notes theretofore authenticated and delivered under this Indenture, except: 16 (i) Notes theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (ii) Notes for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent in trust for the Holders of such Notes, provided that, if such Notes are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor reasonably satisfactory to the Trustee has been made; (iii) Notes paid pursuant to Section 3.06; and (iv) Notes in exchange for or in lieu of which other Notes have been authenticated and delivered pursuant to this Indenture. A Note does not cease to be Outstanding because the Company or any Affiliate of the Company holds the Note, provided that in determining whether the Holders of the requisite amount of Outstanding Notes have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Notes owned by the Company or any Affiliate of 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 request, demand, authorization, direction, notice, consent or waiver, only Notes which a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded. Notes so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the reasonable satisfaction of the Trustee the pledgee's right to act with respect to such Notes and that the pledgee is not the Company or an Affiliate of such Company. "Paying Agent" means any Person authorized by the Company to pay the principal of (and premium, if any) or interest and Liquidated Damages, if any, on any Notes on behalf of the Company. "Payment Default" means any failure to pay any scheduled installment of interest or principal on any Indebtedness within the grace period provided for such payment in the documentation governing such Indebtedness. "PBGC Settlement" means the settlement agreement between the Company and the Pension Benefit Guaranty Corporation (or any successor entity) as amended, modified, restated or replaced from time to time. "Permitted Business" means the petrochemical, chemical and petroleum refining businesses and any business reasonably related, incidental, complementary or ancillary thereto. "Permitted Investments" means: (a) any Investment in the Company or in a Restricted Subsidiary of the Company that is engaged in a Permitted Business; 17 (b) any Investment in Cash Equivalents; (c) any Investment by the Company or any Subsidiary of the Company in a Person, if as a result of such Investment: (i) such Person becomes a Restricted Subsidiary of the Company engaged in a Permitted Business or (ii) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company engaged in a Permitted Business; (d) any non-cash consideration (other than a joint venture interest received in full or partial satisfaction of the 80% requirement in clause (ii) of Section 4.09(a)) received as consideration in an Asset Sale that was made pursuant to and in compliance with Section 4.09; (e) any acquisition of assets or Equity Interests solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company; (f) Hedging Obligations entered into in the ordinary course of business and otherwise permitted under the Indenture; (g) Investments in an Accounts Receivable Subsidiary that, as conclusively determined by the Board of Directors, are necessary or advisable to effect a Receivables Facility; (h) Investments in Unrestricted Subsidiaries and Joint Ventures in an aggregate amount, taken together with all other Investments made in reliance on this clause (h), not to exceed at any time outstanding $25 million (after giving effect to any reductions in the amount of any such Investments as a result of the repayment or other disposition thereof for cash, the amount of such reduction not to exceed the amount of such Investments previously made pursuant to this clause (h)); and (i) any Investment received by the Company or any Restricted Subsidiary as consideration for the settlement of any litigation, arbitration or claim in bankruptcy or in partial or full satisfaction of accounts receivable owned by a financially troubled Person to the extent reasonably necessary in order to prevent or limit any loss by the Company or any of its Restricted Subsidiaries in connection with such accounts receivable. "Permitted Liens" means: (i) Liens in favor of the Company or any Subsidiary Guarantor; (ii) Liens securing the Notes and the Subsidiary Guarantees; (iii) 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 or becomes a Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such merger, consolidation or acquisition and do not extend to 18 any assets of the Company or its Restricted Subsidiaries other than those of the Person merged into or consolidated with the Company or that becomes a Restricted Subsidiary of the Company; (iv) 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 the contemplation of such acquisition; (v) Liens (including the interest of a lessor under a capital lease) on any asset existing at the time of acquisition thereof or incurred within 180 days of the time of acquisition or completion of construction thereof, whichever is later, to secure or provide for the payment of all or any part of the purchase price (or construction price) thereof; (vi) Liens incurred or assumed in connection with the issuance of revenue bonds the interest on which is exempt from federal income taxation pursuant to Section 103(b) of the Internal Revenue Code; (vii) Liens imposed by law, such as laborers' or other employees', carriers', warehousemen's, mechanics', materialmen's and vendors' Liens and Liens imposed by law on pipelines or pipeline facilities; (viii) Liens arising by reason of deposits necessary to qualify the Company or any Restricted Subsidiary to conduct business, maintain self insurance or comply with any law and Liens securing the PBGC Settlement; (ix) Liens to secure the performance of statutory obligations, tender, bid, performance, government contract, surety or appeal bonds or other obligations of a like nature incurred in the ordinary course of business; (x) Liens existing on the Issue Date other than Liens securing Indebtedness under the Existing Credit Facility, the Existing Senior Secured Notes or the Existing ARCO Chemical Debt; (ix) 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, prejudgment Liens that are being contested in good faith by appropriate proceedings and Liens arising out of judgments or awards against the Company or any Restricted Subsidiary with respect to which the Company or such Restricted Subsidiary at the time shall be prosecuting an appeal or proceedings for review and with respect to which it shall have secured a stay of execution pending such appeal or proceedings for review; provided that in each case any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor; (xii) easements, rights-of-way, restrictions, irregularities of title and other similar charges or encumbrances, not interfering in any material respect with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries; 19 (xiii) Liens securing reimbursement obligations with respect to commercial letters of credit obtained in the ordinary course of business which encumber documents and other property or assets relating to such letters of credit and products and proceeds thereof; (xiv) Liens securing assets under construction arising from progress or partial payments by a customer of the Company or its Restricted Subsidiaries relating to such property or assets; (xv) licenses or leases by the Company or any of its Restricted Subsidiaries as licensor or lessor in the ordinary course of business and otherwise permitted by the Indenture for patents, copyrights, trademarks, tradenames and other intellectual property; (xvi) leases or subleases by the Company or any of its Restricted Subsidiaries as lessor or sublessor in the ordinary course of business and otherwise permitted by the indenture; (xvii) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; (xviii) Liens resulting from the deposit of funds or evidences of Indebtedness in trust for the purpose of (A) defeasing Indebtedness of the Company or any of its Restricted Subsidiaries (which defeasance is otherwise permitted under the Indenture) having an aggregate principal amount at any one time outstanding not to exceed $25 million or (B) defeasing Indebtedness ranking pari passu with the Notes; provided that the Notes are defeased concurrently with such Indebtedness; (xix) from and after the first date when the Notes are rated Investment Grade, Liens on any asset of the Company other than any of the Company's or any of its Restricted Subsidiary's manufacturing plants or Liens on any Equity Interests of any Restricted Subsidiary that owns a manufacturing plant; (xx) the pledge of Equity Interests of an Unrestricted Subsidiary or a Joint Venture (or of a Joint Venture Subsidiary that has no assets and conducts no operations other than the holding, directly or indirectly, of Equity Interests of such Joint Venture) organized (or designated as an Unrestricted Subsidiary and holding no other assets and conducting no other operations) to construct, own and/or operate a propylene oxide plant in the European Union to secure Non-Recourse Debt of such Joint Venture or Unrestricted Subsidiary; (xxi) the pledge of Equity Interests of an Unrestricted Subsidiary or a Joint Venture (or of a Joint Venture Subsidiary that has no assets and conducts no operations other than the holding, directly or indirectly, of Equity Interests of such Joint Venture) organized (or designated as an Unrestricted Subsidiary and holding no other assets and conducting no other operations) to participate in the improvement of the Rhodia TDI Plant to secure Non-Recourse Debt of such Joint Venture or Unrestricted Subsidiary or Rhodia or a wholly-owned subsidiary of Rhodia; 20 (xxii) Liens on equipment of the Company or any Restricted Subsidiary arising as a result of a sale and leaseback with respect to such equipment; provided that the proceeds from such sale and leaseback are applied pursuant to Section 4.09; (xxiii) Asset Sale Liens; (xxiv) customary Liens for the fees, costs and expenses of trustees and escrow agents pursuant to any indenture, escrow agreement or similar agreement establishing a trust or an escrow arrangement, and Liens pursuant to merger agreements, stock purchase agreements, asset sale agreements, option agreements and similar agreements in respect of the disposition of property or assets of the Company or any Restricted Subsidiary, to the extent such dispositions are permitted hereunder; (xxv) netting provisions and setoff rights in favor of counterparties to agreements creating Hedging Obligations; (xxvi) other Liens on assets of the Company or any Restricted Subsidiary of the Company securing Indebtedness that is permitted by the terms of the Indenture to be outstanding having an aggregate principal amount at any one time outstanding not to exceed $100 million; and (xxvii) Liens to secure a Permitted Refinancing incurred to refinance Indebtedness that was secured by a Lien permitted under the Indenture and that was incurred in accordance with the provisions of the Indenture; provided that such Liens do not extend to or cover any property or assets of the Company or any Restricted Subsidiary other than assets or property securing the Indebtedness so refinanced. "Permitted Refinancing" means any Indebtedness of the Company or any of its Subsidiaries or Preferred Stock of a Finance Subsidiary issued in exchange for, or the net proceeds of which are used solely to extend, refinance, renew, replace, defease or refund, other Indebtedness of the Company or any of its Restricted Subsidiaries; provided that: (i) the principal amount (or liquidation preference in the case of Preferred Stock) of such Permitted Refinancing (or if such Permitted Refinancing is issued at a discount, the initial issuance price of such Permitted Refinancing) does not exceed the Principal amount of the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of any premiums paid and reasonable expenses incurred in connection therewith); (ii) such Permitted Refinancing or, in the case of Preferred Stock of a Finance Subsidiary, the Indebtedness issued to such Finance Subsidiary, has a Stated Maturity date later than the stated Maturity date of, and has a Weighted Average Life to Maturity equal to or greater that the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated by its terms in right of payment to the Notes or the Subsidiary Guarantees, such Permitted Refinancing, or, in the case of Preferred stock, 21 the Indebtedness issued to such Finance subsidiary, has a Stated Maturity date later than the Stated Maturity date of, and is subordinated in right of payment to, the Notes on subordination terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (iv) such Indebtedness is incurred by the Company or a Subsidiary Guarantor (or such Preferred Stock is issued by a Finance Subsidiary) if the Company or a Subsidiary Guarantor is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (v) such Indebtedness is incurred by the Company or a Restricted Subsidiary (or such Preferred Stock is issued by a Finance Subsidiary) if a Restricted Subsidiary that is not a Subsidiary Guarantor is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "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. "Place of Payment" means a city or any political subdivision thereof referred to in Article 3 and initially designated under Section 4.02. "Predecessor Notes" of any particular Note means every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purposes of this definition, any Note authenticated and delivered under Section 3.06 in lieu of a mutilated, destroyed, lost or stolen Note shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Note. "Preferred Stock" means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of preferred or preference stock of such Person which is outstanding or issued on or after the date of the Indenture. "principal" of a Note means the principal of the Note plus the premium, if any, payable on the Note which is due or overdue or is to become due at the relevant time. "QIB", or "Qualified Institutional Buyer" means a "qualified institutional buyer," as the term is defined in Rule 144A under the Securities Act. "Qualified Equity Interests" shall mean all Equity Interests of a Person other than Disqualified Stock of such Person. "Rating Agency" means (i) S&P or (ii) Moody's or (iii) if neither S&P nor Moody's shall exist, a nationally recognized securities rating agency or agencies, as the case may be, selected by the Company, which shall be substituted for S&P or Moody's or both, as the case may be. 22 "Receivables Facility" means one or more receivables financing facilities or arrangements, as amended from time to time, pursuant to which the Company or any of its Restricted Subsidiaries sells (including a sale in exchange for a promissory note of or an Equity Interest in an Accounts Receivable Subsidiary) its accounts receivable to an Accounts Receivable Subsidiary. "Receivables Fees" means distributions or payments made directly or by means of discounts with respect to any participation interests issued or sold in connection with, and other fees paid to a Person that is not the Company or a Restricted Subsidiary in connection with, any Receivables Facility. "Redemption Date" when used with respect to any Note to be redeemed or purchased means the date fixed or such redemption or purchase by or pursuant to this Indenture and the Notes. "Redemption Price" when used with respect to any Note to be redeemed or purchased means the price at which it is to be redeemed or purchased pursuant to this Indenture and the Notes. "Registration Rights Agreement" means (i) the Registration Rights Agreement dated as of December 4, 2001 among the Company, the Subsidiary Guarantors party thereto and the Initial Purchasers party thereto, as such agreement may be amended from time to time, and (ii) with respect to any Initial Additional Notes, one or more registration rights agreements between the Company and the other parties thereto, as such agreement(s) may be amended from time to time, relating to rights given by the Company to the purchasers of Initial Additional Notes to register or exchange such Initial Additional Notes under the Securities Act. "Registration Statement" means the Registration Statement as defined in the Registration Rights Agreement. "Regular Record Date" for the interest payable on any Interest Payment Date means the date specified for that purpose in Section 3.01. "Regulation S" means Regulation S under the Securities Act. "Resale Restriction Termination Date" means, with respect to any Note, the date that is two years (or such other period as may hereafter be provided under Rule 144(k) under the Securities Act or any successor provision thereto as permitting the resale by non-affiliates of Restricted Securities without restriction) after the later of the original issue date in respect of such Note and the last date on which the Company or any Affiliate of the Company was the owner of such Note (or any Predecessor Note thereto). "Responsible Officer" when used with respect to the Trustee means any officer in the corporate trust department of the Trustee, and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his or her knowledge of and familiarity with the particular subject. 23 "Restricted Investment" means an Investment other than a Permitted Investment. "Restricted Period" means the 40-day distribution compliance period as defined in Regulation S which, in the case of the Initial Notes, ends January 14, 2002. "Restricted Security" has the meaning assigned to such term in Rule 144(a)(3) under the Securities Act; provided, however, that the Trustee shall be entitled to receive, at its request, and conclusively rely on an Opinion of Counsel with respect to whether any Note constitutes a Restricted Security. "Restricted Subsidiary" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. Unless the context otherwise requires, references to a "Restricted Subsidiary" refer to a Restricted Subsidiary of the Company. "Rhodia" means Rhodia S.A., a French company and the successor in interest to Rhone-Poulenc Chemie S.A. under the TDI Agreements. "Rhodia TDI Plant" means the manufacturing facilities for the production of toluene diisocyanate, currently owned by Rhodia and located at Pont-de-Claix, France. "Sale and Leaseback Transaction" means, with respect to any Person, any arrangement with a lender or an investor providing for the leasing by such Person of any property or asset of such Person which has been or is being sold or transferred by such Person to such lender or investor if such arrangement is accounted for as a capitalized lease by such Person under GAAP. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. "Security Documents" means (i) the Security Agreement dated the Existing Notes Issue Date between the Company and the Collateral Agent, each of the Pledge Agreements dated as of July 28, 1998 between the Company and the Collateral Agent, the Security Agreement dated as of July 28, 1998 among Lyondell Petrochemical G.P. Inc., Lyondell Petrochemical L.P. Inc., and the Collateral Agent, the Security Agreement dated as of July 28, 1998 among Lyondell Refining Company and the Collateral Agent, the Security Agreement dated as of July 28, 1998 among Lyondell General Methanol Company and Lyondell Limited Methanol Company and the Collateral Agent, the Pledge Agreement dated as of December 31, 1998 between the Company and the Collateral Agent relating to the pledge of shares of capital stock of Lyondell Refining LP, LLC, the Security Agreement dated as of the Existing Notes Issue Date between the Company (as successor to Lyondell Chemical Worldwide, Inc.) and the Collateral Agent, the Pledge Agreement dated as of the Existing Notes Issue Date between the Company (as successor to Lyondell Chemical Worldwide, Inc.) and the Collateral Agent, the Security Agreement dated as of December 31, 1998 between Lyondell Refining LP, LLC and the Collateral Agent, the Deed of Trust dated as of May 13, 1999 (but effective as of the Existing Notes Issue Date) relating to Bayport, Texas facility from the Company (as 24 successor to Lyondell Chemical Worldwide, Inc.) to the trustee named therein for the benefit of the Collateral Agent, the Deed of Trust dated May 13, 1999 (but effective as of the Existing Notes Issue Date) relating to Channelview, Texas facility from the Company (as successor to Lyondell Chemical Worldwide, Inc.) to the trustee named therein for the benefit of the Collateral Agent, the Mortgage dated as of May 13, 1999 (but effective as of the Existing Notes Issue Date) relating to Lake Charles, Louisiana facility from the Company (as successor to Lyondell Chemical Worldwide, Inc.) to the Collateral Agent, the Pledge Agreement dated as of March 31, 2000 between Company and the Collateral Agent relating to the pledge of limited liability company interests in each of Lyondell POJVGP, LLC, Lyondell POJVLP1, LLC, Lyondell POJVLP2, LLC and Lyondell POJVLP3, LLC, the Security Agreement dated as of March 31, 2000 between PO Offtake, LP and the Collateral Agent; and the Security Agreement dated as of March 31, 2000 among Lyondell POTechGP, Inc., Lyondell POTechLP, Inc. and the Collateral Agent and (ii) any other pledge agreements, security agreements, mortgages, deeds of trust or other agreements or instruments between the Company and/or any of its Restricted Subsidiaries and the Collateral Agent granting Liens on any asset of the Company or any of its Restricted Subsidiaries to secure the Existing Credit Facility Obligations, in each case as amended, modified, restated or supplemented from time to time. "Senior Indebtedness" has the meaning assigned to such term in the Senior Subordinated Notes Indenture. "Senior Subordinated Notes" means the Company's 10 7/8% Senior Subordinated Notes Due 2009. "Senior Subordinated Notes Indenture" means the indenture relating to the Company's Senior Subordinated Notes. "Shelf Registration Statement" means the Shelf Registration Statement as defined in a Registration Rights Agreement. "Significant Asset Sale" means an Asset Sale of (x) any of the Company's or its Restricted Subsidiaries' plants that (a) has a fair market value in excess of $50 million or (b) for Net Proceeds in excess of $50 million (a "Significant Asset") or (y) a controlling interest in any Restricted Subsidiary that owns a Significant Asset (other than, in each case, an involuntary disposition, to the extent that the Existing Credit Facility (but not any refinancing thereof other than a credit facility with commercial banks and other lenders) permits the proceeds thereof to be reinvested prior to any mandatory prepayment of amounts outstanding thereunder). "Significant Subsidiary" means any Restricted Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Act, as such Regulation is in effect on the Issue Date. "Specified Joint Ventures" means (i) Equistar Chemicals, LP, (ii) LYONDELL-CITGO Refining LP ("LCR") and (iii) Lyondell Methanol Company, L.P. 25 "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.07. "S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors. "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 (or any later date established by any amendment to such original documentation) 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. "Subject Assets" means, with respect to any Major Asset Sale, the assets that are the subject of such Major Asset Sale. "Subject Assets Transferee" means any Restricted Subsidiary or Joint Venture that becomes the owner of Subject Assets in connection with a Major Asset Sale. "Subsidiary" means, with respect to any Person, (i) 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 (ii) 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 one or more Subsidiaries of such Person (or any combination thereof) or (c) that is a Specified Joint Venture and as to which (i) a general partner of which is such Person or a Subsidiary of such Person, (ii) such Person owns, directly or indirectly, 50% or more of the partnership interests of such Specified Joint Venture and (iii) the Board of Directors of such Person has designated such Specified Joint Venture to be a "Subsidiary" (which designation shall be irrevocable for so long as such Specified Joint Venture satisfies the foregoing requirements). As of the Issue Date, none of the Specified Joint Ventures are Subsidiaries of the Company. Unless the context otherwise requires, references to a "Subsidiary" refer to a Subsidiary of the Company. "Subsidiary Guarantee" means a Guarantee by a Subsidiary Guarantor of the Company' obligations with respect to the Notes. "Subsidiary Guarantor" means (i) ARCO Chemical Technology, Inc., ARCO Chemical Technology, L.P. and Lyondell Chemical Nederland, Ltd. and (ii) each Restricted Subsidiary that executes a supplemental indenture, in the form of Exhibit B hereto, providing for the Guarantee of the payment of the Notes, in each case until such time as such Subsidiary is released from its Subsidiary Guarantee as permitted by this Indenture. 26 "TDI Agreements" means (i) the Share Purchase Agreement dated as of January 23, 1995 between ARCO Chemical Europe Inc. and Rhone-Poulenc Chemie S.A., as such agreement may be amended, supplemented or otherwise modified from time to time, (ii) the Processing Agreement dated as of January 23, 1995 between ARCO Chemical Chemie TDI and Rhone-Poulenc Chemie S.A., as such agreement may be amended, supplemented or otherwise modified from time to time, and (iii) the TDI License. "TDI Assets" means (i) all rights of ARCO Chemical Europe Inc., ARCO Chemical Chemie TDI, ARCO Chemical Technology, LP and their respective successors under the TDI Agreements and (ii) all of Lyondell TDI's customer lists relating to the Rhodia TDI Plant. "TDI License" means the TDI Technology Agreement dated as of January 23, 1995 between ARCO Chemical Technology LP and Rhone-Poulenc Chemie S.A., as such agreement may be amended, supplemented or otherwise modified from time to time. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. sections 77aaa-77bbbb) as in effect on the date of this Indenture, except as provided by Section 9.04. "Trustee" means the Person named as the "Trustee" in the first paragraph of this Indenture until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean such successor Trustee. "Unrestricted Subsidiary" means (i) any Subsidiary of the Company that is designated by the Board of Directors of the Company as an Unrestricted Subsidiary pursuant to a board resolution, (ii) any Subsidiary of an Unrestricted Subsidiary and (iii) any Accounts Receivable Subsidiary. The Board of Directors 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 Equity Interest 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; provided that (a) any Guarantee (other than as a co-obligor of the Equistar Assumed Debt so long as the Equistar Assumed Debt is not considered Indebtedness of the Company pursuant to the definition thereof) by the Company or any Restricted Subsidiary of any Indebtedness of the Subsidiary being so designated shall be deemed an "Incurrence" of such Indebtedness and an "Investment" by the Company or such Restricted Subsidiary (or both, if applicable) at the time of such designation, (b) either (i) the Subsidiary to be so designated has total assets of $1,000 or less or (ii) if such Subsidiary has assets greater than $1,000, such designation would be permitted under Section 4.07, (c) if applicable, the Investment and the incurrence of Indebtedness referred to in clause (a) of this proviso would be permitted under Section 4.06 and Section 4.07 and 27 (d) in the case of any Subsidiary that is a Joint Venture as of the date of its designation as an Unrestricted Subsidiary, such Subsidiary has an aggregate of 15% or more of its outstanding Capital Stock or other voting interests (other than directors' qualifying shares) held by another Person other than the Company or any Restricted Subsidiary or any Affiliate of the Company. Any such designation by the Board of Directors of the Company pursuant to clause (i) above shall be evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution giving effect to such designation and an Officer's Certificate certifying that such designation complied with the foregoing conditions and was permitted by Section 4.06 and Section 4.07. If (i) at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements of clause (d) (because the Company has acquired more than 85% of the outstanding Capital Stock or other voting interests of any Subsidiary that was a Joint Venture on the date of its designation as an Unrestricted Subsidiary), or (ii) at any time the Company or any Restricted Subsidiary Guarantees any Indebtedness of such Unrestricted Subsidiary or makes any other Investment in such Unrestricted Subsidiary and such incurrence of Indebtedness or Investment would not be permitted under Section 4.06 and Section 4.07 it shall thereafter cease to be an Unrestricted Subsidiary for purposes of the 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 Section 4.06, the Company shall be in default of such covenant). The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall be permitted only if (i) such Indebtedness is permitted under Section 4.06 and (ii) no Default or Event of Default would be in existence following such designation. "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. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (i) 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, including payment at final maturity, in respect thereof, 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 (ii) the then outstanding principal amount of such Indebtedness. "Wholly Owned Restricted Subsidiary" of any Person means a Restricted Subsidiary of such Person all the outstanding Equity Interests of which (other than 28 directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Restricted Subsidiaries of such Person or by such Person and one or more Wholly Owned Restricted Subsidiaries of such Person. "Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person all the outstanding Equity Interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person or by such Person and one or more Wholly Owned Subsidiaries of such Person. Section 1.02. Other Definitions. Defined Term in Section Acceleration Notice 6.02 Act 1.08 Affiliate Transaction 4.10 Agent Members 3.13 Asset Sale Offer 4.09 Authentication Order 3.03 Change of Control Offer 4.14 Change of Control Payment 4.14 Change of Control Payment Date 4.14 Covenant Defeasance 12.03 Defaulted Interest 3.07 DTC 2.03 Event of Default 6.01 Excess Proceeds 4.09 Expiration Date 1.08 Global Notes 2.01 Guaranteed Indebtedness 4.13 incur 4.06 Legal Defeasance 12.02 Offshore Global Note 2.01 Offshore Note Exchange Date 2.01 Offshore Physical Note 2.01 Permanent Offshore Global Note 2.01 Physical Notes 2.01 Place of Payment 3.01 Plan Participants 4.07 Private Placement Legend 2.03 Redemption Amount 10.01 redemption date 13.01 Regular Record Date 3.01 Restricted Payment 4.07 Successor Company 5.01 Subordinated Debt 4.07 29 Defined Term in Section Temporary Offshore Global Note 2.01 U.S. Global Notes 2.01 U.S. Physical Notes 2.01 Section 1.03. Rules of Construction. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Indenture have the meanings assigned to them in this Indenture; (b) "or" is not exclusive; (c) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP and, unless expressly provided otherwise, all determinations and computations made pursuant to any provision hereof shall be made in accordance with GAAP; provided that references to any Person and its Restricted Subsidiaries on a consolidated basis, and any calculations of amounts with respect to any Person and its Restricted Subsidiaries on a consolidated basis, shall refer to such Person and all its Restricted Subsidiaries, whether or not such Restricted Subsidiaries would be accounted for as consolidated subsidiaries on such Person's financial statements prepared in accordance with GAAP; (d) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; (e) all references to "$" or "dollars" shall refer to the lawful currency of the United States of America; (f) the words "include," "included" and "including" as used herein shall be deemed in each case to be followed by the phrase "without limitation," if not expressly followed by such phrase or the phrase "but not limited to"; (g) words in the singular include the plural, and words in the plural include the singular; and (h) any reference to a Section or Article refers to such Section or Article of this Indenture unless otherwise indicated. Section 1.04. Incorporation by Reference of TIA. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. This Indenture is subject to the mandatory provisions of the TIA, which are incorporated by reference in and made a part of this Indenture. Any terms incorporated by reference in this Indenture that are defined by the TIA, defined by any TIA reference to another statute or defined by SEC rule under the TIA, have the 30 meanings so assigned to them therein. The following TIA terms have the following meanings: "indenture securities" means the Notes. "indenture security holder" means a Holder or Noteholders. "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Trustee. "obligor" on the indenture securities means the Company, any Subsidiary Guarantor and any other obligor on the indenture securities. Section 1.05. Conflict with TIA. If any provision hereof limits, qualifies or conflicts with a provision of the TIA that is required under the TIA to be a part of and govern this Indenture, the latter provision shall control. If any provision of this Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the latter provision shall be deemed (a) to apply to this Indenture as so modified or (b) to be excluded, as the case may be. Section 1.06. Compliance Certificates and Opinions. Upon any application or request by the Company or by any other obligor upon the Notes to the Trustee to take any action under any provision of this Indenture, the Company or such other obligor upon the Notes, as the case may be, shall furnish to the Trustee such certificates and opinions as may be required under the TIA. Each such certificate or opinion shall be given in the form of one or more Officer's Certificates, if to be given by an Officer, or an Opinion of Counsel, if to be given by counsel, and shall comply with the requirements of the TIA and any other requirements set forth in this Indenture. Notwithstanding the foregoing, in the case of any such request or application as to which the furnishing of any Officer's Certificate or Opinion of Counsel is specifically required by any provision of this Indenture relating to such particular request or application, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (except for certificates provided for in Section 4.05) shall include: (a) a statement that the individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (b) 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; (c) a statement that, in the opinion of such individual, he or she made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and 31 (d) a statement as to whether, in the opinion of such individual, such condition or covenant has been complied with. Section 1.07. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an Officer may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such Officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or opinion of counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an Officer or Officers to the effect that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. Section 1.08. Acts of Noteholders; Record Dates. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee, and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 7.01) conclusive in favor of the Trustee, the Company and any other obligor upon the Notes, if made in the manner provided in this Section 1.08. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by an officer of a corporation or a member of a partnership or other entity, on behalf of such corporation or partnership or other entity, such certificate or affidavit shall also constitute sufficient proof of such Person's authority. The fact and date of the execution 32 of any such instrument or writing, or the authority of the person executing the same, may also be proved in any other manner that the Trustee deems sufficient. (c) The ownership of Notes shall be proved by the Register. (d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Note shall bind the Holder of every Note issued upon the transfer thereof or in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the Trustee, the Company or any other obligor on the Notes in reliance thereon, whether or not notation of such action is made upon such Note. (e) (i) The Company may set any day as a record date for the purpose of determining the Holders of Outstanding Notes entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders, provided that the Company may not set a record date for, and the provisions of this paragraph shall not apply with respect to, the giving or making of any notice, declaration, request or direction referred to in Section 1.08(e)(ii). If any record date is set pursuant to this paragraph, the Holders of Outstanding Notes on such record date (or their duly designated proxies), and no other Holders, shall be entitled to take the relevant action, whether or not such Persons remain Holders after such record date; provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Notes on such record date. Nothing in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite principal amount of Outstanding Notes on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Trustee in writing and to each Holder in the manner set forth in Section 1.10. (ii) The Trustee may set any day as a record date for the purpose of determining the Holders of Outstanding Notes entitled to join in the giving or making of (w) any Notice of Default, (x) any declaration of acceleration referred to in Section 6.02, (y) any request to institute proceedings referred to in Section 6.06(b) or (z) any direction referred to in Section 6.05, in each case with respect to Notes. If any record date is set pursuant to this paragraph, the Holders of Outstanding Notes on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction, whether or not such Holders remain Holders after such record date; provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Notes on such record date. Nothing in this paragraph shall be construed to prevent the Trustee from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect), and 33 nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite principal amount of Outstanding Notes on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Trustee, at the expense of the Company, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Company in writing and to each Holder in the manner set forth in Section 1.10. (iii) With respect to any record date set pursuant to this Section 1.08, the party hereto that sets such record dates may designate any day as the "Expiration Date" and from time to time may change the Expiration Date to any earlier or later day; provided that no such change shall be effective unless notice of the proposed new Expiration Date is given to the Company or the Trustee, whichever such party is not setting a record date pursuant to this Section 1.08(e) in writing, and to each Holder in the manner set forth in Section 1.10, on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section, the party hereto that set such record date shall be deemed to have initially designated the 180th day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than the 180th day after the applicable record date. (iv) Without limiting the foregoing, a Holder entitled hereunder to take any action hereunder with regard to any particular Note may do so with regard to all or any part of the principal amount of such Note or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such principal amount. Section 1.09. Notices, Etc., to Trustee and Company. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (a) the Trustee by any Holder or by the Company or any other obligor upon the Notes shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at the Corporate Trust Office (telephone: (212) 815-6286; facsimile: (212) 815-5915), or at any other address furnished in writing to the Company by the Trustee, or (b) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder if in writing and delivered in person or mailed, first-class postage prepaid, to the Company at One Houston Center, Suite 700, 1221 McKinney, Houston, Texas 77010, Attention: General Counsel (facsimile: (713) 309-2143), with copies to Baker Botts LLP at 910 Louisiana, Houston, Texas 77002, Attention: Stephen A. Massad, Esq. (facsimile: (713) 229-1522), or at any other address previously furnished in writing to the Trustee by the Company. Section 1.10. Notices to Holders; Waivers. Where this Indenture provides for notice to Holders of any event, such notice shall be deemed to have been given upon the mailing by first class mail, postage prepaid, of such notices to Holders at their registered 34 addresses as recorded in the Register, not later than the latest date, and not earlier than the earliest date, prescribed herein for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of regular mail service, or by reason of any other cause, it shall be impossible to mail notice of any event as required by any provision of this Indenture, then such notification as shall be made with the approval of the Trustee (such approval not to be unreasonably withheld) shall constitute a sufficient notification for every purpose hereunder. Section 1.11. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 1.12. Successors and Assigns. All covenants and agreements in this Indenture by the Company shall bind its respective successors and assigns, whether so expressed or not. Section 1.13. Separability Clause. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 1.14. Benefits of Indenture. Nothing in this Indenture or in the Notes, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, any Paying Agent and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture. Section 1.15. Governing Law. THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY PRINCIPLES OF CONFLICT OF LAWS TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. TO THE EXTENT PERMITTED BY LAW, THE TRUSTEE, THE COMPANY, THE SUBSIDIARY GUARANTORS, ANY OTHER OBLIGORS IN RESPECT OF THE NOTES AND (BY THEIR ACCEPTANCE OF THE NOTES) THE HOLDERS, AGREE TO SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK 35 IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE NOTES. Section 1.16. Legal Holidays. In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Note shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Notes) payment of interest and Liquidated Damages, if any, or principal and premium (if any) need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity. Section 1.17. No Personal Liability of Directors, Officers, Employees, Incorporators and Stockholders. No director, officer, employee, incorporator, shareholder or other holder of Equity Interests of the Company or the Subsidiary Guarantors, as such, shall have any liability for any obligations of the Company or the Subsidiary Guarantors under the Notes, the Subsidiary Guarantees, the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. Section 1.18. Exhibits and Schedules. All exhibits and schedules attached hereto are by this reference made a part hereof with the same effect as if herein set forth in full. Section 1.19. Counterparts. This Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument. ARTICLE 2 Note Forms Section 2.01. Forms Generally. The Notes and the Trustee's certificate of authentication relating thereto shall be in substantially the forms set forth, or referenced, in Exhibit A annexed hereto and in this Article 2. The Notes may have such appropriate insertions, omissions, substitutions, notations, legends, endorsements, identifications and other variations as are required or permitted by law, stock exchange rule or depository rule or usage, the certificate of incorporation, bylaws or other similar governing instruments of the Company, agreements to which the Company is subject, if any, or other customary usage, or as may consistently herewith be determined by the Officers of the Company executing such Notes, as evidenced by such execution (provided always that any such notation, legend, endorsement, identification or variation is in a form acceptable to the Company). Each Note shall be dated the date of its authentication. Initial Notes and any Additional Notes offered and sold in reliance on Rule 144A under the Securities Act shall be issued initially in the form of one or more permanent global Notes in substantially the form set forth in Exhibit A and shall contain the legends 36 set forth in Section 2.03(a) and (b) (the "U.S. Global Notes"), registered in the name of the nominee of the Depositary, deposited with the Trustee, as custodian for the Depositary or its nominee, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of the U.S. Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depositary or its nominee, as provided in Sections 3.13 and 3.14. Initial Notes and any Initial Additional Notes offered and sold in offshore transactions in reliance on Regulation S under the Securities Act shall be issued initially in the form of one or more temporary global Notes in substantially the form set forth in Exhibit A and containing each of the legends set forth in Section 2.03 (the "Temporary Offshore Global Note"), registered in the name of the nominee of the Depositary, deposited with the Trustee, as custodian for the Depositary or its nominee, duly executed by the Company and authenticated by the Trustee as hereinafter provided. At any time following termination of the Restricted Period (the "Offshore Note Exchange Date"), upon receipt by the Trustee and the Company of a certificate substantially in the form set forth in Exhibit C hereto, one or more permanent global Notes substantially in the form of Exhibit A hereto and containing the legend set forth in Section 2.03(b) (the "Permanent Offshore Global Note," and together with the Temporary Offshore Global Note, the "Offshore Global Note") duly executed by the Company and authenticated by the Trustee as hereinafter provided shall be deposited with the Trustee, as custodian for the Depositary, and the Registrar shall reflect on its books and records the date and a decrease in the principal amount of the Temporary Offshore Global Note in an amount equal to the principal amount of the beneficial interest in the Temporary Offshore Global Note transferred. Prior to the Offshore Note Exchange Date and receipt of the certificate referred to above, beneficial interests in a Temporary Offshore Global Note may be held only through Euroclear or Clearstream. The aggregate principal amount of the Offshore Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the nominee of the Depositary for the Offshore Global Note, as provided in Sections 3.13 and 3.14. Initial Notes and any Initial Additional Notes issued pursuant to Section 3.05 and Section 3.13 in exchange for or upon transfer of beneficial interests in the U.S. Global Note or Offshore Global Note shall be in the form of permanent certificated Notes in substantially the form set forth in Exhibit A containing the Private Placement Legend as set forth in Section 2.03 (the "U.S. Physical Notes"), or in the form of permanent certificated Notes substantially in the form set forth in Exhibit A (the "Offshore Physical Notes"), respectively, as hereinafter provided. No Offshore Physical Notes may be issued until expiration of the applicable Restricted Period and receipt by the Company and the Trustee from the (x) proposed transferor of a certificate substantially in the form set forth in Exhibit D or (y) holder of a beneficial interest being exchanged, of certification that such holder is a non-U.S. person (within the meaning of Regulation S under the Securities Act) or a U.S. person who acquired such interest in a transaction exempt from the registration requirements of the Securities Act (in which case a U.S. Physical Note shall be issued). 37 The U.S. Physical Notes and the Offshore Physical Notes, together with any other certificated notes in registered form, are sometimes collectively referred to as the "Physical Notes." The U.S. Global Notes and the Offshore Global Notes, together with any other global notes in registered form, are sometimes collectively referred to as the "Global Notes." Initial Notes and Initial Additional Notes offered and sold in reliance on any exemption under the Securities Act other than Regulation S and Rule 144A thereunder shall be issued in the form of permanent certificated Notes substantially in the form set forth in Exhibit A and shall contain the Private Placement Legend as set forth in Section 2.03. Exchange Notes shall be issued substantially in the form set forth in Exhibit A and, subject to Section 3.13, shall be in the form of one or more Global Notes. Section 2.02. Form of Trustee' Certificate of Authentication. The Trustee's certificate of authentication shall be in substantially the following form: This is one of the Notes referred to in the within-mentioned Indenture. THE BANK OF NEW YORK, as Trustee Dated: __________ By: __________________________ Authorized Signatory If an appointment of an Authenticating Agent is made pursuant to Section 7.15, the Notes may have endorsed thereon, in lieu of the Trustee's certificate of authentication, an alternative certificate of authentication in the following form: This is one of the Notes referred to in the within-mentioned Indenture. THE BANK OF NEW YORK, As Trustee By _____________________________ As Authenticating Agent By _____________________________ Authorized Signatory Dated: Section 2.03. Restrictive Legends. (a) Except as set forth in Section 3.14(l), unless and until (i) an Initial Note or any Initial Additional Note is sold pursuant to an effective registration statement, whether pursuant to the Registration Rights Agreement or otherwise or (ii) an Initial Note or any Initial Additional Note is exchanged for an 38 Exchange Note in an Exchange Offer pursuant to an effective Exchange Offer Registration Statement pursuant to the Registration Rights Agreement, (A) each U.S. Global Note and U.S. Physical Note shall bear the following legend set forth below (the "Private Placement Legend") on the face thereof and (B) each Temporary Offshore Global Note shall bear the Private Placement Legend on the face thereof until the Offshore Note Exchange Date and receipt by the Company and the Trustee of a certificate substantially in the form provided in Exhibit C with respect to the entire principal amount of such Temporary Offshore Global Note: THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER (1) REPRESENTS THAT (A) IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A "QUALIFIED INSTITUTIONAL BUYER" (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT, (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (WITHIN THE MEANING OF RULE 501(a) (1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON (WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT) AND (2) AGREES FOR THE BENEFIT OF THE COMPANY THAT IT WILL NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS NOTE OR ANY BENEFICIAL INTEREST HEREIN, EXCEPT IN ACCORDANCE WITH THE SECURITIES ACT AND ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE SECURITIES ACT, (C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (D) IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, 39 (E) IN A PRINCIPAL AMOUNT OF NOT LESS THAN $100,000, TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, DELIVERS TO THE TRUSTEE A DULY COMPLETED AND SIGNED CERTIFICATE (THE FORM OF WHICH MAY BE OBTAINED FROM THE TRUSTEE) RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE, OR (F) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH (2)(C) ABOVE OR (2)(D) ABOVE, A DULY COMPLETED AND SIGNED CERTIFICATE (THE FORM OF WHICH MAY BE OBTAINED FROM THE TRUSTEE) MUST BE DELIVERED TO THE TRUSTEE. PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH (2)(E) OR (F) ABOVE, THE COMPANY RESERVES THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN ORDER TO DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. NO REPRESENTATION IS MADE AS TO THE AVAILABILITY OF ANY RULE 144 EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. (b) Each Global Note, whether or not an Initial Note or Additional Note, shall also bear the following legend on the face thereof: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 3.13 AND 3.14 OF THE INDENTURE. 40 (c) Each Temporary Offshore Global Note shall bear the following legend on the face thereof: THIS NOTE IS A TEMPORARY GLOBAL NOTE. PRIOR TO THE EXPIRATION OF THE RESTRICTED PERIOD APPLICABLE HERETO, BENEFICIAL INTERESTS HEREIN MAY NOT BE HELD BY ANY PERSON OTHER THAN (1) A NON-U.S. PERSON OR (2) A U.S. PERSON WHO PURCHASED SUCH INTEREST IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") PURSUANT TO RULE 144A THEREUNDER. BENEFICIAL INTERESTS HEREIN ARE NOT EXCHANGEABLE FOR PHYSICAL NOTES OTHER THAN A PERMANENT GLOBAL NOTE IN ACCORDANCE WITH THE TERMS OF THE INDENTURE. TERMS IN THIS LEGEND ARE USED AS USED IN REGULATION S UNDER THE SECURITIES ACT. ARTICLE 3 The Notes Section 3.01. Title and Terms. The aggregate principal amount of Notes that may be authenticated and delivered and Outstanding under this Indenture is initially limited to $393,000,000, but may be increased, subject to compliance with the covenants contained in Article 4 below and the conditions set forth in Section 3.03, and except as may be limited by applicable law. The Initial Notes will be issued in an aggregate principal amount of $393,000,000. All the Original Notes shall vote and consent together on all matters as one class, and none of the Original Notes will have the right to vote or consent as a class separate from one another on any matter. Subject to the conditions set forth in Section 3.03 and the covenants contained in Article 4 below, the Company may issue Additional Notes hereunder. Additional Notes (including any Exchange Notes issued in exchange therefor) shall vote (or consent) as a class with the other Notes and otherwise be treated as Notes for all purposes of this Indenture. The Notes shall be known and designated as the "9 1/2% Senior Secured Notes, Due 2008" of the Company. The final Stated Maturity of the Notes shall be December 15, 2008. Interest on the Outstanding principal amount of Notes will accrue, subject to Section 3.11, at the rate of 9 1/2% per annum and will be payable semiannually in arrears on June 15 and December 15 in each year, commencing on June 15, 2002, to Holders of record at the close of business on the immediately preceding June 1 and December 1, respectively (each such June 1 and December 1 a "Regular Record Date"). Interest on the Original Notes will accrue from the most recent date to which interest has been paid or duly provided for or, if no interest has been paid, from December 4, 2001, and interest on any Additional Notes (and Exchange Notes issued in exchange therefor) will accrue from the most recent date to which interest has been paid or duly provided for or, if no interest has been paid on such Additional Notes, from the date of issuance of such Additional Notes; provided that if any Note is surrendered for exchange on or after a record date for an Interest Payment Date that will occur on or after the date of such exchange, interest on the Note received in exchange thereof will accrue from the date of 41 such Interest Payment Date. The Company will pay interest on overdue principal and, to the extent lawful, on overdue installments of interest and Liquidated Damages, if any, at a rate of 1% per annum in excess of the interest rate referred to above. The principal of, and premium, if any, and interest and Liquidated Damages, if any, on the Notes shall be payable at the Corporate Trust Office or at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York (each, a "Place of Payment") in the manner provided in Section 4.01(b); provided, however, that, under the circumstances set forth in Section 4.01(b), payment of interest and Liquidated Damages on a Note may be made by wire transfer of immediately available funds to the account specified by the Holder of a Global Note or by check mailed to the address of the Person entitled thereto as such address shall appear in the Register. Section 3.02. Denominations. The Notes shall be issuable only in registered form without coupons and only in denominations of $1,000 and any integral multiple thereof. Section 3.03. Execution, Authentication and Delivery and Dating. The Notes shall be executed on behalf of the Company by an Officer of such Company. The signature of such Officer on the Notes may be manual or facsimile. Notes bearing the manual or facsimile signature of an individual who was at any time a proper Officer of the Company shall bind the Company, notwithstanding that such individual has ceased to hold such office prior to the authentication and delivery of such Notes or did not hold such office at the date of such Notes. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Notes executed by the Company to the Trustee for authentication; and the Trustee shall authenticate and deliver (i) Initial Notes for original issue in the aggregate principal amount not to exceed $393,000,000 and (ii) Additional Notes from time to time for original issue in aggregate principal amounts specified by the Company and (iii) Exchange Notes from time to time for issue in exchange for a like principal amount of Initial Notes or Initial Additional Notes, in each case specified in clauses (i) through (iii) above, upon a written order of the Company in the form of an Officer's Certificate (an "Authentication Order"), and in the case of clause (ii), upon receipt by the Trustee of an Opinion of Counsel confirming that the Holders of the Outstanding Notes will be subject to federal income tax in the same amounts, in the same manner and at the same times as would have been the case if such Additional Notes were not issued. Such Officer's Certificates shall specify the amount of Notes to be authenticated and the date on which the Notes are to be authenticated, whether the Notes are to be Initial Notes, Additional Notes or Exchange Notes, that, in the case of Additional Notes, (x) the issuance of such Notes does not contravene any provision of Article 4 of this Indenture and (y) after giving effect to such issuance of Additional Notes and the application of the use of proceeds therefrom, the aggregate principal amount of Notes outstanding does not exceed the amount permitted to be equally and ratably secured under the Existing Credit Facility without causing a default thereunder, whether the Notes are to be issued as one or more Global Notes or Physical Notes, the 42 name or names of the Initial Holder or Holders and such other information as the Company may include or the Trustee may reasonably request. All Notes shall be dated the date of their authentication. No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Note a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder. Section 3.04. Temporary Notes. Until definitive Notes are ready for delivery, the Company may prepare and upon receipt of an Authentication Order the Trustee shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of definitive Notes but may have variations that the Company considers appropriate for temporary Notes. If temporary Notes are issued, the Company will cause definitive Notes to be prepared without unreasonable delay. After the preparation of definitive Notes, the temporary Notes shall be exchangeable for definitive Notes upon surrender of the temporary Notes at the office or agency of the Company in a Place of Payment, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Notes, the Company shall execute and upon receipt of an Authentication Order the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Notes of authorized denominations. Until so exchanged the temporary Notes shall in all respects be entitled to the same benefits under this Indenture as definitive Notes of the same series and tenor. Section 3.05. Registration, Registration of Transfer and Exchange. The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency of the Company in a Place of Payment being herein sometimes collectively referred to as the "Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Notes and of transfers of Notes. The Trustee is hereby appointed "Registrar" for the purpose of registering Notes and transfers of Notes as herein provided. Upon surrender for transfer of any Note at the office or agency of the Company in a Place of Payment, in compliance with all applicable requirements of this Indenture and applicable law, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes, of any authorized denominations and of a like aggregate principal amount. At the option of the Holder, Notes may be exchanged for other Notes, of any authorized denominations and of a like tenor and aggregate principal amount, upon surrender of the Notes to be exchanged at such office or agency. Whenever any Notes are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Notes that the Holder making the exchange is entitled to receive; provided that no exchange of Initial Notes or Initial Additional Notes for Exchange Notes shall occur until an Exchange Offer Registration Statement shall have 43 been declared effective by the SEC and the Trustee shall have received an Officer's Certificate confirming that the Exchange Offer Registration Statement has been declared effective by the SEC and an exchange offer thereunder has been consummated. The Initial Notes or Additional Notes to be exchanged for the Exchange Notes shall be canceled by the Trustee. All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Notes surrendered upon such registration of transfer or exchange. Every Note presented or surrendered for registration of transfer or exchange shall (if so required by the Company or the Registrar) be duly endorsed, or be accompanied by a written instrument of transfer, in form satisfactory to the Company and the Registrar duly executed, by the Holder thereof or such Holder's attorney duly authorized in writing. No service charge shall be made for any registration of transfer or exchange or redemption of Notes, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Notes under this Section 3.05. Section 3.06. Mutilated, Destroyed, Lost and Stolen Notes. If (a) any mutilated Note is surrendered to the Trustee, or the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Note, and (b) there is delivered to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the Trustee that such Note has been acquired by a bona fide purchaser, the Company shall execute and upon receipt of an Authentication Order the Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a new Note of like tenor and principal amount, bearing a number not contemporaneously Outstanding. In case any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Note, pay such Note. Upon the issuance of any new Note under this Section 3.06, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Note issued pursuant to this Section 3.06 in lieu of any mutilated, destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Company, whether or not the mutilated, destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and ratably with any and all other Notes duly issued hereunder. 44 The provisions of this Section 3.06 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes. Section 3.07. Payment of Interest Rights Preserved. Interest and Liquidated Damages on any Note that is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Note (or one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such interest and Liquidated Damages specified in Section 3.01. Any interest and Liquidated Damages on any Note that is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the registered Holder on the relevant Regular Record Date by virtue of having been such Holder; and such Defaulted Interest shall be paid by the Company, as provided in 3.07(a) or 3.07(b) below: (a) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Note and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements reasonably satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as provided in this Section 3.07(a). Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest, the amount thereof and the Special Record Date and payment date therefor to be mailed, first class postage prepaid, to each Holder at such Holder's address as it appears in the Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered on such Special Record Date and shall no longer be payable pursuant to the following 3.07(b). (b) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause (b), such payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section 3.07, each Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any 45 other Note shall carry the rights to interest (including any Liquidated Damages) accrued and unpaid, and to accrue, that were carried by such other Note. Section 3.08. Persons Deemed Owners. Prior to due presentment of a Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Note is registered as the owner of such Note for the purpose of receiving payment of principal of (and premium, if any, on) and (subject to Section 3.07) interest and Liquidated Damages, if any, on such Note and for all other purposes whatsoever, whether or not such Note be overdue, and none of the Company, the Subsidiary Guarantors, the Trustee or any agent of the Company, the Subsidiary Guarantors or the Trustee shall be affected by notice to the contrary. Section 3.09. Cancellation. All Notes surrendered for payment, redemption, registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and, if not already canceled, shall be promptly canceled by it. The Company may at any time deliver to the Trustee for cancellation any Notes previously authenticated and delivered hereunder that the Company may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly canceled by the Trustee. No Notes shall be authenticated in lieu of or in exchange for any Notes canceled as provided in this Section 3.09, except as expressly permitted by this Indenture. All canceled Notes held by the Trustee shall be disposed of in accordance with the Trustee's customary procedures. Section 3.10. Computation of Interest. Interest on the Notes shall be computed on the basis of a 360-day year of twelve 30-day months. Section 3.11. Payment of Liquidated Damages. (a) Under certain circumstances the Company will be obligated to pay certain Liquidated Damages to the Holders of certain Initial Notes, as more particularly set forth in such Initial Notes. (b) Under certain circumstances the Company may be obligated to pay certain Liquidated Damages to the Holders of certain Initial Additional Notes, as may be more particularly set forth in such Initial Additional Notes. Section 3.12. CUSIP Numbers. The Company in issuing the Notes may use "CUSIP" or "CINS" numbers (if then generally in use) in addition to serial numbers, and, if so, the Trustee shall use such "CUSIP" or "CINS" numbers in addition to serial numbers in notices of redemption, repurchase or other notices to Holders as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such "CUSIP" or "CINS" numbers either as printed on the Notes or as contained in any notice of a redemption or repurchase and that reliance may be placed only on the serial or other identification numbers printed on the Notes, and any such redemption or repurchase shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee of any change in the "CUSIP" or "CINS" numbers. 46 Section 3.13. Book-entry Provisions for Global Notes. (a) Each Global Note initially shall (i) be registered in the name of the Depositary for such Global Notes or the nominee of such Depositary, (ii) be delivered to the Trustee as custodian for such Depositary and (iii) to the extent relevant thereto, bear legends as set forth in Section 2.03. None of the Company or the Subsidiary Guarantors, nor any of their agents shall have any responsibility or liability for any aspect of the records relating to, or payments made on account of beneficial ownership interests of, a Global Note, or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Members of, or participants in, the Depositary ("Agent Members") shall have no rights under this Indenture with respect to any Global Note, and the Depositary may be treated by the Company, the Subsidiary Guarantors, the Trustee and any agent of the Company, the Subsidiary Guarantors or the Trustee as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Subsidiary Guarantors, the Trustee or any agent of the Company, the Subsidiary Guarantors or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a beneficial owner of any Note. The registered Holder of a Global Note may grant proxies and otherwise authorize any person, including Agent Members and persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Notes. (b) Interests of beneficial owners in a Global Note may be transferred in accordance with the applicable rules and procedures of the Depositary and the provisions of Section 3.14. Transfers of a Global Note shall be limited to transfers of such Global Note in whole, but not in part, to the Depositary, its successors or their respective nominees, except (i) as required in connection with transfers of interests therein pursuant to Section 3.14(b) or 3.14(g) or as may be required by the Company or the Trustee in connection with transfers pursuant to Section 3.14(i), and (ii) that U.S. Physical Notes or, subject to Section 3.14(h), Offshore Physical Notes shall be transferred to all beneficial owners in exchange for their beneficial interests in the U.S. Global Note or the Offshore Global Note, respectively, in the event that (A) the Depositary notifies the Company that it is unwilling or unable to continue as Depositary for the applicable Global Note and a successor depositary is not appointed by the Company within 90 days or (B) an Event of Default has occurred and is continuing and the Registrar has received a request from the Depositary. In addition, beneficial interests in a Global Note may be exchanged for Physical Notes upon request but only upon at least 20 days' prior written notice given to the Trustee by or on behalf of the Depository in accordance with customary procedures. In connection with any transfer or exchange of a portion of the beneficial interest in any Global Note to beneficial owners for Physical Notes pursuant to this Section 3.13(b), the Registrar shall record on its books and records (and make a notation on the Global Note of) the date and a decrease in the principal amount of such Global Note in an amount equal to the beneficial interest in the Global Note being transferred, and the Company shall execute, and the Trustee shall authenticate and deliver, one or more Physical Notes of like tenor and principal amount of authorized 47 denominations. In connection with a transfer of an entire Global Note to beneficial owners pursuant to this paragraph (b), the applicable Global Note shall be deemed to be surrendered to the Trustee for cancellation, and the Company shall execute, and the Trustee shall authenticate and deliver, to each beneficial owner identified by the Depositary in exchange for its beneficial interest in the applicable Global Note, an equal aggregate principal amount at maturity of U.S. Physical Notes (in the case of the U.S. Global Note) or Offshore Physical Notes (in the case of the Offshore Global Note), as the case may be, of authorized denominations. (c) Any beneficial interest in one of the Global Notes that is transferred to a person who takes delivery in the form of an interest in another Global Note will, upon transfer, cease to be an interest in such Global Note and become an interest in the other Global Note and, accordingly, will thereafter be subject to all transfer restrictions, if any, and other procedures applicable to beneficial interests in such other Global Note for as long as it remains such an interest. (d) The Company, the Subsidiary Guarantors, any other obligor upon the Notes or the Trustee, in the discretion of any of them, may treat as the Act of a Holder any instrument or writing of any Person that is identified by the Depositary as the owner of a beneficial interest in the Global Note, provided that the fact and date of the execution of such instrument or writing is proved in accordance with Section 1.08(b). (e) Any U.S. Physical Note delivered in exchange for an interest in the U.S. Global Note pursuant to paragraph (b) of this Section shall, except as otherwise provided in Section 3.14, bear the Private Placement Legend. Section 3.14. Transfer Provisions. Unless and until (i) an Initial Note or any Initial Additional Note is sold pursuant to an effective registration statement, whether pursuant to the Registration Rights Agreement or otherwise, (ii) an Initial Note or any Initial Additional Note is exchanged for an Exchange Note in the Exchange Offer pursuant to an effective Registration Statement, or (iii) the Resale Restriction Termination Date has occurred with respect to an Initial Note or any Initial Additional Note and such Note is not then held by an Affiliate of the Company, the following provisions shall apply with respect to such Initial Note or Initial Additional Note: (a) General. The provisions of this Section 3.14 shall apply to all transfers involving any Physical Note and any beneficial interest in any Global Note. A Note that is a Restricted Security may not be transferred other than as provided in this Section 3.14. A beneficial interest in a Global Note that is a Restricted Security may not be exchanged for a beneficial interest in another Global Note other than through a transfer in compliance with this Section 3.14. (b) Transfers to Non-QIB Institutional Accredited Investors. With respect to the registration of any proposed transfer of a Note that is a Restricted Security to any Institutional Accredited Investor that is not a QIB, (I) the Registrar shall register such transfer 48 (i) if it complies with all other applicable requirements of this Indenture (including Section 3.05 and Section 3.13); and (ii) the proposed transferee has delivered to the Registrar a certificate substantially in the form of Exhibit E, and such transfer is in respect of an aggregate principal amount of Notes of not less than $100,000; and (iii) if the proposed transferor is or is acting through an Agent Member holding a beneficial interest in a Global Note, upon receipt by the Registrar of written instructions given in accordance with the Depositary's and the Registrar's procedures; and (II) the Registrar shall (x) reflect on its books and records (and make a notation on the relevant Global Note of) the date and a decrease in the principal amount of the relevant Global Note in an amount equal to the principal amount of the beneficial interest in the relevant Global Note to be transferred or (y) cancel the Physical Note so transferred, and the Registrar shall deliver to the transferee one or more Physical Notes of like tenor and amount. Each of the Company and the Trustee may require additional opinions, certifications or other evidence as may be reasonably required to confirm that any such proposed transfer is being made in compliance with the Securities Act and applicable state securities laws. (c) Transfers to QIBs. With respect to the registration of any proposed transfer of a Note that is a Restricted Security to a QIB, (I) the Registrar shall register such transfer (i) if it complies with all other applicable requirements of this Indenture (including Section 3.05 and Section 3.13); and (ii) the proposed transferor has checked the box provided for on the form of such Note stating, or has otherwise certified to the Company and the Registrar in writing, that the sale has been made in compliance with the provisions of Rule 144A to a transferee who has signed the certification provided for on the form of such Note stating, or has otherwise certified to the Company and the Registrar in writing, that it is purchasing such Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a QIB within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A; and 49 (iii) if the proposed transferor or transferee is or is acting through an Agent Member, upon receipt by the Registrar of written instructions given in accordance with the Depositary's and the Registrar's procedures; and (II) the Registrar shall (a) cancel the Physical Note so transferred or (b) reflect on its books and records (and make a notation on the relevant Global Note of) the date and a decrease in the principal amount of such transferor Global Note, as the case may be, and the Registrar shall (x) reflect on its books and records (and make a notation on the relevant Global Note of) the date and an increase in the principal amount of the transferee Global Note or (y) deliver Physical Notes of like tenor and amount. (d) Transfers of Interests in the Temporary Offshore Global Notes. With respect to registration of any proposed transfer of interests in any Temporary Offshore Global Note, (I) the Registrar shall register the transfer of any interest in such Note only (i) if the proposed transferee is a Non-U.S. Person and the proposed transferor has delivered to the Registrar a certificate substantially in the form of Exhibit D hereto and will take delivery in the form of an interest in the Temporary Offshore Global Note; or (ii) if the proposed transferee is a QIB and the proposed transferor has checked the box provided for on the form of Note stating, or has otherwise certified to the Company and the Registrar in writing, that the sale has been made in compliance with provisions of Rule 144A to a transferee who has signed the certification provided for on the form of Note stating, or has otherwise advised the Company and the Registrar in writing, that it is purchasing the Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a QIB within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A; and (iii) upon receipt by the Registrar of written instructions given in accordance with the Depositary's and the Registrar's procedures; and (II) the Registrar shall reflect on its books and records (and make a notation on the relevant Global Note of) the date and an increase in the principal amount of the transferee Global Note, in an amount equal to the principal amount of the Temporary Offshore Global Note to be transferred, and the Registrar shall reflect on its books and records (and make a notation on the relevant Global Note of) the date and a decrease in the principal amount of the transferor Temporary Offshore Global Note. 50 (e) Transfers to Non-U.S. Persons. With respect to the registration of any proposed transfer of a Note that is a Restricted Security to a Non-U.S. Person (except for any transfer referred to in Section 3.14(d)) (I) the Registrar shall register such transfer: (i) if it complies with all other applicable requirements of this Indenture (including Section 3.05 and Section 3.13); and (ii) if the proposed transfer is to be made prior to the end of the Restricted Period, upon receipt of a certificate substantially in the form of Exhibit D hereto from the proposed transferor; and (iii) if the proposed transfer is to be made after the end of the Restricted Period and the Note to be transferred is a U.S. Certificated Note or an interest in the U.S. Global Note, only upon receipt of a certificate substantially in the form of Exhibit D from the proposed transferor; and (iv) if the proposed transferor or transferee is or is acting through an Agent Member, upon receipt by the Registrar of written instructions in accordance with the Depositary's and the Registrar's procedures; and (II) the Registrar shall (a) reflect on its books and records (and make a notation on the relevant Global Note of) the date and a decrease in the principal amount of the transferor Global Note in an amount equal to the principal amount to be transferred or (b) cancel the Physical Notes so transferred, as the case may be, and the Registrar shall (x) reflect on its books and records (and make a notation on the relevant Global Note of) the date and an increase in the principal amount of the transferee Offshore Global Note or (y) deliver one or more Physical Notes of like tenor and amount. (f) Transfers pursuant to Rule 144. With respect to the registration of any proposed transfer of a Note that is a Restricted Security pursuant to the exemption from registration under the Securities Act provided by Rule 144 thereunder, (I) the Registrar shall register such transfer (A) if it complies with all other requirements of this Indenture (including Section 3.05 and Section 3.13); and (B) if such transfer is being made by a proposed transferor who has checked the box provided for on the form of such Note stating, or has otherwise certified to the Company and the Registrar in writing, that the sale has been made in compliance with the provisions of Rule 144; and (C) if the proposed transferor or transferee is or is acting through an Agent Member, upon receipt by the Registrar of written instructions given in accordance with the Depositary's and the Registrar's procedures; and 51 (II) the Registrar shall (a) reflect on its books and records (and make a notation on the relevant Global Note of) the date and a decrease in the principal amount of such transferor Global Note in an amount equal to the principal amount to be transferred or (b) cancel the Physical Note so transferred and the Registrar shall (x) reflect on its books and records (and make a notation on the relevant Global Note of) the date and an increase in the principal amount of the transferee Global Note or (y) the Registrar shall deliver Physical Notes in like tenor and amount. Each of the Company and the Trustee may require additional opinions, certifications or other evidence as may be reasonably required to confirm that any such proposed transfer is being made in compliance with the Securities Act and applicable state securities laws. (g) Transfers to the Company. With respect to the registration of any proposed transfer of a Note to the Company, (I) the Registrar shall register such transfer (A) if it complies with all other requirements of this Indenture (including Section 3.05 and Section 3.13); and (B) if such transfer is being made by a proposed transferor who has checked the box provided for on the form of such Note stating, or has otherwise certified to the Company and the Registrar in writing, that the sale has been made to the Company; and (C) if the proposed transferor is or is acting through an Agent Member, upon receipt by the Registrar of written instructions given in accordance with the Depositary's and the Registrar's procedures; and (II) the Registrar shall (x) reflect on its books and records (and make a notation on the relevant Global Note of) the date and a decrease in the principal amount of such transferor Global Note in an amount equal to the principal amount to be transferred or (y) cancel the Physical Note so transferred, as the case may be and the Registrar shall deliver Physical Notes to the Company in like tenor and amount. (h) Interests in the Offshore Global Note prior to the Offshore Note Exchange Date. Notwithstanding anything to the contrary contained in this Indenture, until the Offshore Note Exchange Date occurs and appropriate certification substantially in the form of Exhibit C is made as provided in Section 2.01, beneficial interests in the Offshore Global Note may be held only in or through accounts maintained at the Depositary by Euroclear or Clearstream, and no person shall be entitled to effect any transfer or exchange that would result in any such interest being held otherwise than in or through such an account, and no Physical Notes may be issued in exchange therefor. (i) Other Transfers. The Registrar shall effect and register, upon receipt of a written request from the Company to do so, a transfer not otherwise permitted by this Section 3.14, such registration to be done in accordance with the otherwise applicable 52 provisions of this Section 3.14, upon the furnishing by the proposed transferor or transferee of a written opinion of counsel (which opinion and counsel are satisfactory to the Company and the Trustee) to the effect that, and such other certifications or evidence as the Company may require to confirm that, the proposed transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and otherwise in compliance with applicable state securities laws. (j) Limitation on Issuance of Physical Notes. No Physical Note shall be exchanged for a beneficial interest in any Global Note, except in accordance with Section 3.13 and this Section 3.14. (k) Execution, Authentication and Delivery of Physical Notes. In any case in which the Registrar is required to deliver a Physical Note to a transferee or transferor, the Company shall execute, and the Trustee shall authenticate and make available for delivery, such Physical Note. (l) Private Placement Legend. Upon the transfer, exchange or replacement of Notes not bearing the Private Placement Legend, the Registrar shall deliver Notes that do not bear the Private Placement Legend. Upon the transfer, exchange or replacement of Notes bearing the Private Placement Legend, the Registrar shall deliver only Notes that bear the Private Placement Legend, unless (i) the requested transfer is after the relevant Resale Restriction Termination Date with respect to such Notes, (ii) upon written request of the Company after there is delivered to the Registrar an opinion of counsel (which opinion and counsel are satisfactory to the Company and the Trustee) to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act, (iii) with respect to an Offshore Global Note, with the agreement of the Company on or after the Offshore Note Exchange Date with respect to such Note, (iv) such Notes are sold or exchanged pursuant to an effective registration statement under the Securities Act or (v) such Notes are sold pursuant to Section 3.14(f). (m) General. By its acceptance of any Note bearing the Private Placement Legend, each Holder of such a Note acknowledges the restrictions on transfer of such Note set forth in this Indenture and in the Private Placement Legend and agrees that it will transfer such Note only as provided in this Indenture. The Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 3.13 or this Section 3.14 (including all Notes received for transfer pursuant to this Section 3.14). The Company shall have the right to require the Registrar to deliver to the Company, at the Company's expense, copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar. In connection with any transfer of any Note, the Trustee, the Registrar and the Company shall be entitled to receive, shall be under no duty to inquire into, may conclusively presume the correctness of, and shall be fully protected in relying upon the certificates, opinions and other information referred to herein (or in the forms provided 53 herein, attached hereto or to the Notes, or otherwise) received from any Holder and any transferee of any Note regarding the validity, legality and due authorization of any such transfer, the eligibility of the transferee to receive such Note and any other facts and circumstances related to such transfer. (n) Certain Additional Terms Applicable to Physical Notes. Any transferee entitled to receive a Physical Note may request that the principal amount thereof be evidenced by one or more Physical Notes in any authorized denomination or denominations and the Registrar shall comply with such request if all other transfer restrictions are satisfied. ARTICLE 4 Covenants Section 4.01. Payment of Principal, Premium and Interest. (a) The Company will duly and punctually pay the principal of (and premium, if any) and interest and Liquidated Damages, if any, on the Notes in accordance with the terms of the Notes and this Indenture. An installment of principal (and premium, if any) or interest and Liquidated Damages shall be considered paid on the date it is due if the Trustee or Paying Agent or Paying Agents hold on that date money designated for and sufficient to pay the installment. (b) Payments (including principal, premium, if any, interest and Liquidated Damages, if any) in respect of the Notes represented by the Global Notes, the Holder of which has given wire transfer instructions on or prior to the relevant record date, shall be made by wire transfer of immediately available funds to the accounts specified by the Global Note Holder. With respect to Physical Notes, the Company will make all payments of principal, premium, if any, interest and Liquidated Damages, if any, at the office or agency maintained by the Company in The City of New York referred to in Section 4.02 or, at the option of the Company, by mailing a check to each such Holder's registered address. Section 4.02. Maintenance of Office or Agency. The Company will maintain in the Borough of Manhattan, The City of New York an office or agency where Notes may be presented or surrendered for payment, where Notes may be surrendered for transfer or exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and of any change in the location, of such office or agency. If at any time the Company shall fail to maintain such office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee. The Company hereby designates the Corporate Trust Office as an initial Place of Payment and as such office of the Company in the Borough of Manhattan, The City of New York, and appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands so long as such Corporate Trust Office remains a Place of Payment. Section 4.03. Money for Payments to Be Held in Trust. If the Company shall at any time act as its own Paying Agent, it will, on or before each due date of the principal 54 of (and premium, if any) or interest and Liquidated Damages, if any, on, any of the Notes, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest and Liquidated Damages, if any, so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and will promptly notify the Trustee of its action or failure so to act. If the Company is not acting as its own Paying Agent, it will, prior to each due date of the principal of (and premium, if any) or interest and Liquidated Damages, if any, on, any Notes, deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest and Liquidated Damages, if any, so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest and Liquidated Damages, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act. If the Company is not acting as its own Paying Agent, the Company will cause any Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section 4.03, that such Paying Agent will: (a) hold all sums held by it for the payment of principal of (and premium, if any) or interest and Liquidated Damages, if any, on Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (b) give the Trustee notice of any default by the Company (or any other obligor upon the Notes) in the making of any such payment of principal (and premium, if any) or interest and Liquidated Damages, if any; (c) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent; and (d) acknowledge, accept and agree to comply in all respects with the provisions of this Indenture and TIA relating to the duties, rights and liabilities of such Paying Agent. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (and premium, if any) or interest and Liquidated Damages, if any, on any Note and remaining unclaimed for two years 55 after such principal (and premium, if any) or interest and Liquidated Damages, if any, has become due and payable shall be paid in the appropriate proportion to the Company upon a Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease. Section 4.04. SEC Reports. (a) Whether or not required by the rules and regulations of the SEC, so long as any Notes issued hereunder are outstanding, the Company will furnish to each Trustee and the Holders of Notes (i) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Company were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, with respect to the annual information only, a report thereon by the Company's certified independent accountants and (ii) all current reports that would be required to be filed with the SEC on Form 8-K if the Company were required to file such reports. In addition, whether or not required by the rules and regulations of the SEC, the Company will file a copy of all such information and reports with the SEC for public availability and make such information available to securities analysts and prospective investors upon request. (b) For so long as any Notes remain outstanding, the Company will furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. (c) All obligors on the Notes will comply with Section 314(a) of the TIA. (d) The Company shall promptly mail copies of all such annual reports, information, documents and other reports provided to the Trustee pursuant to clauses (a) and (c) hereof to the Holders at their addresses appearing in the Register maintained by the Registrar. (e) Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officer's Certificates). Section 4.05. Certificates to Trustee. (a) The Company will deliver to the Trustee within 120 days after the end of each fiscal year of the Company a certificate from the principal executive, financial or accounting officer of the Company stating that such officer has conducted or supervised a review of the activities of the Company and its Restricted Subsidiaries and the Company's and its Restricted Subsidiaries' performance under this Indenture and that, based upon such review, to the best of such officer's knowledge, the Company has fulfilled all obligations thereunder or, if there has 56 been a default in the fulfillment of any such obligation (determined without regard to any period of grace or requirement of notice provided in this Indenture), specifying each such default and the nature and status thereof. (b) The Company will deliver to the Trustee, as soon as possible and in any event within 30 days after the Company becomes aware of an Event of Default or a Default, an Officer's Certificate setting forth the details of such Event of Default or Default, and the action which the Company proposes to take or has taken with respect thereto. (c) The Company will deliver to the Trustee within 120 days after the end of each fiscal year of the Company a written statement by the Company's independent public accountants stating (i) that their audit examination has included a review of the terms of this Indenture and the Notes as they relate to accounting matters, and (ii) whether, in connection with their audit examination, any Default has come to their attention and, if such a Default has come to their attention, specifying the nature and period of the existence thereof. Section 4.06. Limitation on Indebtedness. (a) On or after the Issue Date: (i) the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, Guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt); (ii) the Company will not, and will not permit any of its Restricted Subsidiaries to, issue any Disqualified Stock (including Acquired Disqualified Stock); (iii) and the Company will not permit any of its Restricted Subsidiaries that are not Subsidiary Guarantors to issue any shares of Preferred Stock (including Acquired Preferred Stock); provided, however, that the Company and the Subsidiary Guarantors may incur Indebtedness (including Acquired Debt) and the Company and the Subsidiary Guarantors may issue shares of Disqualified Stock (including Acquired Disqualified Stock) if the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for which financial statements have been filed with the SEC pursuant to Section 4.04 immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock is issued would have been at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock had been issued, as the case may be, at the beginning of such four-quarter period. Letters of credit and bankers' acceptances shall be deemed to have an aggregate principal amount of Indebtedness equal to the maximum amount available thereunder. (b) The foregoing provisions will not apply to: 57 (i) the incurrence by the Company of Indebtedness pursuant to the Existing Credit Facility (and by its Subsidiaries of Guarantees thereof) in an aggregate principal amount at any time outstanding not to exceed an amount equal to $3.477 billion less the aggregate amount of all mandatory repayments (other than mandatory prepayments triggered solely by the issuance of Indebtedness or Preferred Stock of a Finance Subsidiary to refinance the Existing Credit Facility) applied after the Existing Notes Issue Date to (x) repay loans (other than revolving credit loans) outstanding thereunder or (y) permanently reduce the revolving credit commitments thereunder; (ii) the incurrence by the Company and the Subsidiary Guarantors of Indebtedness represented by the Notes (other than Additional Notes) and the Subsidiary Guarantees thereof; (iii) the incurrence by the Company and its Restricted Subsidiaries of Existing Indebtedness (other than Indebtedness of the type described in clause (i), (ii) or (v) through (xii) of this covenant); (iv) the incurrence by the Company or any of its Restricted Subsidiaries of any Permitted Refinancing in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund, Indebtedness that was permitted to be incurred under the Fixed Charge Coverage Ratio test set forth above or clause (ii) or (iii) above or (xiii) or (xiv) below or this clause (iv); (v) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that (i) if the Company or any 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 Notes or the Subsidiary Guarantee, as the case may be, and (ii)(A) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary and (B) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be; (vi) the incurrence by the Company or any Restricted Subsidiary of Hedging Obligations that are incurred for the purpose of (A) fixing or hedging interest rate or currency risk with respect to any fixed or floating rate Indebtedness that is permitted by the Indenture to be outstanding or any receivable or liability the payment of which is determined by reference to a foreign currency; provided that the notional principal amount of any such Hedging Obligation does not exceed the principal amount of the Indebtedness to which such Hedging Obligation relates or (B) fixing or hedging risk with respect to fluctuations in the cost of raw materials; provided that such obligation is entered into for valid business purposes other than speculative purposes (as 58 determined by the Company's or such Restricted Subsidiary's principal financial officer in the exercise of his or her good faith business judgment); (vii) the issuance by any of the Company's Restricted Subsidiaries of shares of Preferred Stock to the Company or a Wholly Owned Restricted Subsidiary; provided that (A) any subsequent issuance or transfer of Equity Interests that results in such Preferred Stock being held by a Person other than the Company or a Wholly Owned Restricted Subsidiary or (B) the transfer or other disposition by the Company or a Wholly Owned Restricted Subsidiary of any such shares to a Person other than the Company or a Wholly Owned Restricted Subsidiary shall be deemed, in each case, to constitute an issuance of such Preferred Stock by such Subsidiary on such date that is not permitted by this clause (vii); (viii) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by tender, bid, performance, government contract, surety or appeal bonds, standby letters of credit and warranty and contractual service obligations of like nature, trade letters of credit or documentary letters of credit, in each case to the extent incurred in the ordinary course of business of the Company or such Restricted Subsidiary and the incurrence by the Company of Indebtedness represented by letters of credit incurred in connection with the PBGC Settlement; (ix) the incurrence by any Restricted Subsidiary of the Company of Indebtedness or the issuance by any Restricted Subsidiary of Preferred Stock, the aggregate principal amount or liquidation preference of which, together with all other Indebtedness and Preferred Stock of the Company's Restricted Subsidiaries at the time outstanding and incurred or issued in reliance upon this clause (ix), does not exceed $50.0 million; (x) the issuance by any Finance Subsidiary of Preferred Stock with an aggregate liquidation preference not exceeding the amount of Indebtedness of the Company held by such Finance Subsidiary; provided that the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for which financial statements have been filed with the SEC pursuant to the covenant described below under Section 4.04 immediately preceding the date on which such Preferred Stock is issued would have been at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom) as if such Preferred Stock had been issued at the beginning of such four-quarter period; (xi) the incurrence of Indebtedness by Foreign Subsidiaries in an aggregate principal amount (or accreted value, as applicable) at any time outstanding and incurred in reliance upon this clause (xi) not to exceed $100.0 million; 59 (xii) the Guarantee by any Restricted Subsidiary of Indebtedness of the Company or a Restricted Subsidiary that was permitted to be incurred by another provision of this covenant; (xiii) Acquired Debt or Acquired Disqualified Stock; provided that such Indebtedness or Disqualified Stock was not incurred in connection with or in contemplation of such Person's becoming a Restricted Subsidiary; and provided further that immediately after giving effect to such incurrence, the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for which financial statements have been filed with the SEC pursuant to Section 4.04 immediately preceding the date of such incurrence would have been at least 2.0 to 1, determined on a pro forma basis; (xiv) Indebtedness or Disqualified Stock of a Specified Joint Venture or a Subsidiary thereof existing at the time such Specified Joint Venture first becomes a Restricted Subsidiary; provided that such Indebtedness or Disqualified Stock was not incurred in connection with or in contemplation of such Specified Joint Venture's becoming a Restricted Subsidiary; and provided further that immediately after giving effect to such Specified Joint Venture's becoming a Restricted Subsidiary, the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for which financial statements have been filed with the SEC pursuant to Section 4.04 immediately preceding the date on which such Specified Joint Venture became a Restricted Subsidiary would have been, determined on a pro forma basis, (x) at least 2.0 to 1 or (y) equal to or greater than it was immediately prior to such Specified Joint Venture's becoming a Restricted Subsidiary; (xv) with respect to any Specified Joint Venture that becomes a Restricted Subsidiary, the incurrence by such Specified Joint Venture of Indebtedness under any revolving credit facility in an aggregate principal amount at any time outstanding not to exceed the aggregate principal amount of committed financing under all revolving credit facilities of such Specified Joint Venture as in effect on the Issue Date; and (xvi) the incurrence by the Company or any Subsidiary Guarantor of Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding and incurred in reliance on this clause (xvi) not to exceed $25.0 million. (c) For purposes of determining compliance with this covenant, in the event that an item of Indebtedness or Preferred Stock meets the criteria of more than one of the categories of permitted Indebtedness described in clauses (i) through (xvi) above or is entitled to be incurred pursuant to Section 4.06(a), the Company shall, in its sole discretion, classify such item of Indebtedness or Preferred Stock in any manner that complies with this covenant and such Indebtedness or Preferred Stock will be treated as having been incurred pursuant to the clauses or Section 4.06(a), as the case may be, designated by the Company. The amount of Indebtedness issued at a price which is less 60 than the principal amount thereof shall be equal to the amount of the liability in respect thereof determined in accordance with GAAP. Section 4.07. Limitation on Restricted Payments. (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any distribution on account of the Company's or any of its Restricted Subsidiaries' Equity Interests (other than (x) dividends or distributions payable in Qualified Equity Interests of the Company and (y) dividends or distributions payable to the Company or any Restricted Subsidiary of the Company); (ii) purchase, redeem or otherwise acquire or retire for value any Equity Interests of the Company, any of its Restricted Subsidiaries or any Affiliate of the Company (other than any such Equity Interests owned by the Company or any of its Restricted Subsidiaries); (iii) make any principal payment on, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness ("Subordinated Debt") of the Company or any Restricted Subsidiary that is subordinated by its terms to the Notes or the Subsidiary Guarantees (other than Indebtedness owed to the Company or any Restricted Subsidiary), except, in each case, payment of interest or principal at Stated Maturity; or (iv) make any Restricted Investment (all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as "Restricted Payments"); unless, at the time of and after giving effect to such Restricted Payment (the amount of any such Restricted Payment, if other than cash, shall be the fair market value (as conclusively evidenced by a Board Resolution) of the asset(s) proposed to be transferred by the Company or such Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment): (A) no Default or Event of Default shall have occurred and be continuing after giving effect thereto; and (B) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the most recently ended four full fiscal quarters for which financial statements have been filed with the SEC pursuant to Section 4.04 immediately preceding the date of such Restricted Payment, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.06(a) and (C) such Restricted Payment, together with the aggregate of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the Existing Notes Issue Date (excluding Restricted Payments permitted by Section 61 4.07(b)(ii) (to the extent paid to the Company or any of its Restricted Subsidiaries or to the extent such distributions are deducted as a minority interest in calculating Consolidated Net Income), Section 4.07(b)(iii), Section 4.07(b)(iv), Section 4.07(b)(v), Section 4.07(b)(vii), Section 4.07(b)(x), Section 4.07(b)(xiv) and Section 4.07(b)(xvi) and 50% of any Restricted Payments permitted by Section 4.07(b)(viii)), is less than the sum, without duplication, of: (i) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing on April 1, 1999, to the end of the Company's most recently ended fiscal quarter for which financial statements have been filed with the SEC pursuant to Section 4.04 at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus (ii) 100% of the aggregate net cash proceeds received by the Company or any of its Restricted Subsidiaries from the issue or sale (other than to a Subsidiary or Joint Venture of the Company) after the Existing Notes Issue Date of Qualified Equity Interests of the Company or of debt securities of the Company or any of its Restricted Subsidiaries that have been converted into or exchanged for such Qualified Equity Interests of the Company, plus (iii) to the extent that any Restricted Investment (other than a Restricted Investment permitted to be made pursuant to Section 4.07(b)(vii) or Section 4.07(b)(viii) below) that was made after the Existing Notes Issue Date is sold for cash or otherwise liquidated, repaid or otherwise reduced, including by way of dividend (to the extent not included in calculating Consolidated Net Income), for cash, the lesser of (A) the cash return with respect to such Restricted Investment (less the cost of disposition, if any) and (B) the initial amount of such Restricted Investment plus (iv) an amount equal to the sum of (A) the net reduction in Investments in Unrestricted Subsidiaries resulting from dividends, repayments of loans or other transfers of assets (to the extent not included in calculating Consolidated Net Income), in each case to the Company or any Restricted Subsidiary from Unrestricted Subsidiaries and (B) the portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets of an 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 Unrestricted Subsidiary, the amount of Restricted Investments (other than Restricted Investments permitted to be made pursuant to Section 4.07(b)(vii) or Section 4.07(b)(viii) below) previously made after the Existing Notes Issue Date by the Company or any Restricted Subsidiary in such Unrestricted Subsidiary. 62 (b) If, other than with respect to payments made under Section 4.07(b)(i) and Section 4.07(b)(xiv) below, no Default or Event of Default shall have occurred and be continuing after giving effect to such Restricted Payment, the foregoing provisions will not prohibit the following Restricted Payments: (i) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of the Indenture; (ii) dividends or distributions by any Restricted Subsidiary of the Company payable (x) to all holders of a class of Capital Stock of such Restricted Subsidiary on a pro rata basis or on a basis that is more favorable to the Company; provided that at least 50% of such class of Capital Stock is held by the Company and/or one or more of its Restricted Subsidiaries or (y) to all holders of a class of Preferred Stock of a Restricted Subsidiary that is not a Subsidiary Guarantor issued after the Issue Date in compliance with Section 4.06; (iii) the payment of cash dividends on any series of Disqualified Stock issued after the Existing Notes Issue Date in an aggregate amount not to exceed the cash received by the Company since the Existing Notes Issue Date upon issuance of such Disqualified Stock; (iv) the redemption, repurchase, retirement or other acquisition of any Equity Interests of the Company, any Restricted Subsidiary or any Joint Venture (or the acquisition of all the outstanding Equity Interests of any Person that conducts no operations and has no assets or liabilities other than the ownership of Equity Interests in a Joint Venture) in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary or Joint Venture of the Company) of, Qualified Equity Interests of the Company; provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement or other acquisition shall be excluded from clause (C)(ii) of Section 4.07(a); (v) the defeasance, redemption or repurchase of Subordinated Debt with the net cash proceeds from an incurrence of Permitted Refinancing or in exchange for or out of the net cash proceeds from the substantially concurrent sale (other than to a Subsidiary or Joint Venture of the Company) of Qualified Equity Interests of the Company; provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement or other acquisition shall be excluded from clause (C)(ii) of Section 4.07(a); (vi) the repurchase, redemption or other acquisition or retirement for value of (x) any Equity Interests of the Company or any Subsidiary of the Company held by any member of the Company's (or any of its Subsidiaries') management pursuant to any management equity subscription agreement or stock option agreement or (y) any Equity Interests of the Company that are or are intended to be used to satisfy issuances of Equity Interests upon exercise of 63 employee or director stock options or upon exercise or satisfaction of other similar instruments outstanding under employee or director benefit plans of the Company or any Subsidiary of the Company; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $5.0 million in any fiscal year of the Company; (vii) Restricted Investments in any of the Specified Joint Ventures (including without limitation, the purchase of Equity Interests of a Specified Joint Venture directly from another Person or the purchase of all the outstanding Equity Interests of any Person that conducts no operations and has no assets or liabilities other than the ownership of Equity Interests of a Specified Joint Venture) to the extent that the proceeds thereof are used to purchase or redeem an interest of another Person in such Specified Joint Venture (other than the Company, a Restricted Subsidiary or an Affiliate of the Company, except a Person that is deemed to be an Affiliate solely by virtue of its ownership of Equity Interests of the Company acquired in exchange for Equity Interests in such Specified Joint Venture); provided that after giving pro forma effect thereto as if such Restricted Payment (and any related incurrence of Indebtedness) had been made at the beginning of the most recently ended four-full-fiscal- quarter period for which financial statements have been filed with the SEC pursuant to Section 4.04 immediately preceding the date of such Restricted Payment, the Company would have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.06(a); (viii) Restricted Investments in any Joint Venture made during any fiscal year of the Company or within 45 days after the end of such fiscal year in amounts that, together with all other Restricted Investments made in such Joint Venture in respect of such fiscal year in reliance on this Section 4.07(b)(viii) during such fiscal year or within 45 days after the end of such fiscal year, do not exceed the amount of dividends or distributions previously paid in respect of such fiscal year to the Company or any Restricted Subsidiary by such Joint Venture; (ix) the payment of dividends on the Company's common stock in an aggregate amount per annum not to exceed the product of (i) $0.90 and (ii) the sum, without duplication, of (w) the number of shares outstanding on the day prior to the Existing Notes Issue Date plus (x) 40,250,000 plus (y) if the Company issues shares of its common stock after the Existing Notes Issue Date, to the extent (1) such shares are issued in 64 exchange for or (2) the net cash proceeds therefrom are used substantially concurrently to acquire Equity Interests (held by a Person other than the Company, a Restricted Subsidiary or an Affiliate of the Company, except a Person that is deemed to be an Affiliate solely by virtue of its ownership of Equity Interests of the Company acquired in exchange for Equity Interests in such Specified Joint Venture) of a Specified Joint Venture that immediately prior to such issuance was or as a result of such exchange or acquisition becomes a Restricted Subsidiary (and such Specified Joint Venture is not subsequently designated as an Unrestricted Subsidiary), such number of shares of common stock plus (z) the sum of (1) 1,000,000 and (2) such number of shares of common stock of the Company as have been or are issued after the Existing Notes Issue Date pursuant to the exercise of employee or director stock options granted prior to the Existing Notes Issue Date or issued after the Existing Notes Issue Date pursuant to other employee or director benefit plans of the Company or any of its Restricted Subsidiaries or issuable pursuant to the exercise of employee or director stock options granted after the Existing Notes Issue Date; provided that the aggregate number of shares includable pursuant to this clause (z)(2) with respect to shares issued or issuable during any fiscal year of the Company shall not exceed 1,000,000; provided further that the number of shares referred to in clauses (y) and (z) shall be adjusted to reflect any stock split (or reverse stock split) or stock dividend made after the Issue Date and prior to the date such shares were issued; (x) distributions or payments of Receivables Fees; (xi) (A) Investments in any Joint Venture or Unrestricted Subsidiary organized to construct, own and/or operate a propylene oxide plant in the European Union in an aggregate amount that, together with all other Investments made pursuant to this Section 4.07(b)(xi), does not exceed $100.0 million and (B) the pledge of the Capital Stock of such Joint Venture or Unrestricted Subsidiary or of a Joint Venture Subsidiary that has no assets and conducts no operations other than the holding directly or indirectly of Equity Interests of such Joint Venture to secure Non-Recourse Debt of such Joint Venture or Unrestricted Subsidiary; (xii) (A) (x) the transfer of the TDI Assets to a newly formed Joint Venture or Unrestricted Subsidiary or (y) the designation of any Restricted Subsidiary that has no assets or liabilities other than all or a portion of the TDI Assets as an Unrestricted Subsidiary, in each case, in connection with the incurrence of Indebtedness by such Joint Venture or Unrestricted Subsidiary or Rhodia or a wholly-owned subsidiary of Rhodia to improve the Rhodia TDI Plant and (B) the pledge of the Capital Stock of such Joint Venture or 65 Unrestricted Subsidiary or of a Joint Venture Subsidiary that has no assets and conducts no operations other than the holding directly or indirectly of Equity Interests of such Joint Venture to secure Non-Recourse Debt of such Joint Venture or Unrestricted Subsidiary or Rhodia or a wholly-owned subsidiary of Rhodia; (xiii) the repurchase of any Subordinated Debt at a purchase price not greater than 101% of the principal amount thereof in the event of (x) a Change of Control pursuant to a provision no more favorable to the holders thereof than the provisions of Section 4.14 or (y) an Asset Sale pursuant to a provision no more favorable to the holders thereof than the provisions of Section 4.09; provided that, in each case, prior to such repurchase the Company has made a Change of Control Offer or Asset Sale Offer, as applicable, and repurchased all Notes that were validly tendered for payment in connection with such Change of Control Offer or Asset Sale Offer; (xiv) distributions by any Restricted Subsidiary or Joint Venture of chemicals to a holder of Capital Stock of such Restricted Subsidiary or Joint Venture if such distributions are made pursuant to a provision in a joint venture agreement or other arrangement entered into in connection with the establishment of such Joint Venture or Restricted Subsidiary that requires such holder to pay a price for such chemicals equal to that which would be paid in a comparable transaction negotiated on an arm's-length basis (or pursuant to a provision that imposes a substantially equivalent requirement); (xv) any other Restricted Payment that, together with all other Restricted Payments made pursuant to this Section 4.07(b)(xv) on or after the Existing Notes Issue Date, does not exceed $25 million (after giving effect to any subsequent reduction in the amount of any Investments made pursuant to this Section 4.07(b)(xv) as a result of the repayment or other disposition thereof for cash as set forth in clause (iii) of the first paragraph above, the amount of such reduction not to exceed the amount of such Investments previously made pursuant to this Section 4.07(b)(xv)); and (xvi) dividends or distributions by any Joint Venture (other than a Specified Joint Venture) to all holders of a class of Capital Stock of such Joint Venture permitted by Section 4.07(b)(ii)(x) above; provided that after giving effect to such dividends or distributions and any related transactions, the Joint Venture making such dividends or distributions to such holders is contractually entitled to receive, and receives within 180 days before or after the date of such dividends or distributions, directly or indirectly, an equivalent or larger cash payment from each such holder (other than from a holder that is the Company or any Restricted Subsidiary) or from an Affiliate of such holder, which cash payment has not been previously applied pursuant to this Section 4.07(b)(xvi) to offset any other dividend or distribution by such Joint Venture to such holder and (y) such dividends or distributions do not exceed such holders' pro rata share of the Joint Venture's cash flows from operating activities, minus any non- cash charge to the extent that it represents an accrual of or reserve for cash 66 expenditures in any future period or amortization of a prepaid cash expense in any future period. (c) The Board of Directors of the Company may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if such designation would not cause a Default. For purposes of making such determination, all outstanding Investments by the Company and its Restricted Subsidiaries in the Subsidiary so designated will be deemed to be Restricted Payments at the time of such designation and will reduce the amount available for Restricted Payments Section 4.07(a) (except to the extent such Investments were repaid in cash, and, in the case of a Joint Venture (and any Subsidiary of a Joint Venture) designated as an Unrestricted Subsidiary on the first day that it is a Subsidiary of the Company, except to the extent that (1) such Investments were made after the Existing Notes Issue Date or (2) in the case of a Specified Joint Venture, such Investments were made prior to the Existing Notes Issue Date). All such outstanding Investments (except as provided in the parenthetical included in the preceding sentence) will be deemed to constitute Investments in an amount equal to the fair market value of such Investments at the time of such designation (as conclusively determined by the Board of Directors). Such designation will only be permitted if any such Restricted Payment would be permitted at such time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. In the case of any designation by the Company of a Person as an Unrestricted Subsidiary on the first day that such Person is a Subsidiary of the Company in accordance with the provisions of the Indenture, such designation shall be deemed to have occurred for all purposes of the Indenture simultaneously with, and automatically upon, such Person becoming a Subsidiary. (d) Not later than the date of making any Restricted Payment, other than those permitted by Sections 4.07(b)(ii)(x), 4.07(b)(vi), 4.07(b)(x) and 4.07(b)(xiv) above, and not later than the 120th day after making any Restricted Payment permitted by Section 4.07(b)(vi) above, the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this Section 4.07 were computed. (e) For purposes of this covenant, any payment made on or after the Existing Notes Issue Date but prior to the Issue Date shall be deemed to be a "Restricted Payment" to the extent such payment would have been a Restricted Payment had the Indenture been in effect at the time of such payment (and, to the extent that any such Restricted Payment was permitted by clauses (b)(i) through (xvi) above, such Restricted Payment may be deemed by the Company to have been made pursuant to such clause). Section 4.08. Limitation on Dividend and other Payment Restrictions Affecting Restricted Subsidiaries and Joint Ventures. (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any restriction on the ability of any Restricted Subsidiary to: (i) (A) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (1) on its Capital Stock, or (2) with respect 67 to any other interest or participation in, or measured by, its profits, or (B) pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries; (ii) make loans or advances to the Company or any of its Restricted Subsidiaries; or (iii) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries; except for such restrictions existing under or by reason of: (a) existing agreements as in effect on the Issue Date; (b) Indebtedness permitted by the Indenture to be incurred containing restrictions on the ability of Restricted Subsidiaries to consummate transactions of the types described in clause (i), (ii) or (iii) above not materially more restrictive than those contained in the Indenture; (c) the Indenture; (d) applicable law; (e) existing restrictions with respect to a Person acquired by the Company or any of its Restricted Subsidiaries (except to the extent such restrictions were put in place in connection with or in contemplation of such acquisition), which restrictions are not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired; (f) customary non-assignment provisions in leases and other agreements entered into in the ordinary course of business; (g) construction loans and purchase money obligations (including Capital Lease Obligations) for property acquired in the ordinary course of business that impose restrictions of the nature described in clause (iii) above on the property so constructed or acquired; (h) in the case of clause (iii) above, restrictions contained in security agreements or mortgages securing Indebtedness of a Restricted Subsidiary to the extent such restrictions restrict the transfer of the property subject to such security agreements or mortgages; (i) a Permitted Refinancing, provided that the restrictions contained in the agreements governing such Permitted Refinancing are not materially more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced (as conclusively evidenced by a Board Resolution); (j) customary restrictions on a Finance Subsidiary imposed in such Finance Subsidiary's organizational documents or by the terms of its Preferred Stock; 68 (k) any restriction with respect to shares of Capital Stock of a Restricted Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of such shares of Capital Stock or any restriction with respect to the assets of a Restricted Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of such assets or all or substantially all the Capital Stock of such Restricted Subsidiary pending the closing of such sale or disposition; (l) in the case of any Restricted Subsidiary that is a Joint Venture, customary restrictions on such Restricted Subsidiary contained in its joint venture agreement, which restrictions are consistent with the past practice of the Company and its Restricted Subsidiaries (as conclusively evidenced by a Board Resolution); (m) existing restrictions with respect to a Specified Joint Venture or the property or assets thereof or a Subsidiary of a Specified Joint Venture or the property or assets thereof, in each case, at the time such Specified Joint Venture first becomes a Restricted Subsidiary (except to the extent such restrictions were put in place in connection with or in contemplation of such Specified Joint Venture becoming a Restricted Subsidiary), which restrictions are not applicable to any Person, or the properties or assets of any Person, other than such Specified Joint Venture or the property or assets thereof or a Subsidiary of such Specified Joint Venture or the property or assets thereof; and (n) the Existing Credit Facility and related documentation as the same is in effect on the Issue Date and as amended, modified, extended, renewed, refunded, refinanced, restated or replaced from time to time; provided that the Existing Credit Facility and related documentation as so amended, modified, extended, reviewed, refunded, refinanced, restated or replaced is not materially more restrictive, taken as a whole, as to the matters enumerated above than the Existing Credit Facility and related documentation as in effect on the Issue Date (as conclusively evidenced by a Board Resolution). For purposes of determining compliance with this covenant, in the event that a restriction meets the criteria of more than one of the categories of permitted restrictions described in clauses (a) through (n) above, the Company shall, in its sole discretion, classify such restriction in any manner that complies with this covenant, and such restriction will be treated as existing pursuant to the clauses designated by the Company. (b) The Company will use best efforts (consistent with its contractual obligations and fiduciary duties to any Joint Venture, in each case, as in effect on the Issue Date) not to permit any of its Joint Ventures that are not Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any restriction on the ability of such Joint Venture to: (i) (A) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or (2) with respect to any other interest or participation in, or measured by, its profits or (B) pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries; 69 (ii) make loans or advances to the Company or any of its Restricted Subsidiaries; or (iii) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries; except for such restrictions existing under or by reason of: (a) such Joint Venture's joint venture agreement or its credit facility (provided that in each case such restrictions are consistent with the past practice of the Company); (b) in the case of any Joint Venture existing on the Issue Date, its existing agreements as in effect on the date of the Indenture and as amended, modified, extended, restated or replaced from time to time; provided that no such amendment, modification, extension, restatement or replacement results in agreements that are materially more restrictive, taken as a whole, as to the matters enumerated above than the existing agreements as in effect on the date of the Indenture (as conclusively evidenced by a Board Resolution); (c) in the case of LCR, any instrument governing its Indebtedness; and (d) the restrictions described in clauses (d), (e), (f), (g), (h), (j), (k) and (n) of Section 4.08(a) (assuming that references in clauses (h) and (k) to a Restricted Subsidiary were references to a Joint Venture). Section 4.09. Limitation on Sales of Assets. (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless: (i) the Company and/or the Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the fair market value (as conclusively evidenced by a Board Resolution set forth in an Officers' Certificate delivered to the Trustee) of the assets or Equity Interests issued or sold or otherwise disposed of; and (ii) at least 80% of the consideration therefor received by the Company and/or such Restricted Subsidiary is in the form of (A) cash or Cash Equivalents or (B) a controlling interest or a joint venture interest (to the extent otherwise permitted by the Indenture) in a business engaged in a Permitted Business or long-term property or assets that are used or useful in a Permitted Business; provided that the amount of (x) any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet) of the Company or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Notes or any guarantee thereof) that are assumed 70 by the transferee of any such assets pursuant to a customary novation agreement that releases the Company or such Restricted Subsidiary from further liability and (y) any securities, notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are promptly converted by the Company or such Restricted Subsidiary into cash (to the extent of the cash received), shall be deemed to be cash for purposes of this provision. (b) Within 360 days after the receipt of any Net Proceeds from an Asset Sale, the Company may apply such Net Proceeds, at its option: (i) to permanently repay Senior Indebtedness (and to correspondingly reduce commitments with respect thereto in the case of revolving borrowings) of the Company or a Subsidiary Guarantor or Indebtedness (and to correspondingly reduce commitments with respect thereto in the case of revolving borrowings) of any Restricted Subsidiary that is not a Subsidiary Guarantor; provided that, so long as the provisions of Section 4.12 are in effect, only repayment of Senior Indebtedness incurred under the Existing Credit Facility (but not any refinancing thereof other than a credit facility with commercial banks and other lenders) shall constitute a repayment of Indebtedness permitted pursuant to this clause (i); or (ii) to acquire a controlling interest or a joint venture interest (to the extent otherwise permitted by the Indenture) in another business or, the making of a capital expenditure or the acquisition of other long-term assets, in each case, in a Permitted Business (or enter into a binding commitment for any such expenditure or acquisition); provided that such binding commitment shall be treated as a permitted application of Net Proceeds from the date of such commitment until and only until the earlier of (x) the date on which such expenditure or acquisition is consummated and (y) the 180th day following the expiration of the aforementioned 360 day period. If the expenditure or acquisition contemplated by such binding commitment is not consummated on or before such 180th day and the Company shall not have applied such Net Proceeds pursuant to clause (i) above on or before such 180th day, such commitment shall be deemed not to have been a permitted application of Net Proceeds at any time; provided that, so long as the provisions of Section 4.12 are in effect, the Company may not apply Net Proceeds of a Significant Asset Sale pursuant to clause (ii) above to satisfy its obligations to apply such proceeds pursuant to this paragraph except to the extent that the provisions of the Existing Credit Facility (but not any refinancing thereof other than a credit facility with commercial banks and other lenders) require a mandatory prepayment from such proceeds but the requisite lenders thereunder have waived such mandatory prepayment. Pending the final application of any such Net Proceeds, the Company may temporarily reduce the revolving Indebtedness under the Existing Credit Facility or otherwise invest such Net Proceeds in any manner that is not prohibited by the Indenture. 71 Any Net Proceeds from Asset Sales that are not applied or invested as provided in the first sentence of this Section 4.09(b) will be deemed to constitute "Excess Proceeds." (c) When the aggregate amount of Excess Proceeds exceeds $25 million, the Company will be required to make an offer to all Holders of Notes (an "Asset Sale Offer") to purchase the maximum principal amount of Notes and, (x) if the Company is required to do so under the terms of any other Indebtedness ranking pari passu with such Notes, such other Indebtedness, and (y) if the Company elects to do so, any Existing ARCO Chemical Debt, on a pro rata basis with the Notes, that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the date of purchase, in accordance with the procedures set forth herein. To the extent that the aggregate amount of Notes (and any other pari passu Indebtedness subject to such Asset Sale Offer) tendered pursuant to such Asset Sale Offer is less than the Excess Proceeds, the Company may, subject to the other terms of the Indenture, use any remaining Excess Proceeds for general corporate purposes. If the aggregate principal amount of Notes surrendered by Holders thereof in connection with an Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on a pro rata basis. Upon completion of the offer to purchase made under the Indenture, the amount of Excess Proceeds shall be reset at zero. (d) The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with any Asset Sale Offer. Section 4.10. Limitation on Affiliate Transactions. (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make any contract, agreement, understanding, loan, advance or Guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (i) such Affiliate Transaction is on an arm's-length basis and (ii) the Company delivers to the Trustee (a) with respect to any Affiliate Transaction involving aggregate consideration in excess of $10 million, a Board Resolution set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with clause (i) above and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors and (b) with respect to any Affiliate Transaction involving aggregate consideration in excess of $25 million, an opinion as to the fairness to the Company or such Restricted Subsidiary of such Affiliate Transaction from a financial point of view issued by an investment banking firm of national standing; provided that: (i) transactions or payments pursuant to any employment arrangements or employee, officer or director benefit plans or arrangements entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business; 72 (ii) transactions between or among the Company and/or its Restricted Subsidiaries; (iii) any Restricted Payment permitted by Section 4.07 of the type described in clause (i) or (ii) of the first paragraph thereof; (iv) customary loans, advances, fees and compensation paid to, and indemnity provided on behalf of, officers, directors, employees or consultants of the Company or any of its Restricted Subsidiaries; (v) transactions entered into on an arm's-length basis in the ordinary course of business between the Company or any of its Restricted Subsidiaries and any Joint Venture; (vi) sales (including a sale in exchange for a promissory note of or Equity Interest in such Accounts Receivable Subsidiary) of accounts receivable and the provision of billing, collection and other services in connection therewith, in each case, to an Accounts Receivable Subsidiary in connection with any Receivables Facility; and (vii) transactions pursuant to any contract or agreement in effect on the date of the Indenture as the same may be amended, modified or replaced from time to time so long as any such contract or agreement as so amended, modified or replaced is, taken as a whole, no less favorable to the Company and its Restricted Subsidiaries than the contract or agreement as in effect on the date of the Indenture (as conclusively evidenced by a Board Resolution); in each case, shall not be deemed to be Affiliate Transactions and therefore not subject to the requirements of clauses (i) and (ii) of the initial sentence above. Section 4.11. Limitation on Liens. (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien (except Permitted Liens) on any asset now owned or hereafter acquired, or any income or profits therefrom, unless all payments due under the Indenture and the Notes or the Subsidiary Guarantees are secured on an equal and ratable basis with the obligations so secured (or, if such obligations are subordinated by their terms to the Notes or the Subsidiary Guarantees, prior to the obligations so secured) until such time as such obligations are no longer so secured. (b) The Company and its Subsidiaries shall also comply with the provisions of Section 4.12(a) until such provisions cease to be in effect pursuant to Section 4.12(b). Section 4.12. Equal and Ratable Liens. (a) To the extent the Company or any Subsidiary of the Company grants a Lien upon any of its property or assets to secure the Existing Credit Facility Obligations, the Company or such Subsidiary, as the case may be, shall, contemporaneously with the granting of such Lien, secure the Indenture Obligations equally and ratably with the Existing Credit Facility Obligations secured by such Lien. 73 (b) Notwithstanding the foregoing, from and after the date when all Liens granted in favor of the holders of Existing Credit Facility Obligations are released (and are not concurrently replaced with any new Liens on any asset of the Company or any of its Restricted Subsidiaries securing Existing Credit Facility Obligations), the provisions of this Section 4.12 will no longer apply. The provisions of Section 4.11 will, however, continue to apply. Section 4.13. No Amendment to Subordination Provisions. The Company will not amend, modify or alter the Senior Subordinated Notes Indenture in any way that would (i) increase the principal of, advance the final maturity date of or shorten the Weighted Average Life to Maturity of any Senior Subordinated Notes such that the final maturity date of the Senior Subordinated Notes is earlier than the 91st day following the final maturity date of the Notes or (ii) amend the subordination provisions of the Senior Subordinated Notes Indenture or any of the defined terms used therein in a manner that would be adverse to the holders of the Notes. Section 4.14. Repurchase of Notes upon a Change in Control. (a) Upon the occurrence of a Change of Control, each Holder will have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the offer described below (the "Change of Control Offer") at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the date of purchase (the "Change of Control Payment") on a date that is not more than 90 days after the occurrence of such Change of Control (the "Change of Control Payment Date"). Within 30 days following any Change of Control, the Company will mail, or at the Company's request the Trustee will mail, a notice to each Holder offering to repurchase the Notes held by such Holder pursuant to the procedures specified in such notice. (b) The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control. (c) On the Change of Control Payment Date, the Company will, to the extent lawful, (1) accept for payment all Notes or portions thereof properly tendered and not withdrawn pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered, and (3) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officer's Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Company. The Paying Agent will promptly mail to each Holder of Notes so tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such Note will be in a principal amount of $1,000 or an integral multiple thereof. 74 (d) The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer at the same or a higher purchase price, at the same times and otherwise in substantial compliance with the requirements applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer. Section 4.15. Limitation on Sale and Leaseback Transactions. The Company will not, and will not permit any of its Restricted Subsidiaries to, enter into any Sale and Leaseback Transaction; provided that the Company or any Restricted Subsidiary may enter into a Sale and Leaseback Transaction if: (a) the Company or such Restricted Subsidiary, as the case may be, could have (i) incurred Indebtedness in an amount equal to the Attributable Debt relating to such Sale and Leaseback Transaction pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.06(a) (whether or not such covenant has ceased to be otherwise in effect pursuant to Section 4.18) and (ii) incurred a Lien to secure such Indebtedness pursuant to Section 4.11 without securing the Notes; and (b) the gross cash proceeds of such Sale and Leaseback Transaction are at least equal to the fair market value (as conclusively determined by the Board of Directors) of the property that is the subject of such Sale and Leaseback Transaction. Section 4.16. Limitation on Line of Business. The Company will not, and will not permit any of its Restricted Subsidiaries to, engage in any business other than Permitted Businesses, except to such extent as would not be material to the Company and its Subsidiaries taken as a whole. Section 4.17. Limitation on Accounts Receivable Facilities. The Company may, and any of its Restricted Subsidiaries may, sell (including a sale in exchange for a promissory note of or an Equity Interest in such Accounts Receivable Subsidiary) at any time and from time to time, accounts receivable to any Accounts Receivable Subsidiary; provided that the aggregate consideration received in each such sale is at least equal to the aggregate fair market value of the receivables sold. Section 4.18. Limited Applicability of Covenants when Notes are Rated Investment-Grade. Notwithstanding the foregoing, the Company's and its Restricted Subsidiaries' obligations to comply with the provisions of Sections 4.06, 4.07, 4.08, 4.09, 4.10, 4.16, 4.17 and 4.22 will terminate and cease to have any further effect from and after the first date when the Notes are rated Investment Grade. Section 4.19. Existence. Subject to Articles 4 and 5 of this Indenture, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its existence and the existence of each of its Restricted Subsidiaries in accordance with the respective organizational documents of the Company and each such Subsidiary and the rights (whether pursuant to charter, partnership certificate, agreement, statute or otherwise), material licenses and franchises of the Company and each such Subsidiary; provided that the Company shall not be required by this Section 4.19 to preserve any such right, license or franchise, or the existence of any Restricted Subsidiary, if the Company shall determine that the maintenance or preservation thereof 75 is no longer desirable in the conduct of the business of the Company and its Restricted Subsidiaries taken as a whole. Section 4.20. Payment of Taxes and Other Claims. The Company will pay or discharge and shall cause each of its Restricted Subsidiaries to pay or discharge, or cause to be paid or discharged, before the same shall become delinquent (a) all material taxes, assessments and governmental charges levied or imposed upon (i) the Company or any such Subsidiary, (ii) the income or profits of any such Subsidiary which is a corporation or (iii) the property of the Company or any such Subsidiary and (b) all material lawful claims for labor materials and supplies that, if unpaid, might by law become a lien upon the property of the Company or any such Subsidiary; provided that the Company shall not be required to pay or discharge, or cause to be paid or discharged, any such tax, assessment, charge or claim the amount, applicability or validity of which is being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP. Section 4.21. Maintenance of Properties and Insurance. The Company will cause all material assets necessary in the conduct of its business or the business of any of its Restricted Subsidiaries, to be maintained and kept in good condition, repair and working order (ordinary wear and tear excepted) and will cause to be made all necessary repairs, renewals and replacements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly conducted at all times; provided that nothing in this Section 4.21 shall prevent the Company or any such Subsidiary from discontinuing the use, operation or maintenance of any of such assets or disposing or abandoning of any of them, if such discontinuance, disposal or abandonment is, in the judgment of the Company, desirable in the conduct of the business of the Company or such Subsidiary. The Company will maintain, and will cause each of its Restricted Subsidiaries to maintain (either in the Company's name or in such Subsidiary's own name) insurance on all their respective properties consistent with the insurance maintained on the Issue Date or otherwise in at least such amounts (with no materially greater risk retention) and against at least such risks as are usually maintained, retained or insured against in the same general area by companies of established repute owning similar properties in such area and engaged in the same or a similar business, in either case, to the extent available to the Company and its Restricted Subsidiaries on commercially reasonable terms. Section 4.22. Limitation on Issuance of Guarantees by Restricted Subsidiaries. (a) The Company will not permit any Restricted Subsidiary that is not a Subsidiary Guarantor, directly or indirectly, to Guarantee or secure the payment of any other Indebtedness of the Company or any of its Restricted Subsidiaries (except Indebtedness of such Restricted Subsidiary or a Restricted Subsidiary of such Restricted Subsidiary) unless (i) such Restricted Subsidiary simultaneously executes and delivers a supplemental indenture in the form of Exhibit B hereto providing for the Guarantee of the payment of the Notes by such Restricted Subsidiary and shall deliver an Opinion of Counsel to the Trustee pursuant to paragraph (c) below; provided that this paragraph shall not be applicable to (x) any Guarantee of any Restricted Subsidiary that existed at the time such Person became a Restricted Subsidiary and was not incurred in connection 76 with, or in contemplation of, such Person's becoming a Restricted Subsidiary, (y) Guarantees of Indebtedness of a Restricted Subsidiary that is a Foreign Subsidiary by a Restricted Subsidiary that is a Foreign Subsidiary or (z) the granting of Liens by a Joint Venture Subsidiary to secure Indebtedness under the Existing Credit Facility, the Existing Senior Secured Notes and the Notes. If the Notes are (A) pari passu with the Guaranteed Indebtedness, then the Subsidiary Guarantee shall be pari passu with, or senior to, the guarantee of such Guaranteed Indebtedness or (B) senior to the Guaranteed Indebtedness, then the Subsidiary Guarantee shall be senior to the guarantee of such Guaranteed Indebtedness at least to the extent that the Notes are senior to such Guaranteed Indebtedness. (b) Notwithstanding the foregoing, each Subsidiary Guarantee by a Restricted Subsidiary shall be automatically and unconditionally released and discharged upon (i) any sale, exchange or transfer, to any Person not an Affiliate of the Company, of all the Company's and each Restricted Subsidiary's Capital Stock in such Restricted Subsidiary (which sale, exchange or transfer is not prohibited by the Indenture) as provided in Section 5.03(b), (ii) the release or discharge of the Guarantee which resulted in the creation of such Subsidiary Guarantee (or, in the case of the Subsidiary Guarantees of ARCO Chemical Technology, Inc., ARCO Chemical Technology, L.P. and Lyondell Chemical Nederland, Ltd. issued on the Issue Date, the release or discharge of its Guarantee of Indebtedness under the Existing Credit Facility and the Existing Senior Secured Notes), except a discharge or release by or as a result of payment under such Guarantee, and (iii) the designation of such Restricted Subsidiary as an Unrestricted Subsidiary in accordance with the terms of the Indenture. (c) The Opinion of Counsel described above shall be to the effect that such supplemental indenture has been duly authorized, executed and delivered by such Subsidiary and constitutes a valid and binding obligation of such Subsidiary, enforceable against such Subsidiary in accordance with its terms (subject to customary exceptions). Section 4.23. Payments for Consents. Neither the Company nor any of its Subsidiaries or Affiliates will, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder of any Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture or the Notes unless such consideration is offered to be paid or agreed to be paid to all Holders of the Notes that consent, waive or agree to amend such term or provision in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. ARTICLE 5 Consolidation, Merger or Sale of Assets Section 5.01. Consolidation, Merger or Sale of Assets by the Company. (a) The Company may not consolidate or merge with or into (whether or not the Company is the surviving corporation), or sell, assign, transfer, convey or otherwise dispose of all or 77 substantially all its assets in one or more related transactions, to another corporation, Person or entity unless: (i) the Company is the surviving corporation or the entity or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia; (ii) the corporation formed by or surviving any such consolidation or merger (if other than the Company) or the corporation to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all the Obligations of the Company under the Notes, the Indenture and the Security Documents to which it is a party pursuant to a supplemental indenture in form reasonably satisfactory to the Trustee; (iii) immediately after such transaction no Default or Event of Default exists; and (iv) the company the entity or Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made (A) will have a Consolidated Net Worth immediately after the transaction equal to or greater than the Consolidated Net Worth of the Company immediately preceding the transaction and (B) except with respect to a consolidation or merger of the Company with or into a Person that has no outstanding Indebtedness, will, at the time of such transaction and after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.06(a). The foregoing shall not prohibit the merger or consolidation of a Wholly Owned Restricted Subsidiary with the Company; provided that, in connection with any such merger or consolidation, no consideration (other than common stock in the surviving Person or the Company) shall be issued or distributed to the stockholders of the Company. (b) The Company will not lease all or substantially all its assets to another Person. Section 5.02. Successor Company Substituted. (a) Except as provided in Section 5.02(b), upon any consolidation or merger, or any sale, assignment, transfer, conveyance or other disposition of all or substantially all the assets of the Company in accordance with Section 5.01 hereof, the successor corporation formed by such consolidation or into or with which the Company is merged or to which such sale, assignment, transfer, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, assignment, transfer, conveyance or other disposition, the provisions of this Indenture referring to the "Company" shall refer instead to the successor corporation), and may 78 exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and the predecessor Company shall be released from all its obligations hereunder and under the Notes. (b) The sale, assignment, transfer, lease, conveyance or other disposition by the Company of all or substantially all its property or assets taken as a whole to one or more of the Company's Subsidiaries shall not relieve the Company from its obligations under the Indenture and the Notes. Section 5.03. Consolidation, Merger or Sale of Assets by a Subsidiary Guarantor. (a) No Subsidiary Guarantor may consolidate with or merge with or into (whether or not such Subsidiary Guarantor is the surviving Person), another corporation, Person or entity whether or not affiliated with such Subsidiary Guarantor unless: (i) subject to the provisions of Section 5.03(b) below, the Person formed by or surviving any such consolidation or merger (if other than the Company or such Subsidiary Guarantor) assumes all the obligations of such Subsidiary Guarantor, pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee, under the Notes; (ii) immediately after giving effect to such transaction, no Default or Event of Default exists; and (iii) the Company would, at the time of such transaction and after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period, (A) have a Consolidated Net Worth immediately after the transaction equal to or greater than the Consolidated Net Worth of the Company immediately preceding the transaction and (B) except with respect to a consolidation or merger with a Person that has no outstanding Indebtedness, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in 4.06(a). All the Subsidiary Guarantees issued pursuant to clause (i) above shall in all respects have the same legal rank and benefit under this Indenture as the Subsidiary Guarantees theretofore and thereafter issued in accordance with the terms of this Indenture as though all such Subsidiary Guarantees had been issued at the date of the execution hereof. (b) (i) The requirements of clauses (i) and (iii) of Section 5.03(a) will not apply in the case of a consolidation with or merger with or into the Company and the requirements of clause (iii) of Section 5.03(a) will not apply in the case of a consolidation with or merger with or into another Subsidiary Guarantor. (ii) In the event of a sale or other disposition, by way of merger, consolidation or otherwise, of all the Capital Stock of any Subsidiary Guarantor to any Person that is not an Affiliate of the Company permitted by the applicable provisions of 79 the Indenture, such Subsidiary Guarantor will be released and relieved of any obligations under its Subsidiary Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Indenture. Section 5.04. Opinion of Counsel to Trustee. The Trustee, subject to the provisions of Sections 7.01 and 7.03, may receive an Opinion of Counsel as conclusive evidence that any such consolidation, merger, conveyance, sale, transfer, lease, exchange or other disposition referred to in Section 5.01 or 5.03 complies with the applicable provisions of this Indenture. ARTICLE 6 Remedies Section 6.01. Events of Default. Each of the following constitutes an "Event of Default": (a) a default in the payment of interest or any Liquidated Damages on the Notes when due, which has continued for 30 days; (b) a default in the payment when due of principal of or premium on, any Note when due at its Stated Maturity, upon optional redemption, upon required repurchase, upon declaration or otherwise; (c) the failure by the Company to comply with its obligations under Article 5, Section 4.09 or Section 4.14; (d) the Company or any Subsidiary Guarantor defaults in the performance of or breaches any other covenant or agreement in this Indenture or under the Notes (other than (a), (b) or (c) above) and such default or breach continues for a period of 60 consecutive days after written notice by the Trustee or the Holders of 25% or more in aggregate principal amount of the Notes; (e) any 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 Significant Subsidiaries (or any Indebtedness for money borrowed Guaranteed by the Company or any of its Significant Subsidiaries if the Company or a Significant Subsidiary does not perform its payment obligations under such Guarantee within any grace period provided for in the documentation governing such Guarantee) and, whether such Indebtedness or Guarantee exists on the date of the indenture or is thereafter created, which default (a) constitutes a Payment Default or (b) results in the acceleration of such Indebtedness prior to its Stated Maturity, and in each case, 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 that has been so accelerated, aggregates $50 million or more; 80 (f) failure by the Company or any of its Significant Subsidiaries to pay a final judgment or final judgments aggregating in excess of $50 million, which judgment or judgments are not paid, discharged or stayed for a period of 60 days; (g) a court having jurisdiction in the premises enters a decree or order for (i) relief in respect of the Company or any Significant Subsidiary in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, (ii) appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Company or any Significant Subsidiary or for all or substantially all the property and assets of the Company or any Significant Subsidiary or (iii) the winding up or liquidation of the affairs of the Company or any Significant Subsidiary and, in each case, such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; (h) the Company or any Significant Subsidiary (i) commences a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consents to the entry of an order for relief in an involuntary case under any such law, (ii) consents to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Company or any Significant Subsidiary or for all or substantially all the property and assets of the Company or any Significant Subsidiary or (iii) effects any general assignment for the benefit of creditors; (i) except as permitted by the Indenture, any Subsidiary Guarantee issued hereunder shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Subsidiary Guarantor, or any Person acting on behalf of any Subsidiary Guarantor, shall deny or disaffirm its obligations under the Subsidiary Guarantees issued thereunder; or (j) any of the Security Documents ceases to be in full force and effect, or any of the Security Documents ceases to give the holders of the Notes any of the Liens purported to be created thereby, or any of the Security Documents is declared null and void or the Company or any Restricted Subsidiary denies in writing that it has any further liability under any Security Document or gives written notice to such effect (in each case other than in accordance with the terms of this Indenture (including Section 14.01(b)) or the terms of the Existing Credit Facility or the Security Documents (including the cessation of effectiveness of any Security Document in connection with a release of all collateral covered thereby in accordance with the terms of this Indenture, the Existing Credit Facility, the Existing Senior Secured Note Indentures and such Security Document) or unless waived by the requisite lenders under the Existing Credit Facility if, after the waiver, the Company is in compliance with Section 4.12; provided that if a failure of the sort described in this clause (j) is susceptible of cure, no Event of Default shall arise under this clause (j) with respect thereto until 30 days after notice of such failure shall have been given to the Company by the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes issued under the Indenture. Section 6.02. Acceleration. If an Event of Default (other than an Event of Default specified in clause (g) or (h) of Section 6.01 that occurs with respect to the 81 Company or any Subsidiary Guarantor) occurs and is continuing under this Indenture, the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then Outstanding, by written notice to the Company (and to the Trustee if such notice is given by the Holders (the "Acceleration Notice")), may, and the Trustee at the request of such Holders shall, declare the principal of, premium, if any, and accrued but unpaid interest and Liquidated Damages, if any, on all the Notes to be due and payable. Upon a declaration of acceleration, such principal, premium, if any, and accrued interest and Liquidated Damages, if any, shall be immediately due and payable. If an Event of Default specified in clause (g) or (h) of Section 6.01 occurs with respect to the Company or any Subsidiary Guarantor, the principal of, premium, if any, accrued interest and Liquidated Damages, if any, on the Notes then Outstanding shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. 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 or interest and Liquidated Damages on the Notes or to enforce the performance of any provision of the Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder 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. All remedies are cumulative to the extent permitted by law. Section 6.04. Waiver of Past Defaults. The Holders of at least a majority in principal amount of the outstanding Notes, by written notice to the Company and to the Trustee, may waive all past defaults and rescind and annul a declaration of acceleration and its consequences under the Notes, if (i) all existing Events of Default, other than the nonpayment of the principal of and premium, if any, and interest and Liquidated Damages, if any, on such Notes that have become due solely by such declaration of acceleration, have been cured or waived and (ii) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. Section 6.05. Control by Majority. The Holders of at least a majority in aggregate principal amount of the Outstanding Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture, that may involve the Trustee in personal liability, or that the Trustee determines in good faith may be unduly prejudicial to the rights of Holders not joining in the giving of such direction and may take any other action it deems proper that is not inconsistent with any such direction received from the Holders. 82 Section 6.06. Limitation on Suits. A Holder may not pursue any remedy with respect to this Indenture or the Notes unless: (a) the Holder gives the Trustee written notice of a continuing Event of Default; (b) the Holders of at least 25% in aggregate principal amount of Outstanding Notes make a written request to the Trustee to pursue the remedy; (c) such Holder or Holders offer the Trustee security or indemnity satisfactory to it against any loss, liability or expense; (d) the Trustee does not comply with the request within 60 days after receipt thereof and the offer of security or indemnity; and (e) during such 60 day period, the Holders of at least a majority in aggregate principal amount of the Outstanding Notes do not give the Trustee a direction inconsistent with the request. 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, premium, if any, interest and Liquidated Damages, if any, on the Note, on or after the respective due dates expressed in the Note, 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 the Holder. Section 6.08. Collection Suit by Trustee. If an Event of Default specified in Section 6.01(a) or (b) hereof occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company or any other obligor for the whole amount of principal, premium, if any, and interest and Liquidated Damages, if any, remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and Liquidated Damages, if any, and such further amount as shall be sufficient to cover amounts due the Trustee under Section 7.08, including the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. Section 6.09. Trustee May File Proofs of Claim. The Trustee is authorized to 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 (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders allowed in any judicial proceedings relative to the Company (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, 83 disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.08. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.08 out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties which the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. Section 6.10. Priorities. If the Trustee collects any money pursuant to this Article or receives any money from the Collateral Agent as the distribution of proceeds received upon realization of any Collateral, it shall pay out the money in the following order: First: to the Trustee, its agents and attorneys for amounts due under Section 7.08, including payment of all compensation, expense and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection; Second: to Holders for amounts due and unpaid on the Notes for principal, premium, if any, interest and Liquidated Damages, if any, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, interest and Liquidated Damages, respectively; and Third: to the Company or to such party as a court of competent jurisdiction shall direct. The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.10 upon five Business Days prior notice to the Company. 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 a 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 and expenses, 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 6.06, or a suit by Holders of more than 10% in aggregate principal amount of the then Outstanding Notes. Section 6.12. Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture or any Note and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case 84 the Company, any other obligor upon the Notes, the Trustee and the Holders shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. Section 6.13. Rights and Remedies Cumulative. No right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 6.14. Waiver of Stay, Extension or Usury Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury or other similar law wherever enacted, now or at any time hereafter in force, that would prohibit or forgive the Company from paying all or any portion of the principal of (or premium, if any), interest or Liquidated Damages, if any, on the Notes contemplated herein or in the Notes or that 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 covenant that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE 7 The Trustee Section 7.01. Certain Duties and Responsibilities. (a) Except during the continuance of an Event of Default, (i) the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) 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, in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein). 85 (b) In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that (i) this paragraph does not limit the effect of Section 7.01(a); (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (iii) 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 6.06. (d) The Trustee may refuse to perform any duty or exercise any right or power or expend or risk its own funds or otherwise incur any financial liability unless it receives indemnity satisfactory to it against any loss, liability or expense. (e) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of Sections 7.01 and 7.03. Section 7.02. Notice of Defaults. (a) Within 90 days after the occurrence of any Default, the Trustee shall transmit by mail to all Holders, as their names and addresses appear in the Register, notice of such Default hereunder actually known to the Trustee unless such Default shall have been cured or waived; provided, however, that, except in the case of a Default in the payment of the principal of, premium (if any) or interest and Liquidated Damages, if any, on, any Note, the Trustee may withhold such notice if and so long as the board of directors, the executive committee or a trust committee of Responsible Officers of the Trustee determines that the withholding of such notice is not opposed to the interests of the Holders. (b) The Trustee shall not be required to take notice or be deemed to have notice or knowledge of any event or of any Default (except default in the payment of monies to the Trustee which are required to be paid to the Trustee on or before a specified date or within a specified time after receipt by the Trustee of a notice or a certificate which was in fact received), unless the Trustee shall receive from the Company or a Holder a notice stating that the same has occurred and is continuing, and specifying the same, and in the absence of such notice the Trustee may conclusively assume that the same does not exist, except as aforesaid. Section 7.03. Certain Rights of Trustee. Subject to the provisions of Section 7.01: (i) the Trustee may conclusively 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, note, other 86 evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (ii) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or a Company Order thereof, and any resolution of any Person's board of directors (or any committee thereof) shall be sufficiently evidenced if certified by an Officer of such Person as having been duly adopted and being in full force and effect on the date of such certificate; (iii) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon the Officer's Certificates of the Company; (iv) the Trustee may consult with counsel of its selection and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (v) in case an Event of Default occurs and is continuing, the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity satisfactory to it against any loss, liability or expense which might be incurred by it in compliance with such request or direction; (vi) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, other evidence of indebtedness or other paper or document; (vii) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; and (viii) the rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and to each agent, custodian and other Person employed to act hereunder. Section 7.04. Not Responsible for Recitals or Issuance of Notes. The recitals contained herein and in the Notes, except the Trustee's certificates of authentication, shall be taken as the statements of the Company, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee 87 makes no representations as to the validity or sufficiency of this Indenture or of the Notes, except that the Trustee represents that it is duly authorized to execute and deliver this Indenture, authenticate the Notes and perform its obligations hereunder and that the statements made by it in a Statement of Eligibility and Qualification on Form T-1 supplied to the Company in connection with the registration of any Notes issued hereunder will be true and accurate subject to the qualifications set forth therein. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of the Notes or the proceeds thereof. Section 7.05. Trustee's Disclaimer. The Trustee makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company' use of the proceeds from the Notes, it shall not be responsible for any statement in the offering memorandum for the Notes or in the Indenture or the Notes (other than its certificate of authentication), the acts of a prior Trustee hereunder, or the determination as to which beneficial owners are entitled to receive any notices hereunder. Section 7.06. May Hold Notes. The Trustee, any Authenticating Agent, any Paying Agent, any Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Notes and, subject to Section 7.09 and Section 7.14, may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Registrar or such other agent. Section 7.07. Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company. Section 7.08. Compensation and Reimbursement. The Company agrees: (a) to pay to the Trustee from time to time such compensation as the Company and the Trustee shall from time to time agree in writing for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (b) to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses, advances and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (c) to indemnify the Trustee and any predecessor Trustee for, and to hold it harmless against, any loss, damage, claims, liability or expense (including taxes, other than taxes based on the income of the Trustee) incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust, including the reasonable costs and expenses of defending itself against any claim 88 (whether asserted by the Company, a Holder or any other person) or liability in connection with the exercise or performance of any of its powers or duties hereunder. The Company' payment obligations pursuant to this Section 7.08 shall survive the discharge of this Indenture. When the Trustee incurs expenses after the occurrence of a Default specified in Section 6.01(g) or 6.01(h), the expenses are intended to constitute expenses of administration under any Bankruptcy Law. Section 7.09. Conflicting Interests. If the Trustee has or shall acquire a conflicting interest within the meaning of the TIA, within 90 days the Trustee shall either eliminate such conflicting interest, apply to the SEC for permission to continue as Trustee with such conflicting interest, or resign, to the extent and in the manner provided by, and subject to the provisions of, the TIA and this Indenture. To the extent permitted by such Act, the Trustee shall not be deemed to have a conflicting interest by virtue of being a trustee under this Indenture with respect to Original Notes and Additional Notes, or a trustee under any other indenture between the Company and the Trustee. Section 7.10. Corporate Trustee Required; Eligibility. (a) There shall at all times be one (and only one) Trustee hereunder. The Trustee shall be a Person that is eligible pursuant to the TIA to act as such and has a combined capital and surplus of at least $100,000,000. If any such Person publishes reports of condition at least annually, pursuant to law or to the requirements of its supervising or examining authority, then for the purposes of this Section 7.10 and to the extent permitted by the TIA, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 7.10, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. Section 7.11. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 7.12. (b) The Trustee may resign at any time by giving written notice thereof to the Company. If the instrument of acceptance by a successor Trustee required by Section 7.12 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (c) The Trustee may be removed at any time by Act of the Holders of a majority in principal amount of the Outstanding Notes, delivered to the Trustee and to the Company. If the instrument of acceptance by a successor Trustee required by Section 7.12 shall not have been delivered to the Trustee within 30 days after the giving of such notice of removal, the Trustee being removed may petition any court of competent jurisdiction for the appointment of a successor Trustee. 89 If at any time: (i) the Trustee shall fail to comply with Section 7.09 after written request therefor by the Company or by any Holder who has been a bona fide Holder for at least six months, or (ii) the Trustee shall cease to be eligible under Section 7.10 and shall fail to resign after written request therefor by the Company or by any such Holder, or (iii) the Trustee shall become incapable of acting or shall be adjudged bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (A) the Company may remove the Trustee, or (B) subject to Section 6.11, any Holder who has been a bona fide Holder for at least six months may, on behalf of itself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee or Trustees. (d) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company shall promptly appoint a successor Trustee and shall comply with the applicable requirements of Section 7.12. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Notes delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 7.12, become the successor Trustee and to that extent supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment in the manner required by Section 7.12, then, subject to Section 6.11, any Holder who has been a bona fide Holder for at least six months may, on behalf of itself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (e) The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to all Holders in the manner provided in Section 1.10. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. Section 7.12. Acceptance of Appointment by Successor. (a) In case of the appointment hereunder of a successor Trustee, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, 90 powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. (b) Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to above. (c) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article 7. Section 7.13. Merger, Conversion, Consolidation or Succession to Business. (a) Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article 7, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Notes shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes. Section 7.14. Preferential Collection of Claims Against the Company. (a) If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Notes), the Trustee shall be subject to the provisions of the TIA regarding the collection of claims against the Company (or any such other obligor). Section 7.15. Appointment of Authenticating Agent. The Trustee may appoint an Authenticating Agent acceptable to the Company to authenticate the Notes. Any such appointment shall be evidenced by an instrument in writing signed by a Responsible Officer, a copy of which instrument shall be promptly furnished to the Company. Unless limited by the terms of such appointment, an Authenticating Agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication (or execution of a certificate of authentication) by the Trustee includes authentication (or execution of a certificate of authentication) by such Authenticating Agent. An Authenticating Agent has the same rights as any Registrar, Paying Agent or agent for service of notices and demands. 91 ARTICLE 8 Holders' List and Reports by Trustee and the Company Section 8.01. The Company to Furnish Trustee Names and Addresses of Holders; Stock Exchange Listing. (a) The Company will furnish or cause to be furnished to the Trustee (i) semi-annually, not more than 15 days after each Regular Record Date, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of such Regular Record Date, and (ii) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; provided, however, that if and so long as the Trustee shall be the Registrar, no such list need be furnished pursuant to this Section 8.01. (b) The Company will promptly notify the Trustee when any Notes are listed on any stock exchange and of any delisting thereof. Section 8.02. Preservation of Information; Communications to Holders. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list, if any, furnished to the Trustee as provided in Section 8.01 and the names and addresses of Holders received by the Trustee in its capacity as Registrar; provided, however, that if and so long as the Trustee shall be the Registrar, the Register shall satisfy the requirements relating to such list. None of the Company, the Trustee or any other Person shall be under any responsibility with regard to the accuracy of such list. The Trustee may destroy any list furnished to it as provided in Section 8.01 upon receipt of a new list so furnished. (b) The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Notes, and the corresponding rights and privileges of the Trustee, shall be as provided by the TIA. (c) Every Holder, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of any disclosure of information as to names and addresses of Holders made pursuant to the TIA. Section 8.03. Reports by Trustee. The Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the TIA at the times and in the manner provided pursuant thereto. If required by Section 313(a) of the TIA, the Trustee shall, within 60 days after each May 15, following the date of this Indenture deliver to Holders a brief report, dated as of such May 15, which complies with the provisions of such Section 313(a). A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee 92 with each stock exchange, if any, upon which any Notes are listed, with the SEC and with the Company. ARTICLE 9 Amendment, Supplement or Waiver Section 9.01. Without Consent of the Holders. (a) Without the consent of any Holder, the Company and the Trustee may enter into one or more indentures supplemental hereto, for any of the following purposes: (i) to cure any ambiguity, omission, defect or inconsistency, (ii) to provide for the assumption by a successor of the obligations of the Company under this Indenture, (iii) to provide for uncertificated Notes in addition to or in place of certificated Notes; provided that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code, (iv) to add Subsidiary Guarantees with respect to the Notes, to grant a Lien under this Indenture to the Trustee as security for the Notes, to confirm and evidence the release, termination or discharge of any Subsidiary Guarantee or any such Lien with respect to or securing the Notes when such release, termination or discharge is permitted under this Indenture, (v) to add to the covenants of the Company for the benefit of the Holders or to surrender any right or power conferred upon the Company, (vi) to provide for or confirm the issuance of Additional Notes in accordance with the terms of the Indenture, (vii) to make any change that does not adversely affect the rights of any Holder under the Notes or this Indenture, or (viii) to comply with any requirement of the SEC in connection with the qualification of this Indenture under the TIA or otherwise. Section 9.02. With Consent of Holders. (a) Subject to Section 6.07, the Company, the Trustee and (if applicable) any Subsidiary Guarantor may amend or supplement this Indenture or the Notes with the written consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Notes, and any past Default or compliance with any provisions may also be waived with the written consent 93 of the Holders of not less than a majority in aggregate principal amount of the Outstanding Notes. (b) Notwithstanding the provisions of this Section 9.02, without the consent of each Holder affected, an amendment or waiver, including a waiver pursuant to Section 6.04, may not (with respect to any Notes held by a non- consenting Holder): (i) change the Stated Maturity of the principal of, or any installment of interest on, any Note, (ii) reduce the principal amount of or premium, if any, or interest or Liquidated Damages, if any, on any Note, (iii) reduce any amount payable on redemption of the Notes or upon the occurrence of an Event of Default or reduce the Change of Control Payment or the amount to be paid in connection with an Asset Sale Offer, (iv) change the place or currency of payment of principal of or premium, if any, or interest or Liquidated Damages, if any, on any Note, (v) impair the right to institute suit for the enforcement of any payment on or after the Stated Maturity (or, in the case of a redemption, on or after the Redemption Date) of any Note, (vi) reduce the above-stated percentage of outstanding Notes the consent of whose Holders is necessary to modify or amend the Indenture, (vii) waive a default in the payment of principal of or premium, if any, or interest or Liquidated Damages, if any, on the Notes (except as set forth in Section 6.04), (viii) reduce the percentage or aggregate principal amount of outstanding Notes the consent of whose Holders is necessary for waiver of compliance with provisions of the Indenture or for waiver of Defaults, (ix) modify or change any provision of the Indenture affecting the ranking of the Notes or the Subsidiary Guarantees in a manner adverse to the Holders of the Notes, (x) release any Subsidiary Guarantor from any of its obligations under its Subsidiary Guarantee or the Indenture other than in accordance with the provisions of the Indenture, or amend or modify any provision relating to such release, or (xi) directly or indirectly release the Liens created by the Security Documents on all or substantially all the Collateral (other than in accordance with the terms of the Existing Credit Facility or the Security Documents or with 94 the consent of the requisite lenders under the Existing Credit Facility if, after such consent, the Company is in compliance with Section 4.12). (c) It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof. (d) After an amendment, supplement or waiver under this Section 9.02 becomes effective, the Company shall mail to the Holders of each Note affected thereby, with a copy to the Trustee, a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any supplemental indenture or the effectiveness of any such amendment, supplement or waiver. Section 9.03. Execution of Amendments, Supplements or Waivers. The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article 9 if the amendment, supplement or waiver 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 or refusing to sign such amendment, supplement or waiver, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Officer's Certificate and an Opinion of Counsel to the effect that the execution of such amendment, supplement or waiver has been duly authorized, executed and delivered by the Company and that such amendment, supplement or waiver is a valid and binding agreement of the Company, enforceable against it in accordance with its terms (subject to customary exceptions). Section 9.04. Revocation and Effect of Consents. (a) Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder is a continuing consent by the Holder and every subsequent Holder of that Note or any Note that evidences all or any part of the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. Subject to the following paragraph of this Section 9.04, any such Holder or subsequent Holder may revoke the consent as to such Holder's Note by notice to the Trustee or the Company received by the Trustee or the Company, as the case may be, before the date on which the Trustee receives an Officer's Certificate certifying that the Holders of the requisite principal amount of Notes have consented (and not theretofore revoked such consent) to the amendment, supplement or waiver. The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any amendment, supplement or waiver as set forth in Section 1.08. (b) After an amendment, supplement or waiver becomes effective, it shall bind every Holder, unless it makes a change described in any of clauses (i) through (viii) of Section 9.02(b). In that case, the amendment, supplement or waiver shall bind each Holder of a Note who has consented to it and every subsequent Holder of such Note or any Note that evidences all or any part of the same debt as the consenting Holder's Note. 95 Section 9.05. Conformity with TIA. (a) Every amendment or supplemental indenture executed pursuant to this Article shall conform to the requirements of the TIA as then in effect. Section 9.06. Notation on or Exchange of Notes. (a) If an amendment, supplement or waiver changes the terms of a Note, the Trustee shall (if required by the Company and in accordance with the specific direction of the Company) request the Holder to deliver its Note to the Trustee. The Trustee shall (if required by the Company and in accordance with the specific written direction of the Company) place an appropriate notation on the Note about the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Note shall issue and the Trustee shall authenticate a new Note that reflects the changed terms. Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver. ARTICLE 10 Redemption of Notes Section 10.01. Right of Redemption. The Notes will not be redeemable at the option of the Company prior to December 15, 2005. Thereafter, the Notes will be redeemable, at the option of the Company, in whole or in part, at any time or from time to time on and prior to maturity. Such redemption may be made upon notice mailed by first-class mail to each Holder's registered address in accordance with Section 10.05. The Notes will be so redeemable at the following Redemption Prices (expressed as a percentage of principal amount on the relevant Redemption Date), plus accrued and unpaid interest and Liquidated Damages, if any, to the relevant Redemption Date, if redeemed during the twelve-month period commencing on December 15 of the years set forth below: Redemption Year Price ---- -------------- 2005................................. 104.750% 2006................................. 102.375% 2007 and thereafter.................. 100.000% Section 10.02. Applicability of Article. Redemption or purchase of Notes as permitted by Section 10.01 shall be made in accordance with this Article 10. Section 10.03. Election to Redeem; Notice to Trustee. In case of any redemption at the election of the Company of the Notes, the Company shall, at least 30 days prior to the Redemption Date initially fixed by the Company (unless a shorter 96 notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Notes to be redeemed. Section 10.04. Selection by Trustee of Notes to Be Redeemed. In the case of any partial redemption, selection of the Notes for redemption will be made not more than 60 days prior to the Redemption Date by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate; provided that no Notes of $1,000 or less shall be redeemed in part. (a) The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the portion of the principal amount thereof to be redeemed. On and after the Redemption Date, interest and Liquidated Damages will cease to accrue on Notes or portions thereof called for redemption. (b) For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Notes shall relate, in the case of any Note redeemed or to be redeemed only in part, to the portion of the principal of such Note that has been or is to be redeemed. Section 10.05. Notice of Redemption. (a) Notice of redemption or purchase as provided in Section 10.01 shall be deemed to have been given upon the mailing by first class mail, postage prepaid, of such notice to each Holder of Notes to be redeemed, at its registered address as recorded in the Register, not later than 30 nor more than 60 days prior to the Redemption Date. Any such notice shall state: (i) the expected Redemption Date, (ii) the Redemption Price, (iii) if less than all Outstanding Notes are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the particular Notes to be redeemed, (iv) that on the Redemption Date the Redemption Price will become due and payable upon each such Note to be redeemed, and that, unless the Company default in making such redemption payment or any Paying Agent is prohibited from making such payment pursuant to the terms of this Indenture, interest and Liquidated Damages thereon shall cease to accrue from and after said date, (v) the place or places where such Notes are to be surrendered for payment of the Redemption Price and the name and address of the Paying Agent or Paying Agents, 97 (vi) the CUSIP and other security identification numbers, if any, subject to Section 3.12 hereof, and (vii) the section of this Indenture pursuant to which the Notes are to be redeemed. Notices of redemption may not be conditional. (b) Notice of such redemption or purchase of Notes to be so redeemed or purchased at the election of the Company shall be given by the Company or, at the written request of the Company delivered at least five Business Days prior to the date proposed for the mailing of such notice, by the Trustee in the name and at the expense of the Company; provided that such notice to the Trustee may be revoked by the Company by written notice delivered to the Trustee prior to the date proposed for the mailing of the notice of such redemption to the Holders. (c) The notice if mailed in the manner herein provided shall be conclusively presumed to have been given, whether or not the Holder receives such notice. In any case, failure to give such notice by mail or any defect in the notice to the Holder of any Note designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Note. Section 10.06. Deposit of Redemption Price. (a) On or prior to 10:00 a.m., New York City time on any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, the Company shall segregate and hold in trust as provided in Section 4.03) an amount of money sufficient to pay the Redemption Price of, and any accrued and unpaid interest and Liquidated Damages, if any, on, all the Notes or portions thereof which are to be redeemed on that date. Section 10.07. Notes Payable on Redemption Date. (a) Notice of redemption having been given as provided in this Article 10, the Notes so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price herein specified and from and after such date (unless Company shall default in the payment of the Redemption Price or any Paying Agent is prohibited from paying the Redemption Price pursuant to the terms of this Indenture) such Notes shall cease to bear interest and Liquidated Damages. Upon surrender of such Notes for redemption in accordance with such notice, such Notes shall be paid by the Company at the Redemption Price. Installments of interest and Liquidated Damages, if any, whose Interest Payment Date is on or prior to the Redemption Date shall be payable to the Holders of such Notes registered as such on the relevant Regular Record Dates according to their terms and the provisions of Section 3.07. (b) On and after any Redemption Date, if money sufficient to pay the Redemption Price of and any accrued and unpaid interest and Liquidated Damages on Notes called for redemption shall have been made available in accordance with Section 10.06, the Notes (or the portions thereof) called for redemption will cease to accrue 98 interest and Liquidated Damages and the only right of the Holders of such Notes (or portions thereof) will be to receive payment of the Redemption Price of, and subject to the last sentence of Section 10.07(a), any accrued and unpaid interest and Liquidated Damages, if any, on such Notes (or portions thereof) to the Redemption Date. If any Note (or portion thereof) called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest and Liquidated Damages from the Redemption Date at the rate borne by the Note (or portion thereof). Section 10.08. Notes Redeemed in Part. Any Note that is to be redeemed only in part shall be surrendered at a Place of Payment (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder's attorney duly authorized in writing) and the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Note without service charge, a new Note or Notes, of any authorized denomination as requested by such Holder in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Note so surrendered. ARTICLE 11 Satisfaction and Discharge Section 11.01. Satisfaction and Discharges of Indenture. (a) This Indenture shall cease to be of further effect (except as to any surviving rights of transfer or exchange of Notes herein provided for), and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (i) either (A) all Notes theretofore authenticated and delivered (other than (y) Notes that have been destroyed, lost or stolen and that have been replaced or paid as provided in Section 3.06, and (z) 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 4.03) have been delivered to the Trustee canceled or for cancellation; or (B) all such Notes not theretofore delivered to the Trustee canceled or for cancellation (x) have become due and payable, or (y) will become due and payable at their Stated Maturity within one year, or 99 (z) are to be called for redemption within one year under arrangements reasonably satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, (ii) the Company has irrevocably deposited or caused to be deposited with the Trustee an amount in United States dollars, U.S. Government Obligations, or a combination thereof, sufficient to pay and discharge the entire Indebtedness on such Notes not theretofore delivered to the Trustee canceled or for cancellation, for principal (and premium, if any) and interest and Liquidated Damages to the date of such deposit (in the case of Notes that have become due and payable), or to the Stated Maturity or Redemption Date, as the case may be; (iii) the Company has paid or caused to be paid all other sums then payable hereunder by the Company; and (iv) the Company has delivered to the Trustee an Officer's Certificate and an Opinion of Counsel each to the effect that all conditions precedent provided for in this Section 11.01 relating to the satisfaction and discharge of this Indenture have been complied with; provided that any such counsel may rely on any Officer's Certificate as to matters of fact (including as to compliance with the foregoing clauses (i), (ii) and (iii)). (b) Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 7.08 and, if money shall have been deposited with the Trustee pursuant to clause (ii) of Section 11.01(a), the obligations of the Trustee under Section 11.02, shall survive. Section 11.02. Application of Trust Money. Subject to the provisions of the last paragraph of Section 4.03, all money deposited with the Trustee pursuant to Section 11.01 shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest and Liquidated Damages on the Notes; but such money need not be segregated from other funds except to the extent required by law. ARTICLE 12 Defeasance and Covenant Defeasance Section 12.01. Option of the Company to Effect Defeasance or Covenant Defeasance. The Company may at its option by a Board Resolution, at any time, elect to have either Section 12.02 or Section 12.03 applied to the Outstanding Notes upon compliance with the conditions set forth below in this Article 12. 100 Section 12.02. Legal Defeasance and Discharge. Upon the exercise by the Company under Section 12.01 of the option applicable to this Section 12.02, the Company shall be deemed to have been discharged from any and all Obligations with respect to all Outstanding Notes (and any Subsidiary Guarantor will be discharged from any and all Obligations in respect of its Subsidiary Guarantee) on the date which is the 123rd day after the deposit referred to in Section 12.04(a); provided that all of the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, such Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire Indebtedness represented by the Outstanding Notes, which shall thereafter be deemed to be "outstanding" only for the purposes of Section 12.05 hereof and the other Sections of this Indenture referred to in clauses (i) and (ii) of this Section 12.02, and to have satisfied all its other obligations under such Notes and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (i) the rights of Holders of Outstanding Notes to receive solely from the trust fund described in Section 12.04 hereof, and as more fully set forth in such Section, payments in respect of the principal of, premium, if any, and interest and Liquidated Damages on such Notes when such payments are due, (ii) the obligations of the Company with respect to such Notes under Sections 1.06, 2.03, 3.03, 3.04, 3.05, 3.06, 3.13, 3.14, 4.01, 4.02, 4.03 and 12.05 hereof, (iii) the rights, powers, trusts, duties and immunities of the Trustee hereunder, including, without limitation, the Trustee's rights under Section 7.08 hereof, and the obligations of the Company in connection therewith and with this Article 12. Subject to compliance with this Article 12, the Company may exercise its option under this Section 12.02 notwithstanding the prior exercise of its option under Section 12.03 hereof with respect to the Notes. Section 12.03. Covenant Defeasance. Upon the exercise by the Company under Section 12.01 of the option applicable to this Section 12.03, the Company shall be released from its obligations under the covenants contained in Sections 4.06 through Section 4.18, Section 4.22, Article 14 and clause (iv) of Section 5.01(a) hereof with respect to the Outstanding Notes and no Default under Section 6.01(e), (f) and (g) shall thereafter constitute a Default or Event of Default on the date which is the 123rd day after the deposit referred to in Section 12.04(a); provided that all of the conditions set forth below are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed not Outstanding for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed Outstanding for all other purposes hereunder. For this purpose, such Covenant Defeasance means that, with respect to the Outstanding Notes, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01(c) or (d), but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. 101 Section 12.04. Conditions to Legal or Covenant Defeasance. The following shall be the conditions to application of either Section 12.02 or Section 12.03 to the Outstanding Notes: (a) the Company has deposited with the Trustee, in trust, money and/or U.S. Government Obligations that through the payment of interest and principal in respect thereof in accordance with their terms will provide money in an amount sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay (i) the principal of, premium, if any, and accrued interest and Liquidated Damages, if any, on the Notes when such payments are due in accordance with the terms of this Indenture and the Notes or (ii) in the case of Legal Defeasance, accrued interest and Liquidated Damages, if any, on the Notes through a scheduled redemption date and the principal of, and premium on the Notes on such redemption date; provided that, at the time of deposit, the Company irrevocably authorize the Trustee to issue a timely notice of redemption and to take such other steps reasonably requested by the Trustee to ensure that such redemption will be effectuated; (b) in the case of an election under Section 12.02, the Company has delivered to the Trustee (i) either (x) an Opinion of Counsel to the effect that Holders will not recognize income, gain or loss for Federal income tax purposes as a result of the exercise by the Company of its option under this Article 12 and will be subject to Federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit, defeasance and discharge had not occurred, which Opinion of Counsel must be based upon (and accompanied by a copy of) a ruling of the Internal Revenue Service to the same effect unless there has been a change in applicable Federal income tax law after the date of this Indenture such that a ruling is no longer required or (y) a ruling directed to the Trustee received from the Internal Revenue Service to the same effect as the aforementioned Opinion of Counsel and (ii) an Opinion of Counsel to the effect that, as a result of the creation of the defeasance trust, the Company will not be required to register under the Investment Company Act of 1940 and after the passage of 123 days following the deposit, the trust fund will not be subject to the effect of Section 547 of the United States Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law or any comparable provision of applicable law; (c) in the case of an election under Section 12.03, the delivery by the Company to the Trustee of (i) an Opinion of Counsel to the effect that, among other things, the Holders will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and defeasance and will be subject to Federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred and (ii) an Opinion of Counsel to the effect that, as a result of the creation of the defeasance trust, the Company will not be required to register under the Investment Company Act of 1940 and after the passage of 123 days following the deposit, the trust fund will not be subject to the effect of Section 547 of the United States Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law or any comparable provision of applicable law; 102 (d) immediately after giving effect to such deposit on a pro forma basis, no Event of Default, or event that after the giving of notice or lapse of time or both would become an Event of Default, shall have occurred and be continuing on the date of such deposit or during the period ending on the 123rd day after the date of such deposit, and such deposit shall not result in a breach or violation of, or constitute a default under, any other agreement or instrument to which the Company is a party or by which the Company is bound; (e) if at such time the Notes are listed on a national securities exchange, the Company has delivered to the Trustee an Opinion of Counsel to the effect that the Notes will not be delisted as a result of such deposit, defeasance and discharge; (f) the Company shall have delivered to the Trustee Officer's Certificates stating that the deposit made by the Company pursuant to its election under Sections 12.02 or 12.03 was not made by the Company with the intent of preferring the Holders over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and (g) the Company shall have delivered to the Trustee Officer's Certificates and an Opinion of Counsel, each stating that all conditions precedent provided for relating to either the Legal Defeasance under Section 12.02 or the Covenant Defeasance under Section 12.03 (as the case may be) have been complied with as contemplated by this Section 12.04. Section 12.05. Deposited Money and Government Securities to Be Held in Trust; Other Miscellaneous Provisions. Subject to Section 12.06, all money and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee pursuant to Section 12.04 in respect of the Outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal of, premium, if any, and interest and Liquidated Damages, but such money need not be segregated from other funds except to the extent required by law. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the money or U.S. Government Obligations deposited pursuant to Section 12.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the Outstanding Notes. Anything in this Article 12 to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon the request of the Company any money or U.S. Government Obligations held by it as provided in Section 12.04 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 12.04(a) hereof), are in excess of the amount thereof 103 which would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. Section 12.06. Repayment to Company. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest and Liquidated Damages on any Note and remaining unclaimed for two years after such principal, premium, if any, or interest and Liquidated Damages has become due and payable shall be paid to the Company on its written request or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, shall at the expense of the Company cause to be published once, in The New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company. Section 12.07. Reinstatement. If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with Section 12.02 or 12.03, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the obligations of the Company under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 12.02 or 12.03 until such time as the Trustee or Paying Agent is permitted to apply all such amounts in accordance with Section 12.02 or 12.03 hereof, as the case may be; provided, however, that, if the Company makes any payment of principal of, premium, if any, or interest and Liquidated Damages on any Note following the reinstatement of its Obligations, the Company shall be subrogated to the rights of the Holder of such Note to receive such payment from the amounts held by the Trustee or Paying Agent. ARTICLE 13 Subsidiary Guarantees Section 13.01. The Guarantees. (a) Subject to the provisions of this Article 13, each Subsidiary Guarantor hereby irrevocably and unconditionally guarantees, jointly and severally, the full and punctual payment (whether at Stated Maturity, upon acceleration, optional redemption, upon repurchase following a Change of Control Offer or an Asset Sale Offer or otherwise) of the principal of and premium, if any, and interest and Liquidated Damages, if any, on, and all other amounts payable under, each Note provided for under this Indenture, and the full and punctual payment of all other amounts payable by the Company under this Indenture. Upon failure by the Company to pay punctually any such amount, each Subsidiary Guarantor shall forthwith on demand pay the amount not so paid at the place and in the manner specified in this Indenture. 104 Section 13.02. Guarantee Unconditional. The obligations of the Subsidiary Guarantors hereunder shall be unconditional and absolute and, without limiting the generality of the foregoing, shall, to the fullest extent permitted by law, not be released, discharged or otherwise affected by: (a) any extension, renewal, settlement, compromise, waiver or release in respect of any obligation of the Company under this Indenture or any Note, by operation of law or otherwise; (b) any modification or amendment of or supplement to this Indenture or any Note; provided that any such modification which increases the obligations of each Subsidiary Guarantor hereunder shall not be effective as to such Subsidiary Guarantor without its consent; (c) any release, impairment, non-perfection or invalidity of any direct or indirect security for any obligation of the Company or any Subsidiary Guarantor hereunder; (d) any change in the corporate existence, structure or ownership of the Company, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting the Company or its assets or any resulting release or discharge of any obligation of the Company contained in this Indenture or any Note; (e) the existence of any claim, set-off or other rights which the Subsidiary Guarantors may have at any time against the Company, the Trustee or any other Person, whether in connection with this Indenture or any unrelated transactions, provided that nothing herein shall prevent the assertion of any such claim by separate suit or compulsory counterclaim; (f) any invalidity or unenforceability relating to or against the Company for any reason of this Indenture or any Note, or any provision of applicable law or regulation purporting to prohibit the payment by the Company of the principal of or interest and Liquidated Damages on any Note or any other amount payable by the Company under this Indenture; or (g) any other act or omission to act or delay of any kind by the Company, the Trustee or any other Person or any other circumstance whatsoever which might, but for the provisions of this paragraph, constitute a legal or equitable discharge of or defense to such Subsidiary Guarantor's obligations hereunder. Section 13.03. Discharge; Reinstatement. The Subsidiary Guarantors' obligations hereunder shall remain in full force and effect until the principal of, premium, if any, and interest and Liquidated Damages, if any, on the Notes and all other amounts payable by the Company under this Indenture shall have been paid in full. If at any time any payment of the principal of, premium, if any, or interest and Liquidated Damages, if any, on any Note or any other amount payable by the Company under this Indenture is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of the Company or otherwise, the Subsidiary Guarantors' 105 obligations hereunder with respect to such payment shall be reinstated as though such payment had been due but not made at such time. Section 13.04. Waiver by the Subsidiary Guarantors. The Subsidiary Guarantors irrevocably waive acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against the Company or any other Person. Section 13.05. Subrogation and Contribution. Upon making any payment with respect to any obligation of the Company under this Article 13, the Subsidiary Guarantor making such payment shall be subrogated to the rights of the payee against the Company with respect to such obligation; provided that such Subsidiary Guarantor shall not enforce either (i) any right to receive payment by way of subrogation against the Company or against any direct or indirect security for such obligation, or any other right to be reimbursed, indemnified or exonerated by or for the account of the Company in respect thereof or (ii) any right to receive payment, in the nature of contribution or for any other reason, from any other Subsidiary Guarantor with respect to such payment, in each case so long as any amount payable by the Company hereunder or under the Notes remains unpaid. Section 13.06. Stay of Acceleration. If acceleration of the time for payment of any amount payable by the Company under this Indenture or the Notes is stayed upon the insolvency, bankruptcy or reorganization of the Company, all such amounts otherwise subject to acceleration under the terms of this Indenture shall nonetheless be payable by the Subsidiary Guarantors hereunder forthwith on demand by the Trustee or the Holders. Section 13.07. Limits of Guarantees. Notwithstanding anything to the contrary in this Article 13, each Subsidiary Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the intention of all such parties that the Subsidiary Guarantee of such Guarantor not constitute a fraudulent conveyance under applicable fraudulent conveyance provisions of the United States Bankruptcy Code or any comparable provision of state law. To effectuate the foregoing intention, the Trustee, the Holders and the Subsidiary Guarantors hereby irrevocably agree that the obligations of such Subsidiary Guarantor under its Subsidiary Guarantee and this Article 13 shall be limited to the maximum amount that would not render such Subsidiary Guarantor's obligations subject to avoidance under applicable fraudulent conveyance provisions of the United States Bankruptcy Code or any comparable provision of state law. Section 13.08. Execution and Delivery of Note Guarantee. To evidence its Subsidiary Guarantee set forth in Section 13.01, each Subsidiary Guarantor hereby agrees that this Indenture (or a supplemental indenture in the form of Exhibit B hereto) shall be executed on behalf of such Subsidiary Guarantor by one of its Officers. The signature of an Officer of a Subsidiary Guarantor on the Indenture shall bind such Subsidiary Guarantor, notwithstanding that such individual has ceased to hold such office prior to the authentication and delivery of any Note or did not hold such office at the date of such Note. 106 The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Subsidiary Guarantee set forth in this Indenture on behalf of the Subsidiary Guarantors. ARTICLE 14 Security Arrangements Section 14.01. Security. (a) In order to secure the Indenture Obligations equally and ratably with the Existing Credit Facility Obligations and Obligations in respect of the Existing Senior Secured Notes and, with respect to certain of the Collateral, the Existing ARCO Chemical Debt, the Company will, and will cause each of its Restricted Subsidiaries named in any Existing Security Document as a party thereto, to execute and deliver to the Collateral Agent prior to the Issue Date each Existing Security Document to which it is a party. The Company and its Restricted Subsidiaries shall comply with all covenants and agreements contained in the Security Documents the failure to comply with which would have a material and adverse effect on the Liens purported to be created thereby, unless such failure to comply is waived by the requisite lenders under the Existing Credit Facility if, after that waiver, the Company is in compliance with Section 4.12. (b) The Trustee and each holder of each Note by its acceptance of that Note acknowledges and agrees that: (i) this Indenture, as originally executed and delivered by the parties hereto, does not create any Lien on any property or securities which secures the Indenture Obligations or this Indenture; (ii) the Existing Security Documents, when executed and delivered by the parties thereto, will comply with the provisions of Section 4.12; (iii) the Existing Security Documents provide, and any Security Document that becomes effective after the Issue Date, may provide, that the Liens created thereby or thereunder automatically will be released and extinguished with respect to any property or security that is transferred or otherwise disposed of in accordance with the terms of the Existing Credit Facility, including any property or security that is the subject of a Major Asset Sale and is transferred to a Subject Asset Transferee; (iv) without the necessity of any consent of or notice to the Trustee or any holder of Indenture Obligations, the Company and the Collateral Agent may amend, modify, supplement or terminate any Security Document as long as the Company remains in compliance with Section 4.12; (v) as among the Trustee and the holders of Indenture Obligations and the lenders under the Existing Credit Facility and the Collateral Agent, those lenders and the Collateral Agent will have the sole ability to control and obtain 107 remedies with respect to all Collateral (including on sale or liquidation of any Collateral after acceleration of the Notes, the Existing Senior Secured Notes, the Existing Credit Facility Obligations or the Existing ARCO Chemical Debt) without the necessity of any consent of or notice to the Trustee or any such holder; (vi) any or all Liens granted under the Security Documents for the benefit of the Holders will be automatically released, without the necessity of any consent of the Trustee or any Holders, upon a release of such Lien or Liens pursuant to the terms of the Security Documents and the Existing Credit Facility or if such release is approved by the requisite lenders under the Existing Credit Facility. (vii) the relative rights of the holders of Indenture Obligations and the holders of Indebtedness or other obligations secured by Liens on the Collateral are governed by, and are subject to the terms and conditions of, the Security Documents and not this Indenture; and (viii) without the necessity of any consent of or notice to the Trustee or any holder of Indenture Obligations, the Company may, on behalf of itself or any of its Restricted Subsidiaries, request and instruct the Collateral Agent to, on behalf of each secured party under the Security Documents, (A) execute and deliver to the Company, for the benefit of any Person, such release documents as the Company may reasonably request, of all liens and security interests held by the Collateral Agent in such assets, and such Person shall be entitled to rely conclusively on such release document, and (B) deliver any such assets in the possession of the Collateral Agent to the Company. Section 14.02. Notice of Payment, Discharge or Defeasance. The Trustee and each Holder, by its acceptance of a Note, agree that upon the payment in full or discharge pursuant to Article 11 of the Indenture Obligations, the Trustee shall without notice to or consent of any Holder, upon the written request of the Company, certify to the Collateral Agent, in writing, that the Indenture Obligations have been paid in full, or that this Indenture has been discharged in accordance with Article 11. 108 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, all as of the date first written above. LYONDELL CHEMICAL COMPANY By: /s/ Karen A. Twitchell ---------------------------------- Name: Karen A. Twitchell Title: Vice President & Treasurer ARCO CHEMICAL TECHNOLOGY, INC., as a Subsidiary Guarantor By: __________________________________ Name: Title: ARCO CHEMICAL TECHNOLOGY, L.P., as a Subsidiary Guarantor By: ARCO Chemical Technology Management, Inc., its General Partner By: __________________________________ Name: Title: LYONDELL CHEMICAL NEDERLAND, LTD., as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ---------------------------------- Name: Karen A. Twitchell Title: Vice President & Treasurer IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, all as of the date first written above. LYONDELL CHEMICAL COMPANY By: __________________________________ Name: Title: ARCO CHEMICAL TECHNOLOGY, INC., as a Subsidiary Guarantor By: /s/ Francis P. McGrail ---------------------------------- Name: Francis P. McGrail Title: President and Treasurer ARCO CHEMICAL TECHNOLOGY, L.P., as a Subsidiary Guarantor By: ARCO Chemical Technology Management, Inc., its General Partner By: /s/ Francis P. McGrail ---------------------------------- Name: Francis P. McGrail Title: President and Treasurer LYONDELL CHEMICAL NEDERLAND, LTD., as a Subsidiary Guarantor By: __________________________________ Name: Title: THE BANK OF NEW YORK, as Trustee By: /s/ Van K. Brown ---------------------------------- Name: VAN K. BROWN Title: VICE PRESIDENT EXHIBIT A [FORM OF NOTE] LYONDELL CHEMICAL COMPANY. 9 1/2% Senior Secured Note due 2008 No.________ [CUSIP/CINS] No. __________ $ ______ LYONDELL CHEMICAL COMPANY, a Delaware corporation (the "Company", which term includes any successor Persons under the Indenture hereinafter referred to), for value received promises to pay to ___________, or its registered assigns, the principal sum of __________________________________ Dollars ($___________) [or such other amount as indicated on the Schedule of Exchanges of Securities attached hereto]/1/, on December 15, 2008. Interest Rate: 9 1/2% per annum. Interest Payment Dates: June 15 and December 15 of each year commencing June 15, 2002. Regular Record Dates: June 1 and December 1 of each year. Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. _______________ /1/ To be included in any Global Note A-1 IN WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile by its duly authorized officer. LYONDELL CHEMICAL COMPANY By:_____________________________ Name: Title: A-2 (Form of Trustee's Certificate of Authentication) This is one of the 9 1/2% Senior Secured Notes due 2008 referred to in the within-mentioned Indenture. THE BANK OF NEW YORK, as Trustee Dated: ______________ By:_________________________ Authorized Signatory A-3 [REVERSE SIDE OF NOTE] LYONDELL CHEMICAL COMPANY 9 1/2% Senior Secured Note due 2008 (1) Principal and Interest. The Company agrees to pay the principal of this Note on December 15, 2008. The Company agrees to pay interest on the principal amount of this Note on each Interest Payment Date, as set forth below, at the rate of 9 1/2% per annum. Interest will be payable semi-annually (to the Holders of record of the Notes (or any predecessor Notes) at the close of business on the Regular Record Date immediately preceding the Interest Payment Date) on each Interest Payment Date, commencing June 15, 2002. [The Holder of this Note is entitled to the benefits of the Registration Rights Agreement, dated December 4, 2001, among the Company, the Subsidiary Guarantors party thereto and the Initial Purchasers named therein (the "Registration Rights Agreement"). In the event that (i) the Company or the Subsidiary Guarantors fail to file an Exchange Offer Registration Statement with the SEC on or prior to the 90th day after the Issue Date, (ii) if the Exchange Offer Registration Statement is not declared effective by the SEC on or prior to the 210th day after the Issue Date, (iii) if the Exchange Offer is not consummated on or before the 30th business day after the Exchange Offer Registration Statement is declared effective, (iv) the Company and the Subsidiary Guarantors are obligated to file the Shelf Registration Statement and fail to file the Shelf Registration Statement with the SEC on or prior to the 30th day after such filing obligation arises, (v) the Company and the Subsidiary Guarantors are obligated to file a Shelf Registration Statement and the Shelf Registration Statement is not declared effective on or prior to the 60th day after the obligation to file a Shelf Registration Statement arises, or (vi) if the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, is declared effective but thereafter ceases to be effective or useable in connection with resales of the Notes during the periods specified in the Registration Rights Agreement, for such time of non-effectiveness or non-usability (each, a "Registration Default"), the Company and the Subsidiary Guarantors agree to pay to the Holder of this Note, if affected thereby, liquidated damages ("Liquidated Damages") in an amount equal to $0.05 per week per $1,000 in principal amount of this Note for each week or portion thereof that the Registration Default continues for the first 90 day period immediately following the occurrence of such Registration Default. The amount of the Liquidated Damages shall increase by an additional $0.05 per week per $1,000 in principal amount of Notes with respect to each subsequent 90 day period until all Registration Defaults have been cured, up to a maximum amount of Liquidated Damages of $0.25 per week per $1,000 in principal amount of Notes. The Company and the Subsidiary Guarantors shall not be required to pay Liquidated Damages for more than one Registration Default at any given time. A-4 Following the cure of all Registration Defaults, the accrual of Liquidated Damages will cease.]/2/ Interest on this Note will accrue from the most recent date to which interest has been paid [on this Note or the Note surrendered in exchange herefor]/3/ or, if no interest has been paid, from December 4, 2001; provided that, if there is no existing default in the payment of interest and if this Note is authenticated between a Regular Record Date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such Interest Payment Date. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal and premium, if any, and interest on overdue installments of interest and Liquidated Damages, to the extent lawful, at a rate per annum equal to 1% per annum in excess of the rate of interest applicable to the Notes. (2) Method of Payment. The Company will pay interest (except defaulted interest) on the principal amount of the Notes on each June 15 and December 15 to the Persons who are Holders (as reflected in the Register at the close of business on the June 1 and December 1 immediately preceding the Interest Payment Date), in each case, even if the Note is canceled on registration of transfer or registration of exchange after such Regular Record Date; provided that, with respect to the payment of principal, the Company will make payment to the Holder that surrenders this Note to any Paying Agent on or after December 15, 2008. The Company will pay principal, premium, if any, and interest and Liquidated Damages, if any, in money of the United States that at the time of payment is legal tender for payment of public and private debts. Payments (including principal, premium, if any, and interest and Liquidated Damages, if any) in respect of the Notes represented by the Global Notes, the Holders of which have given wire transfer instructions on or prior to the relevant record date, shall be made by wire transfer of immediately available funds to the accounts specified by the Global Note Holder. With respect to Physical Notes, the Company will make all payments of principal, premium, if any, and interest and Liquidated Damages, if any, at the office or agency maintained by the Company for such purposes in The City of New York or, at the Company's option, by mailing a check to each such Holder's registered address. If a payment date is a date other than a Business Day, payment may be made at that place on the next succeeding day that is a Business Day and no interest shall accrue for the intervening period. (3) Paying Agent and Registrar. Initially, the Trustee will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar upon written notice thereto. The Company, any Subsidiary or any Affiliate of any of them may act as Paying Agent, Registrar or co-registrar. ________________________ /2/ Include only for Initial Note. /3/ Include only for Exchange Note. A-5 (4) Indenture; Limitations. The Company issued the Notes under an Indenture dated as of December 4, 2001 (the "Indenture"), among the Company, the Subsidiary Guarantors and The Bank of New York, as trustee (the "Trustee"). Capitalized terms herein are used as defined in the Indenture unless otherwise indicated. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (the "TIA"). The Notes are subject to all such terms, and Holders are referred to the Indenture and the TIA for a statement of all such terms. To the extent permitted by applicable law, in the event of any inconsistency between the terms of this Note and the terms of the Indenture, the terms of the Indenture shall control. The Notes are secured senior obligations of the Company. The Indenture limits the initial aggregate principal amount of the Notes to $393,000,000 but permits the issuance of Additional Notes subject to compliance with certain conditions and covenants contained in the Indenture and except as may be limited by applicable law. (5) Optional Redemption. The Notes may be redeemed at the option of the Company, in whole or in part, at any time and from time to time, on or after December 1, 2005, at the following Redemption Prices (expressed in percentages of principal amount on the relevant Redemption Date), plus accrued and unpaid interest and Liquidated Damages, if any, to the Redemption Date, if redeemed during the 12-month period commencing December 15 of each of the years set forth below: Year Redemption Price 2005................................. 104.750% 2006................................. 102.375% 2007 and thereafter.................. 100.000% If less than all the Notes are to be redeemed at any time, selection of Notes for redemption will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate; provided that no Notes of $1,000 or less shall be redeemed in part. Notices of redemption shall be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each Holder of Notes to be redeemed at its registered address. Notices of redemption may not be conditional. If any Note is to be redeemed in part only, the notice of redemption that relates to such Note shall state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Note. Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest and Liquidated Damages, if any, cease to accrue on Notes or portions of them called for redemption. A-6 (6) Repurchase upon a Change in Control and Sale of Assets. Upon the occurrence of (a) a Change in Control, each Holder shall have the right to require that the Company repurchase such Holder's Notes at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase, plus accrued and unpaid interest and Liquidated Damages, if any, to the date of purchase and (b) an Asset Sale, the Company may be obligated to make an offer to purchase on a pro rata basis from the Holders the Notes with the Excess Proceeds of such Asset Sales at a purchase price equal to 100% of the principal amount of such Notes plus accrued interest and Liquidated Damages, if any, to the date of purchase. (7) Denominations; Transfer; Exchange. The Notes are in fully registered form without coupons, in denominations of $1,000 and any integral multiples of $1,000. A Holder may register the transfer or exchange of Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. (8) Persons Deemed Owners. A Holder may be treated as the owner of a Note for all purposes. (9) Unclaimed Money. If money for the payment of principal, premium, if any, or interest and Liquidated Damages, if any, remains unclaimed for two years, the Trustee and the Paying Agent will pay the money back to the Company at its written request. After that, Holders entitled to the money must look to the Company for payment, unless an abandoned property law designates another Person, and all liability of the Trustee and such Paying Agent with respect to such money shall cease. (10) Discharge Prior to Redemption or Maturity. If the Company irrevocably deposits, or causes to be deposited, with the Trustee money or U.S. Government Obligations sufficient to pay the then outstanding principal of and premium, if any, and accrued interest and Liquidated Damages on the Notes (a) to redemption or maturity, the Company will be discharged from the Indenture and the Notes, except in certain circumstances for certain sections thereof, and (b) to redemption or maturity, the Company will be discharged from certain covenants set forth in the Indenture. (11) Amendment; Supplement; Waiver. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the Notes then Outstanding, and any existing Default or compliance with any provision may be waived with the consent of the Holders of a majority in aggregate principal amount of the Notes then Outstanding. Without notice to or the consent of any Holder, the parties thereto may amend the Indenture or the Notes to the extent set forth in the Indenture. (12) Restrictive Covenants. The Indenture contains certain covenants, including, without limitation, covenants with respect to the following matters: (i) Indebtedness; (ii) Restricted Payments; (iii) distributions from Restricted Subsidiaries and Joint Ventures; (iv) sales of assets; (v) transactions with Affiliates; (vi) Liens; (vii) no amendment to subordination provisions; (viii) repurchase of Notes upon a Change in A-7 Control; (ix) Sale and Leaseback Transactions; (x) Subsidiary Guarantees; and (xi) consolidation, merger and sale of assets. Within 120 days after the end of each fiscal year, the Company must report to the Trustee on compliance with such limitations. (13) Successor Persons. When a successor person or other entity (other than a Subsidiary of the Company) assumes all the obligations of its predecessor under the Notes and the Indenture, the predecessor person will be released from those obligations. (14) Remedies for Events of Default. If an Event of Default (other than an Event of Default specified in Section 6.01(g) or (h) of the Indenture that occurs with respect to the Company or a Subsidiary Guarantor) occurs and is continuing under this Indenture, then in every such case the Trustee or the Holders of at least 25% in aggregate principal amount of the Outstanding Notes, by written notice to the Company (and to the Trustee if such notice is given by the Holders), may, and the Trustee at the written request of such Holders shall, declare the principal of, premium, if any, and accrued interest and Liquidated Damages, if any, on all of the Outstanding Notes to be immediately due and payable. Upon a declaration of acceleration, such principal of, premium, if any, and accrued interest and Liquidated Damages, if any, shall be immediately due and payable. If an Event of Default specified in Section 6.01(g) or (h) of the Indenture occurs with respect to the Company or a Subsidiary Guarantor, the principal of, premium, if any, and accrued interest and Liquidated Damages, if any, on the Outstanding Notes shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. The Holders of at least a majority in aggregate principal amount of the Outstanding Notes by written notice to the Company and to the Trustee, may waive all past defaults and rescind and annul a declaration of acceleration and its consequences if (1) all existing Events of Default, other than the nonpayment of the principal of, premium, if any, and interest and Liquidated Damages, if any, on the Notes that have become due solely by such declaration of acceleration, have been cured or waived and (2) the recission would not conflict with any judgment or decree of a court of competent jurisdiction. Holders may not enforce the Indenture, the Notes or the Subsidiary Guarantees except as provided in the Indenture. The Trustee may require security or indemnity satisfactory to it before it enforces the Indenture, the Notes or the Subsidiary Guarantees. The Holders of at least a majority in aggregate principal amount of the Notes then Outstanding may direct the Trustee in the exercise of any trust or power in accordance with the terms of the Indenture. (15) Security. In order to secure the Indenture Obligations, the Company and certain of its Restricted Subsidiaries have entered into the Security Documents. The Indenture Obligations shall be secured by Liens on the Collateral in accordance with the terms and provisions of the Security Documents. The Indenture requires that Holders of the Notes be granted a lien equally and ratably with any lien granted on additional assets to secure the holders of Existing Credit Facility Obligations subsequent to the Issue Date. Each Holder of this Note, by accepting the same, agrees that (i) the Existing Security Documents provide, and any Security Document that becomes effective after the Issue Date, may provide, that the Liens created thereby or thereunder automatically will be released and extinguished with respect to any property or security that is transferred or A-8 otherwise disposed of in accordance with the terms of the Existing Credit Facility, including any property or security that is the subject of a Major Asset Sale and is transferred to a Subject Asset Transferee; (ii) without the necessity of any consent of or notice to the Trustee or any holder of Indenture Obligations, the Company and the Collateral Agent may amend, modify, supplement or terminate any Security Document as long as the Company remains in compliance with the Indenture; (iii) as among the Trustee and the holders of Indenture Obligations and the lenders under the Existing Credit Facility and the Collateral Agent, those lenders and the Collateral Agent will have the sole ability to control and obtain remedies with respect to all Collateral (including on sale or liquidation of any Collateral after acceleration of the Notes, the Existing Senior Secured Notes, the Existing Credit Facility Obligations or the Existing ARCO Chemical Debt) without the necessity of any consent of or notice to the Trustee or any such holder; (iv) any or all Liens granted under the Security Documents for the benefit of the Holders will be automatically released, without the necessity of any consent of the Trustee or the Holders, upon a release of such Lien or Liens pursuant to the terms of the Security Documents and the Existing Credit Facility or if such release is approved by the requisite lenders under the Existing Credit Facility; (v) the relative rights of the holders of Indenture Obligations and the holders of Indebtedness or other obligations secured by Liens on the Collateral are governed by, and are subject to the terms and conditions of, the Security Documents and not this Indenture; and (vi) without the necessity of any consent of or notice to the Trustee or any holder of Indenture Obligations, the Company may, on behalf of itself or any of its Restricted Subsidiaries, request and instruct the Collateral Agent to, on behalf of each secured party under the Security Documents, (A) execute and deliver to the Company, for the benefit of any Person, such release documents as the Company may reasonably request, of all liens and security interests held by the Collateral Agent in such assets, and such Person shall be entitled to rely conclusively on such release document, and (B) deliver any such assets in the possession of the Collateral Agent to the Company. From and after the date when all liens granted in favor of the holders of Existing Credit Facility Obligations are released, the provisions regarding security described above will no longer apply. (16) Subsidiary Guarantees. Each Subsidiary Guarantor irrevocably and unconditionally guarantees, jointly and severally, on a senior basis, the full and punctual payment (whether at Stated Maturity, upon acceleration, optional redemption, upon repurchase following a Change of Control Offer or an Asset Sale Offer or otherwise) of the principal of, premium, if any, and interest and Liquidated Damages, if any, on, and all other amounts payable under, this Note provided for under this Indenture, and the full and punctual payment of all other amounts payable by the Company under the Indenture; provided that, notwithstanding anything to the contrary herein, the aggregate amount of the Obligations guaranteed under the Indenture by any Subsidiary Guarantor shall be limited in amount to the maximum amount that would not render such Subsidiary Guarantor's obligations subject to avoidance under the applicable fraudulent conveyance provisions of the United States Bankruptcy Code or any comparable provision of any applicable state law. (17) Additional Subsidiary Guarantees. If any of the Company's Restricted Subsidiaries shall Guarantee or secure the payment of any other Indebtedness of the Company or any of its Restricted Subsidiaries, then, subject to certain exceptions A-9 specified in the Indenture, such Restricted Subsidiary shall become a Subsidiary Guarantor by executing a supplemental indenture. (18) Trustee Dealings with Company. The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may make loans to, accept deposits from, perform services for, and otherwise deal with, the Company and its Affiliates as if it were not the Trustee. (19) Authentication. This Note shall not be valid until the Trustee signs the certificate of authentication on this Note. (20) Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors Act). (21) Governing Law. This Note shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to any principles of conflict of laws to the extent that the application of the law of another jurisdiction is required thereby. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to the Company, One Houston Center, Suite 700, 1221 McKinney, Houston, Texas 77010; Attention: General Counsel. A-10 [FORM OF TRANSFER NOTICE] FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s) and transfer(s) unto Insert Taxpayer Identification No. __________________________________________________________________________ (Please print or typewrite name and address including zip code of assignee) __________________________________________________________________________ the within Note and all rights thereunder, hereby irrevocably constituting and appointing __________________________________________________________________________ attorney to transfer such Note on the books of the Company with full power of substitution in the premises. A-11 [THE FOLLOWING PROVISION TO BE INCLUDED ON ALL CERTIFICATES BEARING A PRIVATE PLACEMENT LEGEND] In connection with any transfer of this Note occurring prior to December 4, 2003, the undersigned confirms that without utilizing any general solicitation or general advertising that: Check One (a) this Note is being transferred in compliance with the exemption from registration under the Securities Act of 1933, as amended, provided by Rule 144A thereunder and the certificate attached hereto has been completed. [_] (b) this Note is being transferred in compliance with Regulation S under the Securities Act and a certificate in the form specified by the Indenture is being furnished herewith. [_] (c) this Note is being transferred in compliance with the exemption from registration under the Securities Act of 1933, as amended, provided by Rule 144 thereunder. [_] (d) this Note is being transferred to the Company. [_] or (e) this Note is being transferred other than in accordance with (a), (b) or (d) above, and documents are being furnished which comply with the conditions of transfer set forth in this Note and the Indenture. [_] If none of the foregoing boxes is checked, the Trustee or other Registrar shall not be obligated to register this Note in the name of any Person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Sections 3.13 and 3.14 of the Indenture shall have been satisfied. Date:_________________ _________________________ NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within-mentioned instrument in every particular, without alteration or any change whatsoever. Signature Guarantee: _______________________________ Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such A-12 other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED. The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated:_____________________ _______________________________________ To be executed by an executive officer A-13 OPTION OF HOLDER TO ELECT PURCHASE If you wish to have this Note purchased by the Company pursuant to Section 4.09 or Section 4.14 of the Indenture, check the box: [_] If you wish to have a portion of this Note purchased by the Company pursuant to Section 4.09 or Section 4.14 of the Indenture, state the amount (in original principal amount) below: $_____________________. Date:____________ Your Signature:__________________________ (Sign exactly as your name appears on the other side of this Note) Signature Guarantee:_____________________________ Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A-14 SCHEDULE OF EXCHANGES OF SECURITIES The following exchanges of a part of this Global Note for Physical Notes or a part of another Global Note have been made:
Principal amount of this Amount of decrease Amount of increase in Global Note following Signature of in principal amount principal amount of this such decrease (or authorized officer of Date of Exchange of this Global Note Global Note increase) Trustee
A-15 EXHIBIT B SUPPLEMENTAL INDENTURE dated as of __________, ____ among LYONDELL CHEMICAL COMPANY, as Company [SUBSIDIARY GUARANTORS] and THE BANK OF NEW YORK, as Trustee ________________ 9 1/2% Senior Secured Notes due 2008 THIS SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), entered into as of __________, ____, among LYONDELL CHEMICAL COMPANY., a Delaware corporation (the "Company") [INSERT EACH SUBSIDIARY GUARANTOR EXECUTING THIS SUPPLEMENTAL INDENTURE AND ITS JURISDICTION OF INCORPORATION] (each an "Undersigned") and THE BANK OF NEW YORK, as trustee (the "Trustee"). RECITALS WHEREAS, the Company, the Subsidiary Guarantors party thereto and the Trustee entered into the Indenture, dated as of December 4, 2001 (the "Indenture"), relating to the Company's 9 1/2% Senior Secured Notes due 2008 (the "Notes"); WHEREAS, as a condition to the Trustee entering into the Indenture and the purchase of the Notes by the Holders, the Company agreed, subject to certain exceptions, pursuant to Section 4.22 of the Indenture to cause any Restricted Subsidiary that has guaranteed or secured Indebtedness of the Company or any of its Restricted Subsidiaries to provide Subsidiary Guarantees. AGREEMENT NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained and intending to be legally bound, the parties hereto hereby agree as follows: Section 1. Capitalized terms used herein and not otherwise defined herein are used as defined in the Indenture. Section 2. Each Undersigned, by its execution of this Supplemental Indenture, agrees to be a Subsidiary Guarantor under the Indenture and to be bound by the terms of the Indenture applicable to Subsidiary Guarantors, including, but not limited to, Article 13 thereof. Section 3. This Supplemental Indenture shall be governed by and construed in accordance with the internal laws of the State of New York. Section 4. This Supplemental Indenture may be signed in various counterparts which together shall constitute one and the same instrument. Section 5. This Supplemental Indenture is an amendment supplemental to the Indenture and said Indenture and this Supplemental Indenture shall henceforth be read together. IN WITNESS WHEREOF, the parties have duly executed and delivered this Supplemental Indenture or have caused this Supplemental Indenture to be duly executed on their respective behalf by their respective officers thereunto duly authorized, as of the day and year first above written. B-2 LYONDELL CHEMICAL COMPANY By:___________________________ Name: Title: [SUBSIDIARY GUARANTORS] THE BANK OF NEW YORK, as Trustee By:___________________________ Name: Title: B-3 EXHIBIT C Form of Certificate of Beneficial Ownership The Bank of New York 101 Barclay Street, Floor 21 West New York, New York 10286 Attention: Corporate Trust Administration Re: Lyondell Chemical Company 9 1/2% Senior Secured Notes due 2008 (the "Notes") Issued under the Indenture (the "Indenture") dated as of December 4, 2001 relating to the Notes ----------------------------------------------------- This is to certify that based solely on certifications we have received in writing, by tested telex or by electronic transmission from member organizations ("Member Organizations") appearing in our records as persons being entitled to a portion of the principal amount of Notes represented by Temporary Offshore Global Note issued under the above-referenced Indenture, that as of the date hereof, $____ principal amount of Notes represented by the Temporary Offshore Global Note being submitted herewith for exchange is beneficially owned by persons who are either (i) non-U.S. persons (within the meaning of Regulation S under the Securities Act of 1933, as amended) or (ii) U.S. persons who purchased the Notes in a transaction that did not require registration under the Securities Act of 1933, as amended. We further certify that (i) we are not submitting herewith for exchange any portion of such Temporary Offshore Global Note excepted in such Member Organization certifications and (ii) as of the date hereof we have not received any notification from any Member Organization to the effect that the statements made by such Member Organization with respect to any portion of such Temporary Offshore Global Note submitted herewith for exchange are no longer true and cannot be relied upon as of the date hereof. Accordingly, you are hereby requested to (i) exchange $______ of such beneficial interest held by non-U.S. persons in the Temporary Offshore Global Note for an equivalent beneficial interest in a Permanent Offshore Global Note and (ii) transfer $________ of such beneficial interest held by U.S. persons in the Temporary Offshore Global Note into an equivalent beneficial interest in the U.S. Global Note. C-1 You and the Company are entitled to rely upon this Certificate and are irrevocably authorized to produce this Certificate or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby. Yours faithfully, [EUROCLEAR BANK S.A./N.V., as operator of the Euroclear System] OR [CLEARSTREAM BANK, societe anonyme] By:_______________________________ Name: Title: Date:____________________ C-2 EXHIBIT D Form of Certificate to be Delivered in Connection with Transfers Pursuant to Regulation S --------------------------------------- _________, ____ The Bank of New York 101 Barclay Street, Floor 21 West New York, New York 10286 Attention: Corporate Trust Administration Re: Lyondell Chemical Company 9 1/2% Senior Secured Notes due 2008 (the "Notes") --------------------------------------------------- Dear Sirs: In connection with our proposed sale of U.S.$________ aggregate principal amount of the Notes, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the Securities Act of 1933, as amended, and, accordingly, we represent that: (1) the offer of the Notes was not made to a person in the United States; (2) at the time the buy order was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States; (3) no directed selling efforts have been made by us in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable; and (4) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act of 1933. D-1 You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. Very truly yours, [Name of Transferor] By:___________________________ Authorized Signatory D-2 EXHIBIT E Form of Accredited Investor Certificate Transferee Letter of Representation The Bank of New York 101 Barclay Street, Floor 21 West New York, New York 10286 Attention: Corporate Trust Administration Ladies and Gentlemen: In connection with our proposed purchase of $[ ] aggregate principal amount of the 9 1/2% Senior Secured Notes due 2008 (the "Notes") of Lyondell Chemical Company (the "Company"), we confirm that: 1. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act of 1933, as amended (the "Securities Act"), purchasing for our own account or for the account of such an institutional "accredited investor" as to which we exercise sole investment discretion, and we have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any account for which we are acting are each able to bear the economic risk of our or its investment. 2. We understand and knowledge that the Notes have been registered under the Securities Act or any other applicable securities law, and that the Notes may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any account for which we are acting, that if we should sell any Notes within the time period referred to in Rule 144(k) of the Securities Act, we will do so only (A) to the Company, (B) pursuant to an effective registration statement under the Securities Act or any subsidiary thereof, (C) in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined therein), (D) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (E) in a principal amount of not less than $100,000 to an institutional "accredited investor" (as defined above) that, prior to such transfer, furnishes to the Trustee under the Indenture a signed letter containing certain representations and agreements relating to the restrictions on transfer of the Notes (the form of which letter can be obtained from the Trustee), (F) pursuant to the exemption from registration provided by Rule 144 under the Securities Act (if available), or any other exemption from the registration requirements of the securities Act and in compliance with the terms of the Indenture (which terms require the delivery of such opinions and certifications as the Company and the Trustee may require), and we further agree to provide to any person purchasing any of the Notes from us a notice advising such purchaser that resales of the Notes are restricted as stated herein. E-1 3. We are acquiring the Notes for investment purposes and not with a view to distribution thereof or with any present intention of offering or selling any Notes, except as permitted above. You and the Company are entitled to rely upon this letter and you are irrevocably authorized to produce this letter or a copy hereto to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby. THIS LETTER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF, OTHER THAN ANY MANDATING THE APPLICATION OF SUCH LAWS). Very truly yours, (Name of Purchaser) By:________________________________ Name: Title: Date:______________________________ Upon transfer, the Notes would be registered in the name of the new beneficial owner as follows: By: _____________________________ Date: ____________________________ Taxpayer ID number: ______________ E-2 EX-5 11 dex5.txt OPINION OF BAKER BOTTS LLP EXHIBIT 5 [Letterhead of Baker Botts LLP] 016119.0297 January 10, 2002 Lyondell Chemical Company Lyondell Chemical Nederland, Ltd. ARCO Chemical Technology, Inc. ARCO Chemical Technology, LP One Houston Center 1221 McKinney, Suite 700 Houston, Texas 77010 Ladies and Gentlemen: As set forth in the Registration Statement on Form S-4 (the "Registration Statement") to be filed by Lyondell Chemical Company, a Delaware corporation ("Lyondell"), Lyondell Chemical Nederland, Ltd., a Delaware corporation ("LCNL"), ARCO Chemical Technology, Inc., a Delaware corporation ("ACTI"), and ARCO Chemical Technology, LP, a Delaware limited partnership ("ACTLP") (together, the "Co-registrants"), with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act"), relating to the registration under the Act of $393 million aggregate principal amount of 9 1/2% Senior Secured Notes due 2008 (the "New Notes") to be offered by Lyondell in exchange (the "Exchange Offer") for a like principal amount of its issued and outstanding 9 1/2% Senior Secured Notes due 2008 (the "Outstanding Notes") and the issuance of the related guarantees of the New Notes by LCNL, ACTI and ACTLP (the "Guarantees"), we are passing upon certain legal matters in connection with the New Notes and the Guarantees for Lyondell, LCNL, ACTI and ACTLP. The New Notes are to be issued under an Indenture (the "Indenture") dated as of December 4, 2001 among Lyondell, the Subsidiary Guarantors party thereto and The Bank of New York, as trustee. At your request, this opinion is being furnished to you for filing as Exhibit 5 to the Registration Statement. In our capacity as counsel to Lyondell, LCNL, ACTI and ACTLP in connection with the matters referred to above, we have examined the following: (i) the Amended and Restated Certificate of Incorporation and the Amended and Restated Bylaws of Lyondell, the Certificate of Incorporation and Bylaws of LCNL, the Certificate of Incorporation and the Bylaws of ACTI, and the Certificate of Limited Partnership and Partnership Agreement of ACTLP, each as amended to date, (ii) the Indenture and (iii) the originals, or copies certified or otherwise identified, of corporate records of Lyondell, LCNL, ACTI and ACTLP, including minute books of Lyondell, LCNL, ACTI and ACTLP as furnished to us by Lyondell, LCNL, ACTI and ACTLP, certificates of public officials and of representatives of Lyondell, LCNL, ACTI and ACTLP, statutes and other instruments and documents as a basis for the opinions hereinafter expressed. In giving such an opinion, we have relied upon certificates of officers of Lyondell, LCNL, ACTI and ACTLP with respect to the accuracy of the material factual matters BAKER BOTTS LLP Lyondell Chemical Company Lyondell Chemical Nederland, Ltd. ARCO Chemical Technology, Inc. ARCO Chemical Technology, LP January 10, 2002 Page 2 contained in such certificates. We have assumed that all signatures on documents examined by us are genuine, all documents submitted to us are authentic and all documents submitted as certified or photostatic copies conform to the originals thereof. On the basis of the foregoing, and subject to the assumptions, limitations and qualifications set forth herein, we are of the opinion that when (i) the Registration Statement has become effective under the Act and the Indenture has been qualified under the Trust Indenture Act of 1939, as amended, and (ii) the New Notes have been duly executed, authenticated and delivered in accordance with the provisions of the Indenture and issued in exchange for Outstanding Notes pursuant to, and in accordance with the terms of, the Exchange Offer as contemplated in the Registration Statement, (a) the New Notes will constitute legal, valid and binding obligations of Lyondell, enforceable against it in accordance with their terms, except to the extent that the enforceability thereof may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium or other laws relating to or affecting creditors' rights generally and by general principles of equity and public policy (regardless of whether such enforceability is considered in a proceeding in equity or at law) and (b) the Guarantees will be entitled to the benefits of the Indenture and will constitute legal, valid and binding obligations of LCNL, ACTI and ACTLP enforceable against LCNL, ACTI and ACTLP in accordance with their terms, except to the extent that the enforceability thereof may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium or other laws relating to or affecting creditors' rights generally and by principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). The opinion set forth above is based on and limited in all respects to matters of the federal laws of the United States, the General Corporation Law of the State of Delaware, the Revised Uniform Limited Partnership Act of the State of Delaware, the contract law of the State of New York and the laws of the State of Texas, each as currently in effect. We hereby consent to the filing of this opinion of counsel as Exhibit 5 to the Registration Statement and to the reference to our Firm under the heading "Legal Matters" in the prospectus forming a part of the Registration Statement. In giving this consent, we do not hereby admit that we are in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission thereunder. Very truly yours, BAKER BOTTS L.L.P. SAM/SA EX-12 12 dex12.txt COMPUTATION OF RATIO OF EARNINGS EXHIBIT 12 LYONDELL CHEMICAL COMPANY STATEMENT SETTING FORTH DETAIL FOR COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Millions of dollars)
TWELVE TWELVE NINE MONTHS NINE MONTHS MONTHS TWELVE MONTHS ENDED ENDED ENDED MONTHS ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31, DECEMBER 31, DECEMBER 31, 2001 2000 2000 1999 1998 ------------- ------------- ------------ ------------- ------------ Income from continuing operations before income taxes A $(147) $ 759 $ 693 $(104) $ 89 FIXED CHARGES: Interest expense, gross 374 486 627 717 385 Portion of rentals representative of interest 35 35 46 53 35 ----- ------ ------ ----- ---- Total fixed charges before capitalized interest B 408 520 673 770 420 Capitalized interest - - - - - ----- ------ ------ ----- ---- Total fixed charges including capitalized interest C 408 520 673 770 420 EARNINGS (A+B) D 261 1,279 1,366 666 509 Ratio of Earnings to Fixed Charges (D/C) 0.6x 2.5x 2.0x 0.9x 1.2x ===== ====== ====== ===== ====
EX-23.1 13 dex231.txt CONSENT OF PRICEWATERHOUSECOOPERS LLP Exhibit 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form S-4 of Lyondell Chemical Company of the following reports, which appear in Lyondell Chemical Company's Annual Report on Form 10-K for the year ended December 31, 2000. We also consent to the references to us under the heading "Experts" in such Registration Statement. . Our report dated March 12, 2001 on our audits of the consolidated financial statements of Lyondell Chemical Company as of December 31, 2000 and 1999 and for each of the three years in the period ended December 31, 2000. . Our report dated March 12, 2001 on our audits of the consolidated financial statements of Equistar Chemicals, LP as of December 31, 2000 and 1999 and for each of the three years in the period ended December 31, 2000. . Our report dated February 15, 2001 on our audits of the financial statements of LYONDELL-CITGO Refining LP as of December 31, 2000 and 1999 for each of the two years in the period ended December 31, 2000. PricewaterhouseCoopers LLP Houston, Texas January 10, 2002 EX-23.2 14 dex232.txt CONSENT OF DELOITTE & TOUCHE LLP EXHIBIT 23.2 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of Lyondell Chemical Company on Form S-4 of our report on Lyondell-CITGO Refining LP dated February 11, 1999, appearing in the Annual Report on Form 10-K of Lyondell Chemical Company for the year ended December 31, 2000 and to the reference to us under the heading "Experts" in the Prospectus, which is part of this Registration Statement. DELOITTE & TOUCHE LLP Houston, Texas January 10, 2002 EX-24.1 15 dex241.txt LYONDELL CHEMICAL COMPANY POWER OF ATTORNEY EXHIBIT 24.1 LYONDELL CHEMICAL COMPANY POWER OF ATTORNEY ----------------- Each person whose signature appears below hereby constitutes and appoints Dan F. Smith, Robert T. Blakely, Kelvin Collard, and Kerry A. Galvin and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, in connection with any outstanding securities of Lyondell Chemical Company (the "Company"), or any public offering or other issuance of any securities of the Company authorized by the Board of Directors of the Company, or by the Executive Committee thereof pursuant to due authorization by such Board, (1) to execute and file, or cause to be filed, with the United States Securities and Exchange Commission (the "Commission"), (A) registration statements and any and all amendments (including post-effective amendments), and exhibits thereto and any and all other documents in connection therewith as required by the Commission in connection with such registration under the Securities Act of 1933, as amended, and (B) any report or other document required to be filed by the Company with the Commission pursuant to the Securities Exchange Act of 1934, as amended, (2) to execute and file, or cause to be filed, any application for registration or exemption therefrom, any report or any other document required to be filed by the Company under the Blue Sky or securities law of any state and to furnish any other information required in connection therewith, (3) to execute and file, or cause to be filed, any application for registration or exemption therefrom under the securities laws of any jurisdiction outside the United States of America, including any reports or other documents required to be filed subsequent to the issuance of such securities, and (4) to execute and file, or cause to be filed, any application for listing such securities on the New York Stock Exchange, or any other securities exchange in any other jurisdiction where any such securities are proposed to be sold, granting to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act required to be done as he or she might or could do in person, hereby ratifying and confirming all that such attorneys-in-fact and agents, and each of them, may lawfully do or cause to be done by virtue of this power of attorney. Each person whose signature appears below may at any time revoke this power of attorney as to himself or herself only by an instrument in writing specifying that this power of attorney is revoked as to him or her as of the date of execution of such instrument or at a subsequent specified date. This power of attorney shall be revoked automatically with respect to any person whose signature appears below effective on the date he or she ceases to be a member of the Board of Directors or an officer of the Company. Any revocation hereof shall not void or otherwise affect any acts performed by any attorney-in- fact and agent named herein pursuant to this power of attorney prior to the effective date of such revocation. Dated: March 1, 2001 Signature Title --------- ----- /s/ DAN F. SMITH President, Chief Executive Officer and - ------------------------------- Director Dan F. Smith /s/ ROBERT T. BLAKELY Executive Vice President and Chief - ------------------------------- Financial Officer Robert T. Blakely /s/ KELVIN COLLARD Vice President and Controller - ------------------------------- Kelvin Collard Signature Title --------- ----- /s/ DR. WILLIAM T. BUTLER - ------------------------------- Chairman and Director Dr. William T. Butler /s/ CAROL A. ANDERSON - ------------------------------- Director Carol A. Anderson /s/ TRAVIS ENGEN - ------------------------------- Director Travis Engen /s/ DAVID J. LESAR - ------------------------------- Director David J. Lesar /s/ STEPHEN F. HINCHLIFFE, JR. - ------------------------------- Director Stephen F. Hinchliffe, Jr. /s/ DUDLEY C. MECUM II - ------------------------------- Director Dudley C. Mecum II /s/ DR. WILLIAM R. SPIVEY - ------------------------------- Director Dr. William R. Spivey /s/ PAUL R. STALEY - ------------------------------- Director Paul R. Staley EX-24.2 16 dex242.txt ARCO CHEMICAL TECHNOLOGY, INC. POWER OF ATTORNEY EXHIBIT 24.2 ARCO CHEMICAL TECHNOLOGY, INC. POWER OF ATTORNEY WHEREAS, ARCO CHEMICAL TECHNOLOGY, INC., a Delaware corporation (the "Company"), an indirect wholly owned subsidiary of Lyondell Chemical Company ("Lyondell"), intends to file with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act"), a Registration Statement on Form S-4, including a prospectus, with such amendment or amendments thereto, whether pre-effective or post-effective, in each case as may be necessary or appropriate, together with any and all exhibits and other documents having relation to said Registration Statement (collectively, the "Registration Statement"), in connection with Lyondell's proposal to offer to exchange up to $393,000,000 aggregate principal amount of 9 1/2% Senior Secured Notes due 2008, registered under the Act and guaranteed by the Company, for like aggregate principal amounts of outstanding 9 1/2% Senior Secured Notes due 2008 issued by Lyondell and guaranteed by the Company. NOW, THEREFORE, the undersigned, in his or her capacity as a director or officer, or both, as the case may be, of the Company, does hereby appoint Kerry A. Galvin and Robert T. Blakely, and each of them severally, his or her true and lawful attorneys or attorney with power to act with or without the others and with full power of substitution and resubstitution, to execute in his or her name, place and stead, in his or her capacity as a director or officer or both, as the case may be, of the Company, the Registration Statement and all instruments necessary or incidental in connection therewith, with such amendment or amendments thereto in each case as may be necessary or appropriate, together with any and all exhibits and other documents relating thereto as said attorneys or any of them shall deem necessary or incidental in connection therewith, and to file the same or cause the same to be filed with the Commission. Each of said attorneys shall have full power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever necessary or desirable to be done to the premises, as fully and to all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has executed this instrument on this 10th day of January, 2002. /s/ FRANCIS P. MCGRAIL --------------------------- FRANCIS P. MCGRAIL EXHIBIT 24.2 ARCO CHEMICAL TECHNOLOGY, INC. POWER OF ATTORNEY WHEREAS, ARCO CHEMICAL TECHNOLOGY, INC., a Delaware corporation (the "Company"), an indirect wholly owned subsidiary of Lyondell Chemical Company ("Lyondell"), intends to file with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act"), a Registration Statement on Form S-4, including a prospectus, with such amendment or amendments thereto, whether pre-effective or post-effective, in each case as may be necessary or appropriate, together with any and all exhibits and other documents having relation to said Registration Statement (collectively, the "Registration Statement"), in connection with Lyondell's proposal to offer to exchange up to $393,000,000 aggregate principal amount of 9 1/2% Senior Secured Notes due 2008, registered under the Act and guaranteed by the Company, for like aggregate principal amounts of outstanding 9 1/2% Senior Secured Notes due 2008 issued by Lyondell and guaranteed by the Company. NOW, THEREFORE, the undersigned, in his or her capacity as a director or officer, or both, as the case may be, of the Company, does hereby appoint Kerry A. Galvin and Robert T. Blakely, and each of them severally, his or her true and lawful attorneys or attorney with power to act with or without the others and with full power of substitution and resubstitution, to execute in his or her name, place and stead, in his or her capacity as a director or officer or both, as the case may be, of the Company, the Registration Statement and all instruments necessary or incidental in connection therewith, with such amendment or amendments thereto in each case as may be necessary or appropriate, together with any and all exhibits and other documents relating thereto as said attorneys or any of them shall deem necessary or incidental in connection therewith, and to file the same or cause the same to be filed with the Commission. Each of said attorneys shall have full power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever necessary or desirable to be done to the premises, as fully and to all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has executed this instrument on this 10th day of January, 2002. /s/ EVA CHU ------------------------- EVA CHU EXHIBIT 24.2 ARCO CHEMICAL TECHNOLOGY, INC. POWER OF ATTORNEY WHEREAS, ARCO CHEMICAL TECHNOLOGY, INC., a Delaware corporation (the "Company"), an indirect wholly owned subsidiary of Lyondell Chemical Company ("Lyondell"), intends to file with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act"), a Registration Statement on Form S-4, including a prospectus, with such amendment or amendments thereto, whether pre-effective or post-effective, in each case as may be necessary or appropriate, together with any and all exhibits and other documents having relation to said Registration Statement (collectively, the "Registration Statement"), in connection with Lyondell's proposal to offer to exchange up to $393,000,000 aggregate principal amount of 9 1/2% Senior Secured Notes due 2008, registered under the Act and guaranteed by the Company, for like aggregate principal amounts of outstanding 9 1/2% Senior Secured Notes due 2008 issued by Lyondell and guaranteed by the Company. NOW, THEREFORE, the undersigned, in his or her capacity as a director or officer, or both, as the case may be, of the Company, does hereby appoint Kerry A. Galvin and Robert T. Blakely, and each of them severally, his or her true and lawful attorneys or attorney with power to act with or without the others and with full power of substitution and resubstitution, to execute in his or her name, place and stead, in his or her capacity as a director or officer or both, as the case may be, of the Company, the Registration Statement and all instruments necessary or incidental in connection therewith, with such amendment or amendments thereto in each case as may be necessary or appropriate, together with any and all exhibits and other documents relating thereto as said attorneys or any of them shall deem necessary or incidental in connection therewith, and to file the same or cause the same to be filed with the Commission. Each of said attorneys shall have full power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever necessary or desirable to be done to the premises, as fully and to all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has executed this instrument on this 10th day of January, 2002. /s/ LAURA C. FULTON ---------------------------- LAURA C. FULTON EXHIBIT 24.2 ARCO CHEMICAL TECHNOLOGY, INC. POWER OF ATTORNEY WHEREAS, ARCO CHEMICAL TECHNOLOGY, INC., a Delaware corporation (the "Company"), an indirect wholly owned subsidiary of Lyondell Chemical Company ("Lyondell"), intends to file with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act"), a Registration Statement on Form S-4, including a prospectus, with such amendment or amendments thereto, whether pre-effective or post-effective, in each case as may be necessary or appropriate, together with any and all exhibits and other documents having relation to said Registration Statement (collectively, the "Registration Statement"), in connection with Lyondell's proposal to offer to exchange up to $393,000,000 aggregate principal amount of 9 1/2% Senior Secured Notes due 2008, registered under the Act and guaranteed by the Company, for like aggregate principal amounts of outstanding 9 1/2% Senior Secured Notes due 2008 issued by Lyondell and guaranteed by the Company. NOW, THEREFORE, the undersigned, in his or her capacity as a director or officer, or both, as the case may be, of the Company, does hereby appoint Kerry A. Galvin and Robert T. Blakely, and each of them severally, his or her true and lawful attorneys or attorney with power to act with or without the others and with full power of substitution and resubstitution, to execute in his or her name, place and stead, in his or her capacity as a director or officer or both, as the case may be, of the Company, the Registration Statement and all instruments necessary or incidental in connection therewith, with such amendment or amendments thereto in each case as may be necessary or appropriate, together with any and all exhibits and other documents relating thereto as said attorneys or any of them shall deem necessary or incidental in connection therewith, and to file the same or cause the same to be filed with the Commission. Each of said attorneys shall have full power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever necessary or desirable to be done to the premises, as fully and to all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has executed this instrument on this 10th day of January, 2002. /s/ CHARLES L. HALL ----------------------------- CHARLES L. HALL EXHIBIT 24.2 ARCO CHEMICAL TECHNOLOGY, INC. POWER OF ATTORNEY WHEREAS, ARCO CHEMICAL TECHNOLOGY, INC., a Delaware corporation (the "Company"), an indirect wholly owned subsidiary of Lyondell Chemical Company ("Lyondell"), intends to file with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act"), a Registration Statement on Form S-4, including a prospectus, with such amendment or amendments thereto, whether pre-effective or post-effective, in each case as may be necessary or appropriate, together with any and all exhibits and other documents having relation to said Registration Statement (collectively, the "Registration Statement"), in connection with Lyondell's proposal to offer to exchange up to $393,000,000 aggregate principal amount of 9 1/2% Senior Secured Notes due 2008, registered under the Act and guaranteed by the Company, for like aggregate principal amounts of outstanding 9 1/2% Senior Secured Notes due 2008 issued by Lyondell and guaranteed by the Company. NOW, THEREFORE, the undersigned, in his or her capacity as a director or officer, or both, as the case may be, of the Company, does hereby appoint Kerry A. Galvin and Robert T. Blakely, and each of them severally, his or her true and lawful attorneys or attorney with power to act with or without the others and with full power of substitution and resubstitution, to execute in his or her name, place and stead, in his or her capacity as a director or officer or both, as the case may be, of the Company, the Registration Statement and all instruments necessary or incidental in connection therewith, with such amendment or amendments thereto in each case as may be necessary or appropriate, together with any and all exhibits and other documents relating thereto as said attorneys or any of them shall deem necessary or incidental in connection therewith, and to file the same or cause the same to be filed with the Commission. Each of said attorneys shall have full power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever necessary or desirable to be done to the premises, as fully and to all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has executed this instrument on this 10th day of January, 2002. /s/ DAVID J. PRILUTSKI ------------------------------------ DAVID J. PRILUTSKI EX-24.3 17 dex243.txt LYONDELL CHEMICAL NEDERLAND, LTD. POWER OF ATTORNEY EXHIBIT 24.3 LYONDELL CHEMICAL NEDERLAND, LTD. POWER OF ATTORNEY WHEREAS, LYONDELL CHEMICAL NEDERLAND, LTD., a Delaware corporation (the "Company"), an indirect wholly owned subsidiary of Lyondell Chemical Company ("Lyondell"), intends to file with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act"), a Registration Statement on Form S-4, including a prospectus, with such amendment or amendments thereto, whether pre-effective or post-effective, in each case as may be necessary or appropriate, together with any and all exhibits and other documents having relation to said Registration Statement (collectively, the "Registration Statement"), in connection with Lyondell's proposal to offer to exchange up to $393,000,000 aggregate principal amount of 9 1/2% Senior Secured Notes due 2008, registered under the Act and guaranteed by the Company, for like aggregate principal amounts of outstanding 9 1/2% Senior Secured Notes due 2008 issued by Lyondell and guaranteed by the Company. NOW, THEREFORE, the undersigned, in his or her capacity as a director or officer, or both, as the case may be, of the Company, does hereby appoint Kerry A. Galvin and Robert T. Blakely and each of them severally, his or her true and lawful attorneys or attorney with power to act with or without the others and with full power of substitution and resubstitution, to execute in his or her name, place and stead, in his or her capacity as a director or officer or both, as the case may be, of the Company, the Registration Statement and all instruments necessary or incidental in connection therewith, with such amendment or amendments thereto in each case as may be necessary or appropriate, together with any and all exhibits and other documents relating thereto as said attorneys or any of them shall deem necessary or incidental in connection therewith, and to file the same or cause the same to be filed with the Commission. Each of said attorneys shall have full power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever necessary or desirable to be done to the premises, as fully and to all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has executed this instrument on this 10th day of January, 2002. /s/ MORRIS GELB ------------------------------------ MORRIS GELB EXHIBIT 24.3 LYONDELL CHEMICAL NEDERLAND, LTD. POWER OF ATTORNEY WHEREAS, LYONDELL CHEMICAL NEDERLAND, LTD., a Delaware corporation (the "Company"), an indirect wholly owned subsidiary of Lyondell Chemical Company ("Lyondell"), intends to file with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act"), a Registration Statement on Form S-4, including a prospectus, with such amendment or amendments thereto, whether pre-effective or post-effective, in each case as may be necessary or appropriate, together with any and all exhibits and other documents having relation to said Registration Statement (collectively, the "Registration Statement"), in connection with Lyondell's proposal to offer to exchange up to $393,000,000 aggregate principal amount of 9 1/2% Senior Secured Notes due 2008, registered under the Act and guaranteed by the Company, for like aggregate principal amounts of outstanding 9 1/2% Senior Secured Notes due 2008 issued by Lyondell and guaranteed by the Company. NOW, THEREFORE, the undersigned, in his or her capacity as a director or officer, or both, as the case may be, of the Company, does hereby appoint Kerry A. Galvin and Robert T. Blakely and each of them severally, his or her true and lawful attorneys or attorney with power to act with or without the others and with full power of substitution and resubstitution, to execute in his or her name, place and stead, in his or her capacity as a director or officer or both, as the case may be, of the Company, the Registration Statement and all instruments necessary or incidental in connection therewith, with such amendment or amendments thereto in each case as may be necessary or appropriate, together with any and all exhibits and other documents relating thereto as said attorneys or any of them shall deem necessary or incidental in connection therewith, and to file the same or cause the same to be filed with the Commission. Each of said attorneys shall have full power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever necessary or desirable to be done to the premises, as fully and to all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has executed this instrument on this 10th day of January, 2002. /s/ ROBERT T. BLAKELY ------------------------------------ ROBERT T. BLAKELY EXHIBIT 24.3 LYONDELL CHEMICAL NEDERLAND, LTD. POWER OF ATTORNEY WHEREAS, LYONDELL CHEMICAL NEDERLAND, LTD., a Delaware corporation (the "Company"), an indirect wholly owned subsidiary of Lyondell Chemical Company ("Lyondell"), intends to file with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act"), a Registration Statement on Form S-4, including a prospectus, with such amendment or amendments thereto, whether pre-effective or post-effective, in each case as may be necessary or appropriate, together with any and all exhibits and other documents having relation to said Registration Statement (collectively, the "Registration Statement"), in connection with Lyondell's proposal to offer to exchange up to $393,000,000 aggregate principal amount of 9 1/2% Senior Secured Notes due 2008, registered under the Act and guaranteed by the Company, for like aggregate principal amounts of outstanding 9 1/2% Senior Secured Notes due 2008 issued by Lyondell and guaranteed by the Company. NOW, THEREFORE, the undersigned, in his or her capacity as a director or officer, or both, as the case may be, of the Company, does hereby appoint Kerry A. Galvin and Robert T. Blakely and each of them severally, his or her true and lawful attorneys or attorney with power to act with or without the others and with full power of substitution and resubstitution, to execute in his or her name, place and stead, in his or her capacity as a director or officer or both, as the case may be, of the Company, the Registration Statement and all instruments necessary or incidental in connection therewith, with such amendment or amendments thereto in each case as may be necessary or appropriate, together with any and all exhibits and other documents relating thereto as said attorneys or any of them shall deem necessary or incidental in connection therewith, and to file the same or cause the same to be filed with the Commission. Each of said attorneys shall have full power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever necessary or desirable to be done to the premises, as fully and to all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has executed this instrument on this 10th day of January, 2002. /s/ T. KEVIN DENICOLA ------------------------------------ T. KEVIN DENICOLA EXHIBIT 24.3 LYONDELL CHEMICAL NEDERLAND, LTD. POWER OF ATTORNEY WHEREAS, LYONDELL CHEMICAL NEDERLAND, LTD., a Delaware corporation (the "Company"), an indirect wholly owned subsidiary of Lyondell Chemical Company ("Lyondell"), intends to file with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act"), a Registration Statement on Form S-4, including a prospectus, with such amendment or amendments thereto, whether pre-effective or post-effective, in each case as may be necessary or appropriate, together with any and all exhibits and other documents having relation to said Registration Statement (collectively, the "Registration Statement"), in connection with Lyondell's proposal to offer to exchange up to $393,000,000 aggregate principal amount of 9 1/2% Senior Secured Notes due 2008, registered under the Act and guaranteed by the Company, for like aggregate principal amounts of outstanding 9 1/2% Senior Secured Notes due 2008 issued by Lyondell and guaranteed by the Company. NOW, THEREFORE, the undersigned, in his or her capacity as a director or officer, or both, as the case may be, of the Company, does hereby appoint Kerry A. Galvin and Robert T. Blakely and each of them severally, his or her true and lawful attorneys or attorney with power to act with or without the others and with full power of substitution and resubstitution, to execute in his or her name, place and stead, in his or her capacity as a director or officer or both, as the case may be, of the Company, the Registration Statement and all instruments necessary or incidental in connection therewith, with such amendment or amendments thereto in each case as may be necessary or appropriate, together with any and all exhibits and other documents relating thereto as said attorneys or any of them shall deem necessary or incidental in connection therewith, and to file the same or cause the same to be filed with the Commission. Each of said attorneys shall have full power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever necessary or desirable to be done to the premises, as fully and to all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has executed this instrument on this 10th day of January, 2002. /s/ KAREN A. TWITCHELL ------------------------------------ KAREN A. TWITCHELL EX-24.4 18 dex244.txt ARCO CHEMICAL TECHNOLOGY, L.P. POWER OF ATTORNEY EXHIBIT 24.4 ARCO CHEMICAL TECHNOLOGY, LP POWER OF ATTORNEY WHEREAS, ARCO CHEMICAL TECHNOLOGY, LP, a Delaware limited partnership (the "Company"), an indirect wholly owned subsidiary of Lyondell Chemical Company ("Lyondell"), intends to file with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act"), a Registration Statement on Form S-4, including a prospectus, with such amendment or amendments thereto, whether pre-effective or post-effective, in each case as may be necessary or appropriate, together with any and all exhibits and other documents having relation to said Registration Statement (collectively, the "Registration Statement"), in connection with Lyondell's proposal to offer to exchange up to $393,000,000 aggregate principal amount of 9 1/2% Senior Secured Notes due 2008, registered under the Act and guaranteed by the Company, for like aggregate principal amounts of outstanding 9 1/2% Senior Secured Notes due 2008 issued by Lyondell and guaranteed by the Company. NOW, THEREFORE, the undersigned, in his or her capacity as a director or officer, or both, as the case may be, of ARCO Chemical Technology Management, Inc., the general partner of the Company, does hereby appoint Kerry A. Galvin and Robert T. Blakely and each of them severally, his or her true and lawful attorneys or attorney with power to act with or without the others and with full power of substitution and resubstitution, to execute in his or her name, place and stead, in his or her capacity as a director or officer or both, as the case may be, of ARCO Chemical Technology Management, Inc., the general partner of the Company, the Registration Statement and all instruments necessary or incidental in connection therewith, with such amendment or amendments thereto in each case as may be necessary or appropriate, together with any and all exhibits and other documents relating thereto as said attorneys or any of them shall deem necessary or incidental in connection therewith, and to file the same or cause the same to be filed with the Commission. Each of said attorneys shall have full power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever necessary or desirable to be done to the premises, as fully and to all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has executed this instrument on this 10th day of January, 2002. /s/ FRANCIS P. MCGRAIL ------------------------------------ FRANCIS P. MCGRAIL EXHIBIT 24.4 ARCO CHEMICAL TECHNOLOGY, LP POWER OF ATTORNEY WHEREAS, ARCO CHEMICAL TECHNOLOGY, LP, a Delaware limited partnership (the "Company"), an indirect wholly owned subsidiary of Lyondell Chemical Company ("Lyondell"), intends to file with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act"), a Registration Statement on Form S-4, including a prospectus, with such amendment or amendments thereto, whether pre-effective or post-effective, in each case as may be necessary or appropriate, together with any and all exhibits and other documents having relation to said Registration Statement (collectively, the "Registration Statement"), in connection with Lyondell's proposal to offer to exchange up to $393,000,000 aggregate principal amount of 9 1/2% Senior Secured Notes due 2008, registered under the Act and guaranteed by the Company, for like aggregate principal amounts of outstanding 9 1/2% Senior Secured Notes due 2008 issued by Lyondell and guaranteed by the Company. NOW, THEREFORE, the undersigned, in his or her capacity as a director or officer, or both, as the case may be, of ARCO Chemical Technology Management, Inc., the general partner of the Company, does hereby appoint Kerry A. Galvin and Robert T. Blakely and each of them severally, his or her true and lawful attorneys or attorney with power to act with or without the others and with full power of substitution and resubstitution, to execute in his or her name, place and stead, in his or her capacity as a director or officer or both, as the case may be, of ARCO Chemical Technology Management, Inc., the general partner of the Company, the Registration Statement and all instruments necessary or incidental in connection therewith, with such amendment or amendments thereto in each case as may be necessary or appropriate, together with any and all exhibits and other documents relating thereto as said attorneys or any of them shall deem necessary or incidental in connection therewith, and to file the same or cause the same to be filed with the Commission. Each of said attorneys shall have full power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever necessary or desirable to be done to the premises, as fully and to all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has executed this instrument on this 10th day of January, 2002. /s/ EVA CHU ------------------------------------ EVA CHU EXHIBIT 24.4 ARCO CHEMICAL TECHNOLOGY, LP POWER OF ATTORNEY WHEREAS, ARCO CHEMICAL TECHNOLOGY, LP, a Delaware limited partnership (the "Company"), an indirect wholly owned subsidiary of Lyondell Chemical Company ("Lyondell"), intends to file with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act"), a Registration Statement on Form S-4, including a prospectus, with such amendment or amendments thereto, whether pre-effective or post-effective, in each case as may be necessary or appropriate, together with any and all exhibits and other documents having relation to said Registration Statement (collectively, the "Registration Statement"), in connection with Lyondell's proposal to offer to exchange up to $393,000,000 aggregate principal amount of 9 1/2% Senior Secured Notes due 2008, registered under the Act and guaranteed by the Company, for like aggregate principal amounts of outstanding 9 1/2% Senior Secured Notes due 2008 issued by Lyondell and guaranteed by the Company. NOW, THEREFORE, the undersigned, in his or her capacity as a director or officer, or both, as the case may be, of ARCO Chemical Technology Management, Inc., the general partner of the Company, does hereby appoint Kerry A. Galvin and Robert T. Blakely and each of them severally, his or her true and lawful attorneys or attorney with power to act with or without the others and with full power of substitution and resubstitution, to execute in his or her name, place and stead, in his or her capacity as a director or officer or both, as the case may be, of ARCO Chemical Technology Management, Inc., the general partner of the Company, the Registration Statement and all instruments necessary or incidental in connection therewith, with such amendment or amendments thereto in each case as may be necessary or appropriate, together with any and all exhibits and other documents relating thereto as said attorneys or any of them shall deem necessary or incidental in connection therewith, and to file the same or cause the same to be filed with the Commission. Each of said attorneys shall have full power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever necessary or desirable to be done to the premises, as fully and to all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has executed this instrument on this 10th day of January, 2002. /s/ LAURA C. FULTON ------------------------------------ LAURA C. FULTON EXHIBIT 24.4 ARCO CHEMICAL TECHNOLOGY, LP POWER OF ATTORNEY WHEREAS, ARCO CHEMICAL TECHNOLOGY, LP, a Delaware limited partnership (the "Company"), an indirect wholly owned subsidiary of Lyondell Chemical Company ("Lyondell"), intends to file with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act"), a Registration Statement on Form S-4, including a prospectus, with such amendment or amendments thereto, whether pre-effective or post-effective, in each case as may be necessary or appropriate, together with any and all exhibits and other documents having relation to said Registration Statement (collectively, the "Registration Statement"), in connection with Lyondell's proposal to offer to exchange up to $393,000,000 aggregate principal amount of 9 1/2% Senior Secured Notes due 2008, registered under the Act and guaranteed by the Company, for like aggregate principal amounts of outstanding 9 1/2% Senior Secured Notes due 2008 issued by Lyondell and guaranteed by the Company. NOW, THEREFORE, the undersigned, in his or her capacity as a director or officer, or both, as the case may be, of ARCO Chemical Technology Management, Inc., the general partner of the Company, does hereby appoint Kerry A. Galvin and Robert T. Blakely and each of them severally, his or her true and lawful attorneys or attorney with power to act with or without the others and with full power of substitution and resubstitution, to execute in his or her name, place and stead, in his or her capacity as a director or officer or both, as the case may be, of ARCO Chemical Technology Management, Inc., the general partner of the Company, the Registration Statement and all instruments necessary or incidental in connection therewith, with such amendment or amendments thereto in each case as may be necessary or appropriate, together with any and all exhibits and other documents relating thereto as said attorneys or any of them shall deem necessary or incidental in connection therewith, and to file the same or cause the same to be filed with the Commission. Each of said attorneys shall have full power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever necessary or desirable to be done to the premises, as fully and to all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has executed this instrument on this 10th day of January, 2002. /s/ CHARLES L. HALL ------------------------------------ CHARLES L. HALL EXHIBIT 24.4 ARCO CHEMICAL TECHNOLOGY, LP POWER OF ATTORNEY WHEREAS, ARCO CHEMICAL TECHNOLOGY, LP, a Delaware limited partnership (the "Company"), an indirect wholly owned subsidiary of Lyondell Chemical Company ("Lyondell"), intends to file with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act"), a Registration Statement on Form S-4, including a prospectus, with such amendment or amendments thereto, whether pre-effective or post-effective, in each case as may be necessary or appropriate, together with any and all exhibits and other documents having relation to said Registration Statement (collectively, the "Registration Statement"), in connection with Lyondell's proposal to offer to exchange up to $393,000,000 aggregate principal amount of 9 1/2% Senior Secured Notes due 2008, registered under the Act and guaranteed by the Company, for like aggregate principal amounts of outstanding 9 1/2% Senior Secured Notes due 2008 issued by Lyondell and guaranteed by the Company. NOW, THEREFORE, the undersigned, in his or her capacity as a director or officer, or both, as the case may be, of ARCO Chemical Technology Management, Inc., the general partner of the Company, does hereby appoint Kerry A. Galvin and Robert T. Blakely and each of them severally, his or her true and lawful attorneys or attorney with power to act with or without the others and with full power of substitution and resubstitution, to execute in his or her name, place and stead, in his or her capacity as a director or officer or both, as the case may be, of ARCO Chemical Technology Management, Inc., the general partner of the Company, the Registration Statement and all instruments necessary or incidental in connection therewith, with such amendment or amendments thereto in each case as may be necessary or appropriate, together with any and all exhibits and other documents relating thereto as said attorneys or any of them shall deem necessary or incidental in connection therewith, and to file the same or cause the same to be filed with the Commission. Each of said attorneys shall have full power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act whatsoever necessary or desirable to be done to the premises, as fully and to all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has executed this instrument on this 10th day of January, 2002. /s/ DAVID J. PRILUTSKI ------------------------------------ DAVID J. PRILUTSKI EX-25 19 dex25.txt FORM T-1 Exhibit 25 ================================================================================ FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) [_] __________________________ THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) One Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) __________________________ LYONDELL CHEMICAL COMPANY (Exact name of obligor as specified in its charter) Delaware 95-4160558 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 1221 McKinney Street, Suite 700 Houston, Texas 77010 (Address of principal executive offices) (Zip code) LYONDELL CHEMICAL NEDERLAND, LTD. (Exact name of obligor as specified in its charter) Delaware 51-0110124 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 1221 McKinney Street, Suite 700 Houston, Texas 77010 (Address of principal executive offices) (Zip code) ARCO CHEMICAL TECHNOLOGY, INC. (Exact name of obligor as specified in its charter) Delaware 94-2400836 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 1221 McKinney Street, Suite 700 Houston, Texas 77010 (Address of principal executive offices) (Zip code) ARCO CHEMICAL TECHNOLOGY, L.P. (Exact name of obligor as specified in its charter) Delaware 54-1613415 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 1221 McKinney Street, Suite 700 Houston, Texas 77010 (Address of principal executive offices) (Zip code) ___________________________ 9 1/2% Senior Secured Notes due 2008 (Title of the indenture securities) ================================================================================ -2- 1. General information. Furnish the following information as to the Trustee: (a) Name and address of each examining or supervising authority to which it is subject.
- ----------------------------------------------------------------------------------------- Name Address - ----------------------------------------------------------------------------------------- Superintendent of Banks of the State of New 2 Rector Street, New York, N.Y. York 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers. Yes. 2. Affiliations with Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. 16. List of Exhibits. Exhibits identified in parentheses below, on file with the Commission, are incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a- 29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R. 229.10(d). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33- 44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. -3- SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 7th day of January, 2002. THE BANK OF NEW YORK By: /S/ STACEY POINDEXTER --------------------------- Name: STACEY POINDEXTER Title: ASSISTANT TREASURER -4- EXHIBIT 7 --------- - -------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of One Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business September 30, 2001, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act. Dollar Amounts ASSETS In Thousands Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin......... $ 3,238,092 Interest-bearing balances.................................. 5,255,952 Securities: Held-to-maturity securities................................ 127,193 Available-for-sale securities.............................. 12,143,488 Federal funds sold and Securities purchased under agreements to resell................................. 281,677 Loans and lease financing receivables: Loans and leases held for sale............................. 786 Loans and leases, net of unearned income................... 46,206,726 LESS: Allowance for loan and lease losses............................................... 607,115 Loans and leases, net of unearned income and allowance....................................... 45,599,611 Trading Assets.............................................. 9,074,924 Premises and fixed assets (including capitalized leases).................................................... 783,165 Other real estate owned..................................... 935 Investments in unconsolidated subsidiaries and associated companies....................................... 200,944 Customers' liability to this bank on acceptances outstanding................................................ 311,521 Intangible assets........................................... Goodwill................................................. 1,546,125 Other intangible assets.................................. 8,497 Other assets................................................ 8,761,129 ----------- Total assets................................................ $87,334,039 =========== LIABILITIES Deposits: In domestic offices........................................ $28,254,986 Noninterest-bearing........................................ 10,843,829 Interest-bearing........................................... 17,411,157 In foreign offices, Edge and Agreement subsidiaries, and IBFs.................................... 31,999,406 Noninterest-bearing........................................ 1,006,193 Interest-bearing........................................... 30,993,213 Federal funds purchased and securities sold under agreements to repurchase............................. 6,004,678 Trading liabilities......................................... 2,286,940 Other borrowed money: (includes mortgage indebtedness and obligations under capitalized leases).................................. 1,845,865 Bank's liability on acceptances executed and outstanding................................................ 440,362 Subordinated notes and debentures........................... 2,196,000 Other liabilities........................................... 7,606,565 ----------- Total liabilities........................................... $80,634,802 =========== EQUITY CAPITAL Common stock................................................ 1,135,284 Surplus..................................................... 1,050,729 Retained earnings........................................... 4,436,230 Accumulated other comprehensive income...................... 76,292 Other equity capital components............................. 0 Total equity capital........................................ 6,698,535 ----------- Total liabilities and equity capital........................ $87,334,039 =========== I, Thomas J. Mastro, Senior Vice President and Comptroller of the above- named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Thomas J. Mastro, Senior Vice President and Comptroller We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. Thomas A. Renyi ] Gerald L. Hassell ] Directors Alan R. Griffith ] - -------------------------------------------------------------------------------- EX-99.1 20 dex991.txt LETTER TO DTC PARTICIPANTS Exhibit 99.1 ------------ LYONDELL CHEMICAL COMPANY Letter to The Depository Trust Company Participants for Tender of All Outstanding 9 1/2% Senior Secured Notes due 2008 in exchange for registered 9 1/2% Senior Secured Notes due 2008 - -------------------------------------------------------------------------------- The Exchange Offer will expire at 5:00 p.m., New York City time, on _________, 2002 (the "Expiration Date"), unless sooner terminated or extended. Outstanding Notes tendered in the Exchange Offer may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date for the Exchange Offer. - -------------------------------------------------------------------------------- To Depository Trust Company Participants: We are enclosing herewith the materials listed below relating to the offer by Lyondell Chemical Company (the "Issuer") to exchange its 9 1/2% Senior Secured Notes due 2008 (the "New Notes"), the issuance of which has been registered under the Securities Act of 1933, as amended (the "Securities Act"), for a like principal amount of its issued and outstanding unregistered 9 1/2% Senior Secured Notes due 2008 (the "Outstanding Notes"), upon the terms and subject to the conditions set forth in the Issuer's prospectus dated ________, 2002 (the "Prospectus") and the related Letter of Transmittal. The exchange of the Outstanding Notes for the New Notes and the related documentation are referred to herein as the "Exchange Offer." We are enclosing copies of the following documents: 1. Prospectus dated ___________, 2002; 2. Letter of Transmittal (together with accompanying Substitute Form W-9 Guidelines); 3. Notice of Guaranteed Delivery; and 4. Letter of instructions that may be sent to your clients for whose account you hold Outstanding Notes in your name or in the name of your nominee, with space provided for obtaining such client's instructions with regard to the Exchange Offer. We urge you to contact your clients promptly. Please note that the Exchange Offer will expire at 5:00 p.m., New York City time, on ___________, 2002, unless sooner terminated or extended. The Exchange Offer is not conditioned upon any minimum aggregate principal amount of Outstanding Notes being tendered for exchange. Pursuant to the Letter of Transmittal, each holder of Outstanding Notes will represent to the Issuer that: . such person is not an "affiliate," as defined in Rule 405 under the Securities Act, of the Issuer or a broker-dealer tendering Outstanding Notes acquired directly from the Issuer for its own account; . if such person is not a broker-dealer, or is a broker-dealer but will not receive New Notes for its own account in exchange for Outstanding Notes, it is not engaged in, and does not intend to participate in, a distribution of New Notes; . such person does not have an arrangement or understanding with any person to participate in the distribution of the Outstanding Notes or the New Notes within the meaning of the Securities Act; and . any New Notes received are being acquired in the ordinary course of business of the person receiving such New Notes. If such person is a broker-dealer that will receive New Notes for its own account in exchange for Outstanding Notes, it represents that the Outstanding Notes to be exchanged for New Notes were acquired as a result of market-making activities or other trading activities, and it will deliver a Prospectus in connection with any resale of such New Notes; however, by so acknowledging and by delivering a Prospectus, it will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. The enclosed Letter to Clients contains an authorization by the beneficial owners of the Outstanding Notes for you to make the foregoing representations. The Issuer will not pay any fee or commission to any broker or dealer or to any other person (other than the Exchange Agent) in connection with the solicitation of tenders of Outstanding Notes pursuant to the Exchange Offer. The Issuer will pay or cause to be paid any transfer taxes payable on the transfer of Outstanding Notes to it, except as otherwise provided in Instruction 7 of the enclosed Letter of Transmittal. Additional copies of the enclosed material may be obtained from us upon request. Very truly yours, Lyondell Chemical Company 2 EX-99.2 21 dex992.txt LETTER TO CLIENTS Exhibit 99.2 ------------ LYONDELL CHEMICAL COMPANY Letter to Clients for Tender of All Outstanding 9 1/2% Senior Secured Notes due 2008 in exchange for registered 9 1/2% Senior Secured Notes due 2008 - -------------------------------------------------------------------------------- The Exchange Offer will expire at 5:00 p.m., New York City time, on __________, 2002 (the "Expiration Date"), unless sooner terminated or extended. Outstanding Notes tendered in the Exchange Offer may be withdrawn at any time before 5:00 p.m., New York City time, on the Expiration Date for the Exchange Offer. - -------------------------------------------------------------------------------- To Our Clients: We are enclosing with this letter a prospectus dated ___________, 2002 (the "Prospectus") of Lyondell Chemical Company (the "Issuer") and the related Letter of Transmittal. These two documents together constitute the Issuer's offer to exchange its 9 1/2% Senior Secured Notes due 2008 (the "New Notes"), the issuance of which has been registered under the Securities Act of 1933, as amended (the "Securities Act"), for a like principal amount of issued and outstanding unregistered 9 1/2% Senior Secured Notes due 2008, (the "Outstanding Notes"). The exchange of Outstanding Notes for New Notes and the related documentation are referred to herein as the "Exchange Offer." The Exchange Offer is not conditioned upon any minimum aggregate principal amount of Outstanding Notes being tendered for exchange. We are the holder of record of Outstanding Notes held by us for your own account. A tender of your Outstanding Notes held by us can be made only by us as the record holder according to your instructions. The Letter of Transmittal is furnished to you for your information only and cannot be used by you to tender Outstanding Notes held by us for your account. We request instructions as to whether you wish to tender any or all of the Outstanding Notes held by us for your account under the terms and conditions of the Exchange Offer. We also request that you confirm that we may, on your behalf, make the representations contained in the Letter of Transmittal. Under the Letter of Transmittal, each holder of Outstanding Notes will represent to the Issuer that: . such person is not an "affiliate," as defined in Rule 405 under the Securities Act, of the Issuer or a broker-dealer tendering Outstanding Notes acquired directly from the Issuer for its own account; . if such person is not a broker-dealer or is a broker-dealer but will not receive New Notes for its own account in exchange for Outstanding Notes, it is not engaged in, and does not intend to participate in, a distribution of the New Notes; . such person does not have an arrangement or understanding with any person to participate in the distribution of the Outstanding Notes or the New Notes within the meaning of the Securities Act; . any New Notes received are being acquired in the ordinary course of business of the person receiving such New Notes; and . if such person is a broker-dealer who will receive New Notes for its own account in exchange for Outstanding Notes, it will represent that the Outstanding Notes to be exchanged or New Notes were 1 acquired as a result of market-making activities or other trading activities, and that it will deliver a Prospectus in connection with any resale of those New Notes; however, by so acknowledging and by delivering a Prospectus, it will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. Very truly yours, 2 Please return your instructions to us in the enclosed envelope within ample time to permit us to submit a tender on your behalf before the Expiration Date. INSTRUCTION TO DTC TRANSFER PARTICIPANT To Participant of The Depository Trust Company: The undersigned hereby acknowledges receipt and review of the prospectus dated ____________, 2002 (the "Prospectus") of Lyondell Chemical Company (the "Issuer") and the related Letter of Transmittal. These two documents together constitute the Issuer's offer to exchange its 9 1/2% Senior Secured Notes due 2008 (the "New Notes"), the issuance of which has been registered under the Securities Act of 1993, as amended (the "Securities Act"), for a like principal amount of its issued and outstanding unregistered 9 1/2% Senior Secured Notes due 2008 (the "Outstanding Notes"). The exchange of Outstanding Notes for New Notes and the relevant documentation are referred to herein as an "Exchange Offer." This will instruct you, the registered holder and DTC participant, as to the action to be taken by you relating to the Exchange Offer for the Outstanding Notes held by you for the account of the undersigned. The aggregate principal amount of the Outstanding Notes held by you for the account of the undersigned is (fill in amount): - -------------------------------------------------------------------------------- Title of Series Principal Amount - -------------------------------------------------------------------------------- Lyondell Chemical Company 9 1/2% Senior Secured Notes due 2008 - -------------------------------------------------------------------------------- With respect to the Exchange Offer, the undersigned hereby instructs you (check appropriate box): [_] To TENDER all Outstanding Notes held by you for the account of the undersigned. [_] To TENDER the following amount of Outstanding Notes held by you for the account of the undersigned: - -------------------------------------------------------------------------------- Title of Series Principal Amount - -------------------------------------------------------------------------------- Lyondell Chemical Company 9 1/2% Senior Secured Notes due 2008 - -------------------------------------------------------------------------------- [_] NOT to TENDER any Outstanding Notes held by you for the account of the undersigned. If no box is checked, a signed and returned Instruction to DTC Participant will be deemed to instruct you to tender all Outstanding Notes held by you for the account of the undersigned. If the undersigned instructs you to tender the Outstanding Notes held by you for the account of the undersigned, it is understood that you are authorized to make, on behalf of the undersigned (and the undersigned, by its signature below, hereby makes to you), the representations contained in the Letter of Transmittal that are to be made with respect to the undersigned as a beneficial owner, including, but not limited to, the representations that: (i) the undersigned is not an "affiliate," as defined in Rule 405 under the Securities Act, of the Issuer or a broker-dealer tendering Outstanding Notes acquired directly from the Issuer for its own account; 3 (ii) if the undersigned is not a broker-dealer or is a broker-dealer but will not receive New Notes for its own account in exchange for Outstanding Notes, it is not engaged in, and does not intend to participate in, a distribution of New Notes; (iii) the undersigned does not have an arrangement or understanding with any person to participate in the distribution of the Outstanding Notes or the New Notes within the meaning of the Securities Act; (iv) any New Notes received are being acquired in the ordinary course of business of the undersigned; and (v) if the undersigned is a broker-dealer that will receive New Notes for its own account in exchange for Outstanding Notes, it will represent that the Outstanding Notes to be exchanged for New Notes were acquired as a result of market-making activities or other trading activities, and it will acknowledge that it will deliver a Prospectus in connection with any resale of those New Notes; however, by so acknowledging and by delivering a Prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. SIGN HERE Name of beneficial owner(s):____________________________________________________ Signature(s):___________________________________________________________________ Name(s) (please print):_________________________________________________________ Address:________________________________________________________________________ Telephone Number:_______________________________________________________________ Taxpayer Identification or Social Security Number:______________________________ Date:___________________________________________________________________________ 4 EX-99.3 22 dex993.txt NOTICE OF GUARANTEED DELIVERY Exhibit 99.3 ------------ LYONDELL CHEMICAL COMPANY Notice of Guaranteed Delivery for Tender of All Outstanding 9 1/2% Senior Secured Notes due 2008 in exchange for registered 9 1/2% Senior Secured Notes due 2008 This form, or one substantially equivalent hereto, must be used by a holder to accept the Exchange Offer of Lyondell Chemical Company (the "Issuer"), and to tender outstanding unregistered 9 1/2% Senior Secured Notes due 2008 (the "Outstanding Notes") to The Bank of New York, as exchange agent (the "Exchange Agent") pursuant to the guaranteed delivery procedures described in "The Exchange Offer--Guaranteed Delivery Procedures" of the Issuer's prospectus dated __________, 2002 (the "Prospectus") and in Instruction 2 to the related Letter of Transmittal. Any holder who wishes to tender Outstanding Notes pursuant to such guaranteed delivery procedures must ensure that the Exchange Agent receives this Notice of Guaranteed Delivery, properly completed and duly executed, prior to the Expiration Date (as defined below) of the Exchange Offer. Capitalized terms used but not defined herein have the meanings ascribed to them in the Prospectus or the Letter of Transmittal. - -------------------------------------------------------------------------------- The Exchange Offer will expire at 5:00 p.m., New York City time, on ___________, 2002 (the "Expiration Date"), unless sooner terminated or extended. Outstanding Notes tendered in the Exchange Offer may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date for the Exchange Offer. - -------------------------------------------------------------------------------- The Exchange Agent for the Exchange Offer is: The Bank of New York For Delivery By Mail (registered or certified mail recommended), Overnight Delivery or by Hand: The Bank of New York 15 Broad Street 16th Floor New York, NY 10005 Attn.: Enrique Lopez - Reorganization Unit By Facsimile Transmission (eligible institutions only): (212) 235-2261 Attn.: Enrique Lopez Confirm by telephone: (212) 235-2360 Delivery of this instrument to an address other than as set forth above, or transmission via facsimile to a number other than as set forth above, will not constitute a valid delivery. The instructions accompanying this Notice of Guaranteed Delivery should be read carefully before the Notice of Guaranteed Delivery is completed. This Notice of Guaranteed Delivery is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an "Eligible Institution" under the instructions thereto, such signature guarantee must appear in the applicable space in the box provided on the Letter of Transmittal for guarantee of signatures. 1 Ladies and Gentlemen: The undersigned hereby tenders to the Issuer, upon the terms and subject to the conditions set forth in the Prospectus and the related Letter of Transmittal, receipt of which is hereby acknowledged, the principal amount of Outstanding Notes set forth below pursuant to the guaranteed delivery procedures set forth in the Prospectus under the caption "The Exchange Offer--Guaranteed Delivery Procedures" and in Instruction 2 of the Letter of Transmittal. The undersigned hereby tenders the Outstanding Notes listed below:
- ------------------------------------------------------------------------------------------------------------------------------------ Certificate Numbers(s) (if known) of Outstanding Notes or Account Number at the Book-entry Title of Facility Aggregate Principal Aggregate Principal Series Amount Represented Amount Tendered - ------------------------------------------------------------------------------------------------------------------------------------ Lyondell Chemical Company 9 1/2% Senior Secured Notes due 2008 - ------------------------------------------------------------------------------------------------------------------------------------ PLEASE SIGN AND COMPLETE - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------- ------------------------------------------ - ------------------------------------------- ------------------------------------------ Name(s) of Registered Holders(s) Signatures of Registered Holder(s) or Authorized Signatory - ------------------------------------------- - ------------------------------------------- Address Dated________________________________, 2002 - ------------------------------------------- Area Code and Telephone Number(s) - -------------------------------------------------------------------- -- ------------------------------------------------------------
This Notice of Guaranteed Delivery must be signed by the registered holder(s) of Outstanding Notes exactly as the name(s) of such person(s) appear(s) on certificates for Outstanding Notes or on a security position listing as the owner of Outstanding Notes, or by person(s) authorized to become holder(s) by endorsements and documents transmitted with this Notice of Guaranteed Delivery. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, such person must provide the following information: 2 Please print name(s) and address(es) Name(s): ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ Capacity: ________________________________________________________________________________ Address(es): ________________________________________________________________________________ ________________________________________________________________________________ GUARANTEE (Not to be used for signature guarantee) The undersigned, a firm which is a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., or is a commercial bank or trust company having an office or correspondent in the United States, or is otherwise an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, hereby guarantees deposit with the Exchange Agent of the Letter of Transmittal (or facsimile thereof or agent's message in lieu thereof), together with the Outstanding Notes tendered hereby in proper form for transfer (or confirmation of the book-entry transfer of such Outstanding Notes into the Exchange Agent's account at the DTC described in the Prospectus under the caption "The Exchange Offers--Book-Entry Transfer" and in the Letter of Transmittal) and any other required documents, all by 5:00 p.m., New York City time, within five New York Stock Exchange trading days following the Expiration Date. Name of Firm:________________________ _______________________________ (Authorized Signature) Address:_____________________________ Name:__________________________ (Include Zip Code) Title:_________________________ (Please Type or Print) Area Code and Telephone Number: _____________________________________ Date:____________________, 2002 Do not send Outstanding Notes with this form. Actual surrender of Outstanding Notes must be made pursuant to, and be accompanied by, a properly completed and duly executed Letter of Transmittal and any other required documents. 3 INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY 1. Delivery of this Notice of Guaranteed Delivery. A properly completed and duly executed copy of this Notice of Guaranteed Delivery (or facsimile hereof or an agent's message and Notice of Guaranteed Delivery in lieu hereof) and any other documents required by this Notice of Guaranteed Delivery with respect to the Outstanding Notes must be received by the Exchange Agent at its address set forth herein prior to the Expiration Date of the Exchange Offer. The method of delivery of this Notice of Guaranteed Delivery and any other required documents to the Exchange Agent is at the election and sole risk of the holder, and the delivery will be deemed made only when actually received by the Exchange Agent. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. As an alternative to delivery by mail, holders may wish to consider using an overnight or hand delivery service. In all cases, sufficient time should be allowed to ensure timely delivery. For a description of the guaranteed delivery procedures, see Instruction 2 of the Letter of Transmittal. 2. Signatures on this Notice of Guaranteed Delivery. If this Notice of Guaranteed Delivery (or facsimile hereof) is signed by the registered holder(s) of the Outstanding Notes referred to herein, the signature(s) must correspond exactly with the name(s) written on the face of the Outstanding Notes without alteration, enlargement or any change whatsoever. If this Notice of Guaranteed Delivery (or facsimile hereof) is signed by a participant of the DTC whose name appears on a security position listing as the owner of the Outstanding Notes, the signature must correspond with the name shown on the security position listing as the owner of the Outstanding Notes. If this Notice of Guaranteed Delivery (or facsimile hereof) is signed by a person other than the registered holder(s) of any Outstanding Notes listed or a participant of the DTC, this Notice of Guaranteed Delivery must be accompanied by appropriate bond powers, signed as the name(s) of the registered holder(s) appear(s) on the Outstanding Notes or signed as the name(s) of the participant shown on the DTC's security position listing. If this Notice of Guaranteed Delivery (or facsimile hereof) is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation, or other person acting in a fiduciary or representative capacity, such person should so indicate when signing and submit with the Letter of Transmittal evidence satisfactory to the Exchange Agent of such person's authority to so act. 3. Requests for Assistance or Additional Copies. Questions and requests for assistance and requests for additional copies of the Prospectus and this Notice of Guaranteed Delivery may be directed to the Exchange Agent at the address set forth on the cover page hereof. Holders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Exchange Offer. 4 EX-99.4 23 dex994.txt LETTER OF TRANSMITTAL Exhibit 99.4 ------------ LYONDELL CHEMICAL COMPANY Letter of Transmittal for Tender of All Outstanding 9 1/2% Senior Secured Notes due 2008 in exchange for registered 9 1/2% Senior Secured Notes due 2008 - -------------------------------------------------------------------------------- The Exchange Offer will expire at 5:00 p.m., New York City time, on _________, 2002 (the "Expiration Date"), unless sooner terminated or extended. Outstanding Notes tendered in the Exchange Offer may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date for the Exchange Offer. - -------------------------------------------------------------------------------- PLEASE READ CAREFULLY THE ATTACHED INSTRUCTIONS If you desire to accept the Exchange Offer, this Letter of Transmittal should be completed, signed and submitted to the Exchange Agent: The Bank of New York For Delivery By Mail (registered or certified mail recommended), Overnight Delivery or by Hand: The Bank of New York 15 Broad Street 16th Floor New York, NY 10005 Attn: Enrique Lopez - Reorganization Unit By Facsimile Transmission (eligible institutions only): (212) 235-2261 Attn: Enrique Lopez Confirm by telephone: (212) 235-2360 Delivery of this instrument to an address other than as shown above or transmission via a facsimile number other than the one listed above will not constitute a valid delivery. The instructions accompanying this Letter of Transmittal should be read carefully before this Letter of Transmittal is completed. The undersigned hereby acknowledges receipt and review of the prospectus dated __________, 2002 (the "Prospectus") of Lyondell Chemical Company (the "Issuer") and this Letter of Transmittal which together constitute the Issuer's offer to exchange its 9 1/2% Senior Secured Notes due 2008 (the "New Notes"), the issuance of which has been registered under the Securities Act of 1933, as amended (the "Securities Act"), for a like principal amount of issued and outstanding unregistered 9 1/2% Senior Secured Notes due 2008 (the "Outstanding Notes"). The exchange of Outstanding Notes for New Notes and the related documentation are referred to as the "Exchange Offer." Capitalized terms used but not defined herein have the respective meanings given to them in the Prospectus. 1 The Issuer reserves the right, at any time or from time to time, to extend the period of time during which the Exchange Offer for the Outstanding Notes is open, at its discretion, in which event the term "Expiration Date" shall mean the latest date to which such Exchange Offer is extended. The Issuer shall notify The Bank of New York (the "Exchange Agent") of any extension by oral or written notice and shall make a public announcement thereof no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. The New Notes will bear interest at 9 1/2% per annum. Interest payment dates will be June 15 and December 15 of each year commencing June 15, 2002. Registered holders of New Notes on the relevant record date for the first interest payment date following the consummation of the Exchange Offer will receive interest accruing from the most recent date to which interest has been paid on the Outstanding Notes or, if no interest has been paid, from December 4, 2001. Outstanding Notes accepted for exchange will cease to accrue interest from and after the date of consummation of the Exchange Offer. Holders whose Outstanding Notes are accepted for exchange will not receive any payment in respect of accrued interest on such Outstanding Notes otherwise payable on any interest payment date the record date for which occurs on or after consummation of the Exchange Offer. Interest will be paid to the person in whose name the applicable New Note is registered at the close of business on June 1, in the case of the June 15 interest payment date, and December 1, in the case of the December 15 interest payment date. Interest will be computed on the basis of 360-day year of twelve 30-day months. No additional interest will be payable on the New Notes. This Letter of Transmittal is to be used by a holder of Outstanding Notes if: . certificates of Outstanding Notes are to be forwarded herewith; or . delivery of Outstanding Notes is to be made by book-entry transfer to the account maintained by the Exchange Agent at The Depository Trust Company (the "DTC") pursuant to the procedures set forth in the Prospectus under the caption "The Exchange Offer--Procedures for Tendering--Book-Entry Transfer" and an "agent's message" is not delivered as described in the Prospectus under the caption "The Exchange Offer--Procedures for Tendering--Tendering Through DTC's Automated Tender Offer Program." Tenders by book-entry transfer may also be made by delivering an agent's message pursuant to DTC's Automated Tender Offer Program in lieu of this Letter of Transmittal. Holders of Outstanding Notes whose Outstanding Notes are not immediately available, or who are unable to deliver their Outstanding Notes, this Letter of Transmittal and all other documents required hereby to the Exchange Agent on or prior to the Expiration Date for the Exchange Offer, or who are unable to complete the procedure for book-entry transfer on a timely basis, must tender their Outstanding Notes according to the guaranteed delivery procedures set forth in the Prospectus under the caption "The Exchange Offer-- Guaranteed Delivery Procedures." See Instruction 2 of this Letter of Transmittal. Delivery of documents to the book-entry transfer facility does not constitute delivery to the Exchange Agent. The term "holder" with respect to the Exchange Offer for Outstanding Notes means any person in whose name such Outstanding Notes are registered on the books of Lyondell Chemical Company, any person who holds such Outstanding Notes and has obtained a properly completed bond power from the registered holder or any participant in the DTC system whose name appears on a security position listing as the holder of such Outstanding Notes and who desires to deliver the Outstanding Notes by book-entry transfer at DTC. The undersigned has completed, executed and delivered this Letter of Transmittal to indicate the action the undersigned desires to take with respect to the Exchange Offer. Holders who wish to tender their Outstanding Notes must complete this Letter of Transmittal in its entirety (unless such Outstanding Notes are to be tendered by book-entry transfer and an agent's message is delivered in lieu hereof). Please read the entire Letter of Transmittal and the Prospectus carefully before checking any box below. The instructions included with this Letter of Transmittal must be followed. Questions and requests for assistance or for additional copies of the Prospectus and this Letter of Transmittal may be directed to the Exchange Agent. 2 List below the Outstanding Notes tendered under this Letter of Transmittal. If the space below is inadequate, list the title, registered numbers and principal amounts on a separate signed schedule and affix the list to this Letter of Transmittal.
- -------------------------------------------------------------------------------------------------------------------- DESCRIPTION OF OUTSTANDING NOTES TENDERED - -------------------------------------------------------------------------------------------------------------------- Name(s) and Address(es) of Registered Holder(s) Exactly as Name(s) Appear(s) on Outstanding Notes (Please Fill In, If Blank) - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- Outstanding Notes(s) Tendered - -------------------------------------------------------------------------------------------------------------------- Aggregate Principal Amount Registered Represented by Principal Amount Title of Series Number(s)* Note(s) Tendered** - -------------------------------------------------------------------------------------------------------------------- Lyondell Chemical Company 9 1/2% Senior Secured Notes due 2008 ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- Total - --------------------------------------------------------------------------------------------------------------------
* Need not be completed by book-entry holders. ** Unless otherwise indicated, any tendering holder of Outstanding Notes will be deemed to have tendered the entire aggregate principal amount represented by such Outstanding Notes. All tenders must be in integral multiples of $1,000. [_] CHECK HERE IF TENDERED OUTSTANDING NOTES ARE ENCLOSED HEREWITH. [_] CHECK HERE AND COMPLETE THE FOLLOWING IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE DTC (FOR USE BY ELIGIBLE INSTITUTIONS ONLY): Name of Tendering Institution:_______________________________________ Book-entry Facility Account Number(s):_________________________________________ Transaction Code Number(s):_________________________________________ 3 [_] CHECK HERE AND COMPLETE THE FOLLOWING IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY EITHER ENCLOSED HEREWITH OR PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT (COPY ATTACHED) (FOR USE BY ELIGIBLE INSTITUTIONS ONLY): Name(s) of Registered Holder(s) of Outstanding Notes:______________________________________________________ Date of Execution of Notice of Guaranteed Delivery:_______________________________________________________ Window Ticket Number (if available):____________________________________________________________ Name of Eligible Institution that Guaranteed Delivery:_______________________________________________________ DTC Account Number(s) (if delivered by book-entry transfer):___________________________________________________ Transaction Code Number (if delivered by book-entry transfer):___________________________________________________ Name of Tendering Institution (if delivered by book-entry transfer):_________________________________________ [_] CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED BY BOOK- ENTRY TRANSFER AND NON-EXCHANGED OUTSTANDING NOTES ARE TO BE RETURNED BY CREDITING THE DTC ACCOUNT NUMBER SET FORTH ABOVE (FOR USE BY ELIGIBLE INSTITUTIONS ONLY). [_] CHECK HERE AND COMPLETE THE FOLLOWING IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO: Name:______________________________________________________________________ Address:___________________________________________________________________ If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to participate in, a distribution of New Notes. If the undersigned is a broker-dealer that will receive New Notes for its own account in exchange for Outstanding Notes, it represents that the New Notes are acquired as a result of market-making activities or other trading activities and that it will deliver a Prospectus in connection with any resale of such New Notes; however, by so acknowledging and by delivering a Prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. 4 SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY. Ladies and Gentlemen: Subject to the terms and conditions of the Exchange Offer, the undersigned hereby tenders to the Issuer for exchange the principal amount of Outstanding Notes indicated above. Subject to and effective upon the acceptance for exchange of the principal amount of Outstanding Notes tendered in accordance with this Letter of Transmittal, the undersigned hereby exchanges, assigns and transfers to, or upon the order of, the Issuer all right, title and interest in and to the Outstanding Notes tendered for exchange hereby, including all rights to accrued and unpaid interest thereon as of the Expiration Date. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent the true and lawful agent and attorney-in-fact for the undersigned (with full knowledge that said Exchange Agent also acts as the agent for the Issuer in connection with the Exchange Offer) with respect to the tendered Outstanding Notes with full power of substitution to: . deliver such Outstanding Notes, or transfer ownership of such Outstanding Notes on the account books maintained by the DTC, to the Issuer and deliver all accompanying evidences of transfer and authenticity; and . present such Outstanding Notes for transfer on the books of the Issuer and receive all benefits and otherwise exercise all rights of beneficial ownership of such Outstanding Notes, all in accordance with the terms of the Exchange Offer. The power of attorney granted in this paragraph shall be deemed to be irrevocable and coupled with an interest. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, exchange, assign and transfer the Outstanding Notes tendered hereby and to acquire the New Notes issuable upon the exchange of such tendered Outstanding Notes, and that the Issuer will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim, when the same are accepted for exchange by the Issuer as contemplated herein. The undersigned acknowledges that the Exchange Offer is being made in reliance upon interpretations set forth in no-action letters issued to third parties by the staff of the Securities and Exchange Commission (the "SEC"), including Exxon Capital Holdings Corporation (available April 13, 1988), Morgan Stanley & Co. Incorporated (available June 5, 1991), Shearman & Sterling (available July 2, 1993) and similar no-action letters (the "Prior No-Action Letters"), that the New Notes issued in exchange for Outstanding Notes pursuant to the Exchange Offer may be offered for resale or resold and otherwise transferred by holders thereof (other than any such holder that is an "affiliate" of the Issuer within the meaning of Rule 405 under the Securities Act), without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such New Notes are acquired in the ordinary course of such holders' business and that such holders are not engaging in, do not intend to participate in and have no arrangement or understanding with any person to participate in a distribution of such New Notes. The SEC has not, however, considered the Exchange Offer in the context of a no-action letter and there can be no assurance that the staff of the SEC would make a similar determination with respect to the Exchange Offer as in other circumstances. The undersigned hereby further represents to the Issuer that: . neither the holder nor any other person receiving New Notes in the Exchange Offer is an "affiliate," as defined in Rule 405 under the Securities Act, of the Issuer or a broker-dealer tendering Outstanding Notes acquired directly from the Issuer for its own account; . if the undersigned is not a broker-dealer or is a broker-dealer but will not receive New Notes for its own account in exchange for Outstanding Notes, the undersigned represents that it is not engaged in, and does not intend to participate in, a distribution of New Notes; 5 . neither the undersigned nor any other person receiving notes in the Exchange Offer has an arrangement or understanding with any person to participate in the distribution of the Outstanding Notes or the New Notes within the meaning of the Securities Act; and . the New Notes to be received are being acquired in the ordinary course of business of the person receiving such New Notes, whether or not the undersigned. If the undersigned is a broker-dealer that will receive New Notes for its own account in exchange for Outstanding Notes, it represents that the New Notes are being acquired by it as a result of market-making activities or other trading activities and that it will deliver a Prospectus in connection with any resale of such New Notes. By so acknowledging and by delivering a Prospectus, however, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. The undersigned acknowledges that if the undersigned is tendering Outstanding Notes in the Exchange Offer with the intention of participating in any manner in a distribution of the New Notes: . the undersigned cannot rely on the position of the staff of the SEC set forth in the Prior No-Action Letters and, in the absence of an exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with the resale transaction of the New Notes, in which case the registration statement must contain the selling security holder information required by Item 507 or Item 508, as applicable, of Regulation S-K of the SEC; and . failure to comply with such requirements in such instance could result in the undersigned incurring liability for which the undersigned is not indemnified by the Issuer. The undersigned will, upon request, execute and deliver any additional documents deemed by the Exchange Agent or the Issuer to be necessary or desirable to complete the exchange, assignment and transfer of the Outstanding Notes tendered hereby, including the transfer of such Outstanding Notes on the account books maintained by the DTC. For purposes of the Exchange Offer, the Issuer shall be deemed to have accepted for exchange validly tendered Outstanding Notes when, as and if the Issuer gives oral or written notice thereof to the Exchange Agent. Any tendered Outstanding Notes that are not accepted for exchange pursuant to the Exchange Offer for any reason will be returned, without expense, to the undersigned at the address shown below or at a different address as may be indicated herein under Special Delivery Instructions as promptly as practicable after the Expiration Date for such Exchange Offer. All authority conferred or agreed to be conferred by this Letter of Transmittal shall survive the death, incapacity or dissolution of the undersigned, and every obligation of the undersigned under this Letter of Transmittal shall be binding upon the successors, assigns, heirs, executors, administrators, trustees in bankruptcy and legal representatives. This tender may be withdrawn only in accordance with the procedures set forth in the section of the Prospectus entitled "The Exchange Offer--Withdrawal of Tenders." The undersigned acknowledges that the Issuer's acceptance of properly tendered Outstanding Notes pursuant to the procedures described under the caption "The Exchange Offer--Procedures for Tendering" in the Prospectus and in the instructions hereto will constitute a binding agreement between the undersigned and the Issuer upon the terms and subject to the conditions of the Exchange Offer. The undersigned further agrees that acceptance of any tendered Outstanding Notes by the Issuer and the issuance of New Notes in exchange therefor shall constitute performance in full by the Issuer of their obligations under the registration rights agreement and that the Issuer shall have no further obligations or liabilities thereunder for the registration of the Outstanding Notes or the New Notes. The Exchange Offer is subject to certain conditions set forth in the Prospectus under the caption "The Exchange Offer--Conditions to the Exchange Offer." The undersigned recognizes that as a result of these conditions (which may be waived, in whole or in part, by the Issuer), the Issuer may not be required to exchange any 6 of the Outstanding Notes tendered hereby. In such event, the Outstanding Notes not exchanged will be returned to the undersigned at the address shown below the signature of the undersigned. Unless otherwise indicated under "Special Issuance Instructions," please issue the New Notes issued in exchange for the Outstanding Notes accepted for exchange and return any Outstanding Notes not tendered or not exchanged, in the name(s) of the undersigned (or, in the case of a book-entry delivery of Outstanding Notes, please credit the account indicated above maintained at the DTC). Similarly, unless otherwise indicated under "Special Delivery Instructions," please mail or deliver the New Notes issued in exchange for the Outstanding Notes accepted for exchange and any Outstanding Notes not tendered or not exchanged (and accompanying documents, as appropriate) to the undersigned at the address shown below the undersigned's signature(s). In the event that both "Special Issuance Instructions" and "Special Delivery Instructions" are completed, please issue the New Notes issued in exchange for the Outstanding Notes accepted for exchange in the name(s) of, and return any Outstanding Notes not tendered or not exchanged to, the person(s) so indicated. The undersigned recognizes that the Issuer has no obligation pursuant to the "Special Issuance Instructions" and "Special Delivery Instructions" to transfer any Outstanding Notes from the name of the registered holder(s) thereof if the Issuer does not accept for exchange any of the Outstanding Notes so tendered for exchange. - -------------------------------------------------------- ------------------------------------------------------- SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 5 AND 6) (SEE INSTRUCTIONS 5 AND 6) To be completed ONLY (i) if Outstanding Notes in a To be completed ONLY if Outstanding Notes in a principal amount not tendered, or New Notes issued in principal amount not tendered, or New Notes issued exchange for Outstanding Notes accepted for exchange, in exchange for Outstanding Notes accepted for are to be issued in the name of someone other than the exchange, are to be mailed or delivered to someone undersigned, or (ii) if Outstanding Notes tendered by other than the undersigned, or to the undersigned at book-entry transfer which are not exchanged are to be an address other than that shown below the returned by credit to an account maintained at the DTC undersigned's signature. Mail or deliver New Notes other than the DTC Account Number set forth above. and/or Outstanding Notes to: Issue New Notes and/or Outstanding Notes to: Name:___________________________________________________ Name:_________________________________________________________ Address:________________________________________________ Address:______________________________________________________ ________________________________________________________ ______________________________________________________________ (Include Zip Code) (Include Zip Code) ________________________________________________________ ______________________________________________________________ (Tax Identification or Social Security Number) (Tax Identification or Social Security Number) (Please Type or Print) (Please Type or Print) ________________________________________________________ _______________________________________________________________
[_] Credit unexchanged Outstanding Notes delivered by book-entry transfer to the DTC account number set forth below: DTC Account Number: ________________________________________________________________________________ 7 IMPORTANT PLEASE SIGN HERE WHETHER OR NOT OUTSTANDING NOTES ARE BEING PHYSICALLY TENDERED HEREBY (Complete Accompanying Substitute Form W-9 Below) X - -------------------------------------------------------------------------------- X - -------------------------------------------------------------------------------- (Signature(s) of Registered Holder(s) of Outstanding Notes) Dated _____, 2002 (The above lines must be signed by the registered holder(s) of Outstanding Notes as your name(s) appear(s) on the Outstanding Notes or on a security position listing, or by person(s) authorized to become registered holder(s) by a properly completed bond power from the registered holder(s), a copy of which must be transmitted with this Letter of Transmittal. If Outstanding Notes to which this Letter of Transmittal relate are held of record by two or more joint holders, then all such holders must sign this Letter of Transmittal. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, then such person must (i) set forth his or her full title below and (ii) unless waived by the Issuer, submit evidence satisfactory to the Issuer of such person's authority so to act. See Instruction 5 regarding the completion of this Letter of Transmittal, printed below.) Name(s):________________________________________________________________________ (Please Type or Print) Capacity (Full Title):__________________________________________________________ Address:________________________________________________________________________ ________________________________________________________________________________ (Include Zip Code) Area Code and Telephone Number:_________________________________________________ Taxpayer Identification or Social Security Number:______________________________ MEDALLION SIGNATURE GUARANTEE (If Required by Instruction 5) Certain signatures must be guaranteed by an Eligible Institution. Signature(s) Guaranteed by an Eligible Institution:___________________________________________________________ (Authorized Signature) ________________________________________________________________________________ (Title) ________________________________________________________________________________ (Name of Firm) ________________________________________________________________________________ (Address, Including Zip Code) ________________________________________________________________________________ (Area Code and Telephone Number) Dated:____________________________________________________________________, 2002 8 INSTRUCTIONS TO LETTER OF TRANSMITTAL FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER 1. Delivery of this Letter of Transmittal and Outstanding Notes or Agent's Message and Book-Entry Confirmations. All physically delivered Outstanding Notes or any confirmation of a book-entry transfer to the Exchange Agent's account at the DTC of Outstanding Notes tendered by book-entry transfer (a "Book-Entry Confirmation"), as well as a properly completed and duly executed copy of this Letter of Transmittal or facsimile hereof (or an agent's message in lieu hereof), and any other documents required by this Letter of Transmittal must be received by the Exchange Agent at its address set forth herein on or prior to 5:00 p.m., New York City time, on the Expiration Date for the Exchange Offer, or the tendering holder must comply with the guaranteed delivery procedures set forth below. Outstanding Notes tendered hereby must be in denominations of principal amount of $1,000 and any integral multiple thereof. The method of delivery of the tendered Outstanding Notes, this Letter of Transmittal and all other required documents to the Exchange Agent is at the election and risk of the holder and, except as otherwise provided below, the delivery will be deemed made only when actually received or confirmed by the Exchange Agent. Instead of delivery by mail, it is recommended that the holder use an overnight or hand delivery service. In all cases, sufficient time should be allowed to ensure delivery to the Exchange Agent before the Expiration Date. NEITHER THIS LETTER OF TRANSMITTAL NOR OUTSTANDING NOTES SHOULD BE SENT TO THE ISSUER. All questions as to the validity, form, eligibility (including time of receipt) or acceptance of tendered Outstanding Notes and withdrawal of tendered Outstanding Notes will be determined by the Issuer in its sole discretion, which determination will be final and binding. The Issuer reserves the absolute right to reject any and all Outstanding Notes not properly tendered or any Outstanding Notes the Issuer's acceptance of which would, in the opinion of counsel for the Issuer, be unlawful. The Issuer also reserves the right to waive any defects, irregularities or conditions of tender as to particular Outstanding Notes. The Issuer's interpretation of the terms and conditions of the Exchange Offer (including the instructions in this Letter of Transmittal) shall be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Outstanding Notes must be cured within such time as the Issuer shall determine. Neither the Issuer, the Exchange Agent nor any other person shall be under any duty to give notification of defects or irregularities with respect to tenders of Outstanding Notes, nor shall any of them incur any liability for failure to give such notification. Tenders of Outstanding Notes will not be deemed to have been made until such defects or irregularities have been cured or waived. Any Outstanding Notes received by the Exchange Agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the Exchange Agent to the tendering holders of Outstanding Notes, unless otherwise provided in this Letter of Transmittal, as soon as practicable following the Expiration Date. See "The Exchange Offer" section of the Prospectus. 2. Guaranteed Delivery Procedures. Holders who wish to tender their Outstanding Notes and (a) whose Outstanding Notes are not immediately available, or (b) who cannot deliver their Outstanding Notes, this Letter of Transmittal or any other documents required hereby to the Exchange Agent prior to the Expiration Date, or (c) who are unable to comply with the applicable procedures under the DTC's Automated Tender Offer Program on a timely basis, must tender their Outstanding Notes according to the guaranteed delivery procedures set forth in the Prospectus. Pursuant to such procedures: . such tender must be made by or through a financial institution (including most banks, savings and loan associations, and brokerage houses) that is a participant in the Securities Transfer Agents' Medallion Program, the New York Stock Exchange Medallion Program or the Stock Exchanges' Medallion Program approved by the Securities Transfer Association Inc. (an "Eligible Institution"); . prior to the Expiration Date, the Exchange Agent must have received from the Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery) or a properly transmitted agent's message and Notice of Guaranteed Delivery setting forth the name and address of the holder of the Outstanding Notes, 9 the registration number(s) of such Outstanding Notes and the total principal amount of Outstanding Notes tendered, stating that the tender is being made thereby and guaranteeing that, within five New York Stock Exchange trading days after such Expiration Date, this Letter of Transmittal (or facsimile hereof or an agent's message in lieu hereof) together with the Outstanding Notes in proper form for transfer (or a Book-entry Confirmation) and any other documents required by this Letter of Transmittal will be deposited by the Eligible Institution with the Exchange Agent; and . this Letter of Transmittal (or a facsimile hereof or an agent's message in lieu hereof) together with the certificates for all physically tendered Outstanding Notes in proper form for transfer (or Book-entry Confirmation, as the case may be) and all other documents required hereby are received by the Exchange Agent within five New York Stock Exchange trading days after such Expiration Date. Any holder of Outstanding Notes who wishes to tender Outstanding Notes pursuant to the guaranteed delivery procedures described above must ensure that the Exchange Agent receives the Notice of Guaranteed Delivery prior to 5:00 p.m., New York City time, on the Expiration Date. Upon request of the Exchange Agent, a Notice of Guaranteed Delivery will be sent to holders who wish to tender their Outstanding Notes according to the guaranteed delivery procedures set forth above. See "The Exchange Offer--Guaranteed Delivery Procedures" section of the prospectus. 3. Tender by Holder. Only a registered holder of Outstanding Notes may tender such Outstanding Notes in the Exchange Offer. Any beneficial holder of Outstanding Notes who is not the registered holder and who wishes to tender should arrange with the registered holder to execute and deliver this Letter of Transmittal on his behalf or must, prior to completing and executing this Letter of Transmittal and delivering his Outstanding Notes, either make appropriate arrangements to register ownership of the Outstanding Notes in such holder's name or obtain a properly completed bond power from the registered holder. 4. Partial Tenders (Not Applicable to Holders Who Tender by Book-Entry Transfer). Tenders of Outstanding Notes will be accepted only in integral multiples of $1,000. If less than the entire principal amount of any Outstanding Notes is tendered, the tendering holder should fill in the principal amount tendered in the third column of the box entitled "Description of Outstanding Notes Tendered" above. The entire principal amount of Outstanding Notes delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated. If the entire principal amount of all Outstanding Notes is not tendered, then Outstanding Notes for the principal amount of Outstanding Notes not tendered and New Notes issued in exchange for any Outstanding Notes accepted will be returned to the holder as promptly as practicable after the Outstanding Notes are accepted for exchange. 5. Signatures on this Letter of Transmittal; Bond Powers and Endorsements; Medallion Guarantee of Signatures. If this Letter of Transmittal (or facsimile hereof) is signed by the record holder(s) of the Outstanding Notes tendered hereby, the signature(s) must correspond exactly with the name(s) as written on the face of the Outstanding Notes without alteration, enlargement or any change whatsoever. If this Letter of Transmittal (or facsimile hereof) is signed by a participant in the DTC, the signature must correspond with the name as it appears on the security position listing as the holder of the Outstanding Notes. If any tendered Outstanding Notes are owned of record by two or more joint owners, all of such owners must sign this Letter of Transmittal. If this Letter of Transmittal (or facsimile hereof) is signed by the registered holder(s) of Outstanding Notes listed and tendered hereby and the New Notes issued in exchange therefor are to be issued (or any untendered principal amount of Outstanding Notes is to be reissued) to the registered holder(s), then said holder(s) need not and should not endorse any tendered Outstanding Notes, nor provide a separate bond power. In any other case, such holder(s) must either properly endorse the Outstanding Notes tendered or transmit a properly completed separate bond power with this Letter of Transmittal, with the signatures on the endorsement or bond power guaranteed by an Eligible Institution. 10 If this Letter of Transmittal (or facsimile hereof) or any Outstanding Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Issuer, evidence satisfactory to the Issuer of their authority to act must be submitted with this Letter of Transmittal. No signature guarantee is required if (i) this Letter of Transmittal (or facsimile hereof) is signed by the registered holder(s) of the Outstanding Notes tendered herein (or by a participant in the DTC whose name appears on a security position listing as the owner of the tendered Outstanding Notes) and the New Notes are to be issued directly to such registered holder(s) (or, if signed by a participant in the DTC, deposited to such participant's account at the DTC) and neither the box entitled "Special Delivery Instructions" nor the box entitled "Special Registration Instructions" has been completed, or (ii) such Outstanding Notes are tendered for the account of an Eligible Institution. In all other cases, all signatures on this Letter of Transmittal (or facsimile hereof) must be guaranteed by an Eligible Institution. 6. Special Issuance and Delivery Instructions. Tendering holders should indicate, in the applicable box or boxes, the name and address to which New Notes or substitute Outstanding Notes for principal amounts not tendered or not accepted for exchange are to be issued or sent, if different from the name and address of the person signing this Letter of Transmittal. In the case of issuance in a different name, the taxpayer identification or social security number of the person named must also be indicated. Holders tendering Outstanding Notes by book-entry transfer may request that Outstanding Notes not exchanged be credited to such account maintained at the DTC as such noteholder may designate hereon. If no such instructions are given, such Outstanding Notes not exchanged will be returned to the name and address (or account number) of the person signing this Letter of Transmittal. 7. Transfer Taxes. The Issuer will pay all transfer taxes, if any, applicable to the exchange of Outstanding Notes pursuant to the Exchange Offer. If, however, New Notes or Outstanding Notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be registered or issued in the name of, any person other than the registered holder of the Outstanding Notes tendered hereby, or if tendered Outstanding Notes are registered in the name of any person other than the person signing this Letter of Transmittal, or if a transfer tax is imposed for any reason other than the exchange of Outstanding Notes pursuant to the Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with this Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering holder and the Exchange Agent will retain possession of an amount of New Notes with a face amount at least equal to the amount of such transfer taxes due by such tendering holder pending receipt by the Exchange Agent of the amount of such taxes. 8. Tax Identification Number. Federal income tax law requires that a holder of any Outstanding Notes or New Notes must provide the Issuer (as payor) with its correct taxpayer identification number ("TIN"), which, in the case of a holder who is an individual, is his or her social security number. If the Issuer is not provided with the correct TIN, the holder or payee may be subject to a $50 penalty imposed by Internal Revenue Service and backup withholding, currently at a rate of 30%, on interest payments on the New Notes. To prevent backup withholding, each tendering holder and each prospective holder must provide such holder's correct TIN by completing the Substitute Form W-9 set forth herein, certifying that the TIN provided is correct (or that such holder is awaiting a TIN), and that (i) the holder has not been notified by the Internal Revenue Service that such holder is subject to backup withholding as a result of failure to report all interest or dividends or (ii) the Internal Revenue Service has notified the holder that such holder is no longer subject to backup withholding. If the New Notes will be registered in more than one name or will not be in the name of the actual owner, consult the instructions on Internal Revenue Service Form W-9, which may be obtained from the Exchange Agent, for information on which TIN to report. Certain foreign individuals and entities will not be subject to backup withholding or information reporting if they submit a Form W-8, signed under penalties of perjury, attesting to their foreign status. A Form W-8 can be obtained from the Exchange Agent. 11 If such holder does not have a TIN, such holder should consult the instructions on Form W-9 concerning applying for a TIN, check the box in Part 3 of the Substitute Form W-9, write "applied for" in lieu of its TIN and sign and date the form and the Certificate of Awaiting Taxpayer Identification Number. Checking this box, writing "applied for" on the form and signing such certificate means that such holder has already applied for a TIN or that such holder intends to apply for one in the near future. If such holder does not provide its TIN to the Issuer within 60 days, backup withholding will begin and continue until such holder furnishes its TIN to the Issuer. The Issuer reserves the right in its sole discretion to take whatever steps are necessary to comply with the Issuer's obligations regarding backup withholding. 9. Validity of Tenders. All questions as to the validity, form, eligibility (including time of receipt), acceptance and withdrawal of tendered Outstanding Notes will be determined by the Issuer in its sole discretion, which determination will be final and binding. The Issuer reserves the absolute right to reject any and all Outstanding Notes not properly tendered or any Outstanding Notes the Issuer's acceptance of which might, in the opinion of the Issuer or its counsel, be unlawful. The Issuer also reserves the absolute right to waive any conditions of the Exchange Offer or defects or irregularities of tenders as to particular Outstanding Notes. The Issuer's interpretation of the terms and conditions of the Exchange Offer (including this Letter of Transmittal and the instructions hereto) shall be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Outstanding Notes must be cured within such time as the Issuer shall determine. Neither the Issuer, the Exchange Agent nor any other person shall be under any duty to give notification of defects or irregularities with respect to tenders of Outstanding Notes nor shall any of them incur any liability for failure to give such notification. 10. Waiver of Conditions. The Issuer reserves the absolute right to waive, in whole or part, any of the conditions to the Exchange Offer set forth in the Prospectus. 11. No Conditional Tender. No alternative, conditional, irregular or contingent tender of Outstanding Notes will be accepted. 12. Mutilated, Lost, Stolen or Destroyed Outstanding Notes. Any holder whose Outstanding Notes have been mutilated, lost, stolen or destroyed should contact the Exchange Agent at the address indicated above for further instructions. This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost, stolen or destroyed Outstanding Notes have been followed. 13. Requests for Assistance or Additional Copies. Requests for assistance or for additional copies of the Prospectus or this Letter of Transmittal may be directed to the Exchange Agent at the address or telephone number set forth on the cover page of this Letter of Transmittal. Holders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Exchange Offer. 14. Withdrawal. Tenders may be withdrawn only pursuant to the limited withdrawal rights set forth in the Prospectus under the caption "The Exchange Offer--Withdrawal of Tenders." IMPORTANT: This Letter of Transmittal or a manually signed facsimile hereof or an agent's message in lieu thereof (together with the Outstanding Notes delivered by book-entry transfer or in original hard copy form) must be received by the Exchange Agent, or the Notice of Guaranteed Delivery must be received by the Exchange Agent, prior to the Expiration Date. 12 - ------------------------------------------------------------------------------------------------------------------------------------ SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE _____________________________________ BOX AT RIGHT AND CERTIFY BY SIGNING AND Social Security Number DATING BELOW or Form W-9 _____________________________________ Employer ID Number - ------------------------------------------------------------------------------------------------------------------------------------ Part 2--Certification--Under penalties of perjury, I Part 3-- certify that: (1) The number shown on this form is my correct Awaiting TIN [_] Taxpayer Identification Number (or I have checked _________________________ the box in part 3 and executed the Certificate of Please complete the Name awaiting taxpayer identification number below) and certificate of Awaiting Taxpayer Identification __________________________ (2) I am not subject to backup withholding either Number below. Address (Number and Street) because I have not been notified by the Internal Revenue Service ("IRS") that I am subject to __________________________ backup withholding as a result of failure to report City, State and Zip Code all interest or dividends, or because the IRS has notified me that I am no longer subject to backup withholding. - ------------------------------------------------------------------------------------------------------------------------------------ Department of the Treasury Certificate Instructions--You must cross out item (2) in Part 2 above if you have been notified Internal Revenue Service by the IRS that you are subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you are subject to backup withholding you received another notification from the IRS stating that you are no Payor's Request for longer subject to backup withholding, do not cross out item (2). Taxpayer Identification Number (TIN) SIGNATURE________________________________DATE_________________, 2002 - ------------------------------------------------------------------------------------------------------------------------------------
FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU WITH RESPECT TO THE NEW NOTES. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9 - -------------------------------------------------------------------------------- CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number to the payor within 60 days, 31% of all reportable payments made to me thereafter will be withheld until I provide a number. ______________________________________ __________________________________, 2002 Signature Date - -------------------------------------------------------------------------------- 13 -----END PRIVACY-ENHANCED MESSAGE-----